ECD Lecture 1 - challenges of entrepreneurship
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Transcript of ECD Lecture 1 - challenges of entrepreneurship
Enterprise Creation & Development
Lecture 1:
Challenges of Entrepreneurship
Mr Khoo Chen En
(6460 8016; [email protected])
ECD Oct 14/Lecture 1/kce 1
Enterprise Creation & Development
Challenges of Entrepreneurship
Generation of Business Opportunities
Scanning the Business Environment
Importance of the Business Plan
Starting the Business
Financing the Business I
Financing the Business II
Developing the Business
ECD Oct 13/Lecture 1/ttl2
Assessment System
3
Weightage BazaarBusiness
plan
Mid semester test
30%14 Jan 2015 (Wed)
(Time and Venue to be confirmed)
Individual Assignment 1 (Week 5)(3-5 page report)
20%
What you intend to sell during the First Step! bazaar -26 Nov 2014, Wed 3pm
Your business idea -26 Nov 2014, Wed 3pm
GroupAssignment 2 30%
1) Bazaar – 17 Jan 2015 (Sat)
2) Post mortem & next step report – 28 Jan 2015, Wed 3pm
Comprehensivebusiness plan – 28 Jan 2015, Wed 3pm
Tutorialparticipation
20%10% class participation
10% presentation for assignment 2
ECD Oct 14/Lecture 1/kce
Recommended Text
• Donald F. Kuratko ENTREPRENEURSHIP –THEORY, PROCESS AND PRACTICE, 9th Edition, CENGAGE, Chp 1,2 & 4
• Justin G. Longenecker, Carlos W. Moore, J. William Petty and Leslie E. Patch, SMALL BUSINESS MANAGEMENT – AN ENTREPRENEURIAL EMPHASIS, International Edition, Thomson South-Western, Chp 1
4ECD Oct 14/Lecture 1/kce
Lecture Objectives
• Definitions
• Why be an Entrepreneur?
• Entrepreneurial Attributes
• Different Types of Risk
• Stress and the Entrepreneur
• Entrepreneurial Ethics
5ECD Oct 14/Lecture 1/kce
6
Successful Entrepreneurs
• Larry Page, CEO of Google
• Age : 41 (born 1973)
• Net Worth US$20.3B (2012)
• Son of a computer science professor
ECD Oct 14/Lecture 1/kce
7
Successful Entrepreneurs
• Olivia Lum, Chairman & Group CEO, Hyflux
• Age 52 (born 1962)
• Net Worth:US$460M (2011)
• Adopted at birth by a poor elderly woman, never knew her biological parents
• Started company at age 28, with $20,000 savings
• Ernst & Young World Entrepreneur Of The Year 2011
ECD Oct 14/Lecture 1/kce
8
Successful Entrepreneurs• Michael Masterson, Serial
Entrepreneur
• Age : 64 (born 1950)
• Co-started/turned-around dozens of multi-million dollar businesses across diverse industries (several above US$350M)
• Born in poor New York neighbourhood in family of 7 children
• Started first business at age 11
• Author of several New York Times and Wall Street Journal bestsellers
ECD Oct 14/Lecture 1/kce
Key Definitions
Entrepreneur:
• Derived from French word “entreprendre”, which means “to undertake”
• Innovator/Developer who recognizes & seizes opportunities; converts those opportunities into workable/marketable ideas; adds value through time, effort, money, skills; takes calculated risksof starting a business to implement these ideas & realizes rewards from these efforts
• Entrepreneurs are born AND made
9ECD Oct 14/Lecture 1/kce
Key Definitions
10
Difference between “Inventor”, “Innovator” & “Entrepreneur”:
• Inventor: Creates new technology or product ... often not yet ready for market
• Innovator: Transforms new or existing technology, product, service, business model, customer experience into something ready for market
• Entrepreneur: Recognizes & seizes opportunity, assumes risks, TAKES ACTION to create & develop business to pursue opportunity
ECD Oct 14/Lecture 1/kce
Key Definitions
11
Difference b/w “Small Business Owner” & “Entrepreneur”:
• Small Business Owner: Create business that provides oneself & perhaps a few others with a job, at satisfactory profits
• Entrepreneur: Create & develop a fast-growing, highly profitable, eventually self-sustaining business, that is dominant in its area/industry, often with focus on continuous innovation
ECD Oct 14/Lecture 1/kce
Key Definitions
12
5 Levels of Entrepreneurs (based on actual real-life role instead of fictitious title):
• Level 0: Employee
• Level 1: Self-Employed / Technician
• Level 2: Manager
• Level 3: Leader / Owner Entrepreneur
• Level 4: Investor Entrepreneur
• Level 5: Highest-Level Entrepreneur
[Source: Bradley J. Sugars, ‘’Billionaire in Training’, MacGraw Hill 2006]
ECD Oct 14/Lecture 1/kce
Why be an Entrepreneur?
Profit
Personal satisfaction
Independence
Freedom
Personal fulfillment
13ECD Oct 14/Lecture 1/kce
Model of Entrepreneurial Motivation
14
[Source: Douglas W. Naffziger, Jeffrey S. Hornsby and Donald F. Kuratko, ‘A Proposed Research Model of Entrepreneurial Motivation’, Entrepreneurship Theory and Practice, Spring 1994:33]
Intrinsic/ extrinsic rewards
Firm outcomes
Decision to behave
entrepreneurially
Entrepreneurial strategy
Entrepreneurial management
Implementation / Outcome perception
Personal Expectation / Outcome comparison
PC PE PG
BE IDEA
•PC= personal characteristics•PE= personal environment•PG= personal goals•BE= business environment
ECD Oct 14/Lecture 1/kce
Key Elements in Entrepreneur’s Background
Supportive childhood family environment.
Having a father who is self-employed helps.
Education is important.
Aged 22-45 when starting venture.
Work history: dissatisfied with company job but has technical knowledge.
15ECD Oct 14/Lecture 1/kce
Entrepreneurial Attributes
16
Internal locus of control
Self-confidence & Optimism
Need/drive to achieve
IndependenceOpportunityorientation
Creativity & Innovativeness
Calculated risk taking
Tolerance for Failure
ECD Oct 14/Lecture 1/kce
Entrepreneurial Attributes
17
VisionIntegrity & Reliability
Commitment, Determination & Perseverance
High energy level
Team BuildingInitiative &
Responsibility
Tolerance for ambiguity
(ability to thrive in a fluid situation)
Persistent problem-solving
Seeking Feedback
ECD Oct 14/Lecture 1/kce
The Entrepreneurial Journey
• Entrepreneurs emerge as a function of value-creation process.
• emergence of the opportunity
• emergence of the venture and
• emergence of the entrepreneur.
• Socially situated process that involves numerous actors and events.
• Processes include emotions, impulses, and physiological responses as individuals react to a diverse, multifaceted, and imposing array of activities, events and developments.
18ECD Oct 14/Lecture 1/kce
Different Types of Risk
19
THE DARK SIDE OF ENTREPRENEURSHIP
Financial Risk
Psych
ic R
isk
Car
eer
Ris
kFamily & Social Risk
ECD Oct 14/Lecture 1/kce
Stress and the Entrepreneur
What is entrepreneurial stress?
• Discrepancies between a person’s expectations and
ability to meet demands need to be looked up to by your staff,
need to build up the company fast, need to put systems in place, market to
difficult markets do you have the ability to do it? the bigger the gap, the
higher the stress becomes
• Discrepancies between the individual’s expectations
and personality
20ECD Oct 14/Lecture 1/kce
Stress and the Entrepreneur
• Engage in constant communication activities interacting with customers, suppliers, regulators, lawyers & accountants (stakeholders) people in your company, outside your company, behind the scenes
• Entrepreneurs must bear the cost of their mistakes while playing a multitude of roles – salesperson, recruiter, spokesperson & negotiator need to wear a lot of different hats
21ECD Oct 14/Lecture 1/kce
Stress and the Entrepreneur
• Lack of support from colleagues that may be available to managers in a large corporation
• Require a large commitment of time & energy, often at the expense of family & social activities.
22ECD Oct 14/Lecture 1/kce
Sources of Stress
23
Loneliness – isolated from persons in whom they can confide
ECD Oct 14/Lecture 1/kce
Sources of Stress
24
Immersion in Business – most entrepreneurs are married to the business.
ECD Oct 14/Lecture 1/kce
Sources of Stress
• People problems
Successful entrepreneurs are to some extent perfectionists and know or insist how they want things done (need to have vs good to have!)
• Need to achieve
Achievement brings satisfaction
25ECD Oct 14/Lecture 1/kce
Stress and the Entrepreneur
• What kind of behaviour does an entrepreneur exhibit when stressed?
26ECD Oct 14/Lecture 1/kce
Stress and the Entrepreneur• Stress can result from personality
• ‘Type A’ behaviour
• Impatient, demanding & over strung
• Chronic & severe sense of urgency want to be better
than competitors
• Constant involvement in multiple projects subject to deadlines
• Neglect all aspects of life except work
• Tendency to take on excessive responsibility
• Tendency to speak faster than most people
27ECD Oct 14/Lecture 1/kce
Dealing With Stress
NetworkingGetting
away from it all
Communicatingwith employees
Finding satisfaction outside the company
DelegatingMental health check-up (or counselling)
Knowing self and
business/life partners
28ECD Oct 14/Lecture 1/kce
Defining Entrepreneurial Ethics
• Provide the rules for how society conducts any activity in an ‘acceptable’ manner.
• Entrepreneurs are confronted by shareholders, customers, managers, the community, government, employees, unions, peers and so on.
• Values, mores and societal norms all constantly fluctuate.
• ‘Deciding what is good or right or bad and wrong in such a dynamic environment is necessarily ‘situational’.
29ECD Oct 14/Lecture 1/kce
30
Chinese milk powder contaminated with melamine sickens 1,253 babies
Sanlu, China's biggest milk powder manufacturer, sold contaminated milk after farmers laced their produce with industrial chemicals to increase its protein content
ECD Oct 14/Lecture 1/kce
31
India turning into hub for fake medicines
The global fake-drug industry, worth about US$90 billion, causes the deaths of almost 1Mpeople a year.
Tricks of the trade include sticking fraudulent labels on expired products, filling vials with water, putting chalk powder in medicine packets.
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/10/AR2010091006700.html
ECD Oct 14/Lecture 1/kce
Types of Morally Questionable ActsTYPE DIRECT EFFECT EXAMPLES
Non-role Against the firm - Expense account cheating-- Embezzlement
Role failure Against the firm -Superficial performance appraisal-- Not confronting expense account cheating
Role distortion
For the firm - Bribery-- Manipulating suppliers
Role assertion
For the firm - Not withdrawing product line in face of initial allegations of inadequate safety
32
Source: James A. Water and Frederick Bird, ‘Attending to Ethics in Management’, Journal of Business Ethics, 5, 1989:494
ECD Oct 14/Lecture 1/kce
33
Corruption Perceptions Index
• Globally oriented entrepreneurs are going to face a myriad of business environments in the Asia–Pacific
ECD Oct 14/Lecture 1/kce
Social Entrepreneurship
• Social Entrepreneurs innovate & act according to the desire to create & sustain social value for others.
• Their assets & wealth are used to create community benefit.
• Profits & surpluses are reinvested in the business & community rather than distributed to shareholders.
• There is either a double or triple bottom-line paradigm that balances economic, social and possibly environmental returns.
34ECD Oct 14/Lecture 1/kce
35
Conclusion
The more you know, the more prepared you will be when opportunity knocks. If you are lazy and wile your time away, you would not know how to take advantage of opportunities even if they stared you in the face.
Li Ka Shing
ECD Oct 14/Lecture 1/kce
Recall Lecture Objectives
• Definitions
• Why be an Entrepreneur?
• Entrepreneurial Attributes
• Different Types of Risk
• Stress and the Entrepreneur
• Entrepreneurial Ethics
36ECD Oct 14/Lecture 1/kce