FOUNDATIONS of

ENTREPRENEURSHIP

Elikem Nutifafa Kuenyehia

CLASS TWO: INTRODUCTION TO ENTREPRENEURSHIP

Class Outline

• Hand in class questionnaire• Recap of class 1• Recap of real life case study• Introduction to entrepreneurship– Definitions–

Recap of Class One

• What did you learn about entrepreneurship from Class One?

• What did you learn about opportunities and challenges of entrepreneurship in Ghana?

• What did you learn from the Guest Speaker Kwaku Ofosu-Bediako

Class Questionnaire

• Hand in to Malik now please

Case Study Write Up

Introduction to Entrepreneurship

History and Development of Entrepreneurship

- Entrepreneurship evolved from French word “entreprendre” meaning “to undertake”- Other referrals include middleman, director of resources, tax contractor- Richard Cantillon maintains entrepreneurs as middlemen in his postulation of agents of economy (landowners, entrepreneurs, hirelings- In mid 20th century definition of entrepreneurship were based on economic situations

Some Definitions An entrepreneur is ‘a necessary

destabilising force bringing economic growth through the disequilibrium of constant change and innovation’.

-Joseph Schumpeter

‘Individual who undertook formation of an organisation for commercial purposes’.

- Adam Smith

‘It is possessing the know-how to find, marshal and control resources (often owned by others)

- Timmons

My Definition

• ‘Is the process of risking resources based on an idea (or series of ideas) to develop the idea or ideas into goods and/or services that people perceive as valuable and are willing to pay for, in such a way as to maximise profit for the enterprise risking the resources’

Entrepreneurship as a process

Entrepreneurial process begins with an idea which develops into an opportunity or vice-versa eg. Elizabeth Villars – Camelot idea in 1974

Idea and opportunity are intertwined by size of willing patronisers

Idea must remove an existing pain Key resources risked include time,

human and capital resources One Cycle Entrepreneurship vs

Repeated Cycle

Entrepreneurship as a state of mind or series of attributes

• Entrepreneurship as a characterisation of attributes that enable people to exploit opportunities for financial reward

- Motivation factor is the individual’s state of mind

• Entrepreneurship as a pattern of behaviour

• Ability to build a vision from nothing-Timmons

• Complementing one’s skills by building a venture team

Forms of entrepreneurship Social Entrepreneurshipo Creating social change through an

enterpriseo Enterprises include non-profit organizations

and businesses set up with a social purpose o Examples – Grameen Bank, Sinapi Aba

Trust, Teachers Fund Financial Services

Intrapreneurshipo Formation of new idea within an existing

organisationo Entrepreneurial concept belongs to the

organisation and not the intrapreneur.o Financial rewards also go to the company

(Intrapreneur’s reward is limited)o Examples – Google (3M), MET Insurance

(MET2U)

Forms of entrepreneurship cont’d

Extrapreneurshipo Break off from existing companyo New company may carry similar idea

from parent companyo May have financial and social support

from parent company o New enterprise may be in the same

business line as the existing company or a supplier to it

Incubation

• Involves “nurturing” start-up business with an enabling environment, material and intangible resources

• Set up by universities or high tech parks• Examples - Busy Internets Incubation

Program, Meltwater Foundation to establish a Non-Profit Incubator In Ghana?

Opportunity entrepreneurship vs. Necessity entrepreneurship

o Opportunity entrepreneur develops an idea to exploit an existing opportunity

o Necessity entrepreneurs result from lack of alternatives

Entrepreneur vs. Businessmano All entrepreneurs are businessmen but not all

businessmen are entrepreneurso A Businessman establishes a business for personal

goals while an entrepreneur establishes an enterprise for profit and growth –Beaver and Jenkins

Evolution of entrepreneurship in Ghana

Entrepreneurship began before the arrival of the Europeans

Europeans were also entrepreneurs as they risked resources to identify trading opportunities in Ghana

Post independence witnessed the introduction of a mixed economy in Ghana

Nkrumah’s Government encouraged private enterprise The NLC government also supported local

entrepreneurs when it published in 1968, ‘The Promotion of Ghanaian Business Enterprise’

Busia’s government was the first to extensively draw up policies and establish bodies to aid entrepreneurs

Evolution of entrepreneurship in Ghana cont’d

Rawlings Government introduced ERP and SAP

Kufour’s government is dedicated to making the private sector the engine of growth in the economy. Policies aimed at encouraging entrepreneurship can be found in ‘KOE’

Mills Government ‘better Ghana agenda’ aim to provide various incentive schemes to ease credit delivery to entrepreneurs, to establish export trade houses, and develop an incubation policy

Role of entrepreneurship in a country’s economy

development

• Creates jobs• Drives economic growth• Frees up states resources• Fosters competition• Fosters innovation• Increases productivity• Provides a tax base for government

Challenges facing Ghanaian Entrepreneurs

• Access to finance• Low incomes and corresponding low

savings culture• Little initiative by banks to be

creative• Human Capital • Unfriendly government machinery• Political and economic instability• Access to information

Factors favouring entrepreneurship

Political stability Macro-economic stability Secure property rights Ease of starting a business Free flow of information The rule of law and mechanism for contract

enforcement Availability of human capital Access to finance Size of the market in terms of numbers and income

levels Regulation of businesses Culture

Institutions that help entrepreneurship to thrive

• An independent central bank• An independent judiciary• An independent media and easy access

to credible information• Neutral and professional army or

security forces

Why become an entrepreneur?

Most graduate students take regular executive or civil service career paths while

Some, after a few years of experience quit to start their own enterprise or buy one.

Appeal for joining ‘Corporate Ghana’ or civil service:

o More securityo Certainty of incomeo Greater training opportunitieso Lower levels of stresso Smaller personal risko Responsibilityo Autonomy & desire to control one’s own destinyo ....etc

Why become an entrepreneur?

• Others still prefer entrepreneurship because;

• Autonomy & Desire to control own destiny

• Flexibility• Opportunity to reap unlimited profits• Unemployment & Underemployment• Family