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INTRODUCTION TO ENTREPRENEURSHIP
Objectives Explain the concept of entrepreneurship Outline the rewards and drawbacks of entrepreneurship Identify the main personal , entrepreneurial characteristics (PECs) of successful entrepreneurs Identify Supporting Enabling factors (SEFs) Identify the factors that are driving the growth of entrepreneurship 2 Explain how to avoid the mistakes of entrepreneurship
WHAT IS ENTREPRENEURSHIP?
Many see entrepreneurship as the mere emergence of new businesses through the following ways New Business / New idea New Business / Existing idea Buying Existing Business Buying a franchise Entering into a family business
WHAT IS ENTREPRENEURSHIP?
The way to make the economy more productive and compete more effectively in the global economy The essence of free enterprise because the birth of new businesses gives a market economy its vitality ( new jobs, products)
WHAT IS ENTREPRENEURSHIP?
A new style of doing business An approach way of seeing things and of doing things differently Style of management ( Peter Drucker) High risk activity Ability to see change/ difficulties as a business opportunity
WHAT IS ENTREPRENEURSHIP?
Almost all definitions of entrepreneurship include: Initiative taking The organizing and reorganizing of social/economic mechanisms to turn resources and situations to practical account. The acceptance of risk or failure
Concept of Entrepreneur
Marco Polo who attempted to establish trade routes to the far east The money person (forerunner of Capitalist) entered into contract with the go-between to sell his goods. Early Capitalist 7
Concept of Entrepreneur
Middle Ages
The term entrepreneur was used to describe both an actor and a person who managed large production projects. This person did not take any risks, managing the project with the resources provided. A typical entrepreneur was the cleric who managed architectural projects.
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Concept of Entrepreneur
17th Century
The entrepreneur was a person who entered into a contract with the government to perform a service
18th Century
The entrepreneur was distinguished from the capital provider. Eli Whitney & Thomas Edison were unable to finance invention themselves. Both were capital users (entrepreneurs), not capital providers (venture capitalists.
Concept of Entrepreneur
Viewed mostly from an economic perspective Contributes his own initiative, skill and ingenuity in planning, organizing, and administering the enterprise assuming the chance of loss and gain (risk taker) Andrew Carnegie is an example, building the American steel industry through competitiveness rather than creativity
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Concept of Entrepreneur
The notion of an entrepreneur as an innovator was established. Innovation, the act of introducing new, is one of the most difficult tasks for the entrepreneur. John Pierpont Morgan and Edward Harriman are examples of this type of entrepreneur. This ability to innovate is an instinct that distinguishes human beings from other creatures and can be observed throughout history. 11
DEFINITION OF ENTREPRENEURSHIP
The process of creating value by pulling together resources to exploit an opportunity Entrepreneurship is the dynamic process of creating incremental wealth
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DEFINITION OF ENTREPRENEURSHIP
The process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence.
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WHO IS AN ENTREPRENEUR?
To the economist , an entrepreneur is one who brings resources, labour, materials, and other assets into combinations that make their value greater than before, and one who introduces changes, innovations, and a new order.
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WHO IS AN ENTREPRENEUR?
Definition
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REWARDS OF ENTREPRENEURSHIP
Opportunity to gain control over ones own destiny Opportunity to reach ones full potential Opportunity to benefit financially Opportunity to contribute to society and be recognized for ones efforts Freedom from supervision and rules of bureaucratic organizations Freedom from routine, boring and unchallenging jobs Freedom from the limits of standardized pay
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DRAWBACKS OF ENTREPRENEURSHIP
Uncertainty
of income Complete responsibility Risk of losing your entire invested capital Long hours and hard work Emotional loneliness Disruptions to personal life Strong possibility of failure Lower quality of life until the business gets 19 established
DRAWBACKS OF ENTREPRENEURSHIP
Which drawbacks are most disturbing to you and why? Can anything be done to reduce them?
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ENTREPRENEUR VS INVENTOR
An inventor creates something for the first time. While the entrepreneur falls in love with the new venture, the inventor falls in love with the invention and often requires the expertise of an entrepreneur to launch a new venture Historians classify Albert Einstein as an inventive genius and Henry Ford as an entrepreneurial genius.
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THE ENTREPRENEUR
The classic entrepreneur is often seen as one who possess certain innate traits, often referred to as Personal Entrepreneurial Characteristics ( PECs)
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Analyze situations easily and make and implement decisions quickly Creative thinkers, able to identify a positive trend within a negative situation Good planners and organizers
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Enjoy a challenge Energetic, always on the go Information seeking Persuasive and good networkers
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True entrepreneurs are born with special personality traits that create business. These traits cannot be taught or learned. Entrepreneurial tendencies can be learned and developed through experience and business training.
2.
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Supporting and Enabling factors (SEFs) are factors which are largely outside of the control of the entrepreneur but which nonetheless played a critical role in the success of the entrepreneur
(Orville Reid 2011).
The concept of SEFs concedes that for success to occur the entrepreneur must have PECs as well as SEFs which contributes to success.
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What
is failure ? Is it OK to fail? Many cultures, including ours stigmatize failure A business may fail and many do An entrepreneur only fails when he never tries again Entrepreneurs use business failures as opportunities to start over again and to learn from them
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Capital Ideas
Technology
People
Social Factors
Natural entrepreneurial spirit
Said to be part of the Jamaican psyche
Probably connected with Anancyism from stories of Bro. Anancy who tricked others to get what he wanted.
Social Factors
The
boss
Entrepreneurship
Cultural factors
Ethnic groupings
Some
ethnic groups (Chinese, Jews, Indians) have a tradition of being involved in business in Jamaica.
Cultural
Cable
penetration
Economic
The state of the Jamaican economy is both a push and pull factor for persons to engage in entrepreneurship
Stable economy
Helps business planning, gives confidence for starting new business
High inflation
Wreaks havoc with business planning but encourages trading (buy-&-sell) operations
High rates reduce ability to repay loans, makes loan financing unattractive for funding business
Economic
Economic
Globalization The ongoing process of integration of regional economies, societies & cultures through international exchange Has economic, technological, socio-cultural, political and biological components Include the transnational dissemination of ideas, language and popular culture
Globalization
Globalization
Globalization
The
international markets
Lowering/removal of Exporting possibilities Lower
export possibilities
Globalization
Mobility
of labour / jobs
trading blocks
Caribbean Common Market
CARICOM
CSME
Deepening the integration process, provides a unified market for goods within CARICOM
trading blocks
Opening up of markets (North America, Central America, South America & the Caribbean)
NAFTA
Political
What specifically have governments done to promote entrepreneurship
Adopted
Encourages
Political
Encourage
Political
Government
policies
Have
been reducing Government ownership of businesses by privatizing state owned enterprises (JPS, the telecommunications sector, Air Jamaica, the sugar companies, etc.)
Political
Government
policies
Governments
role has been changing to that of facilitator & referee, rather than owner & operator evidenced by the establishment of bodies such as the Office of Utilities Regulation -OUR, Fair Trading Commission - FTC, AntiDumping Commission, Financial Services Commission.
Political (Contd)
Business facilitation strategies
E-government
To reduce bureaucracy and lost man-hours; one stop shop for importers/exporters. Certain taxes can be paid on-line
Government
Political (Contd)
Access
Political (Contd)
Business Low
facilitation strategies
of import duties, removal of unnecessary red
Lowering
tape
Political (Contd)
Business
facilitation strategies
of technical assistance
Provision
(JBDC)
Tax
High
Cost
Input costs
of economic inputs- due to depreciating exchange rate e.g. Imported materials, rent etc.
Security Utility and
Transportation Labour
Crime & violence Extortion Robbery & Murder Population size Small society, everybody knows everyone else; could restrict individual opportunities e.g. after business failure Small local market for sale of goods & services
people live helps determine & limit the types of opportunities open to them (e.g. Kingston or Portmore vs. rural farming community)
Socialization
Parents & family tends to encourage their children to select more traditional careers in less risky, established professions.
economies such as Jamaica have little option if we are to survive in this global environment Jamaica has to find a way to take advantage of opportunities to create and grow businesses to compete against imports, create local employment and increase the standard of living for its peoples.
Poor management
Lack of leadership ability, sound judgment and knowledge necessary to make the business work
Lack of experience Poor Financial Control Weak Marketing Efforts Failure to develop a Strategic Plan
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SUMMARY
Concept
Rewards
PECs
Factors
How
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TUTORIAL ACTIVITY
What
What
You
TUTORIAL ACTIVITY
Select one successful local entrepreneur Explain why you think this person is successful Identify four major PECs that this person exhibits Substantiate your views with evidence of actual events/activities where these PECs were demonstrated
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TUTORIAL ACTIVITY
Historians
classify Albert Einstein as an inventive genius and Henry Ford as an entrepreneurial genius. Do you agree? Why?
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