CHAPTER ONE

THE NATURE OF
ENTREPRENEURSHIP

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 1.1 INTRODUCTION

 The word ‘entrepreneur Is originated from a

French word, entreprender, was considered as an
individual commissioned to undertake a
particular commercial project.
 Entrepreneur is someone who undertakes certain
projects.
 Entrepreneurship is then what the entrepreneur
does.
 Entrepreneurial is an adjective describing how
the entrepreneur undertakes what he or she
does.
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 1.3 Definitions of Entrepreneurship and Entrepreneur

 Entrepreneurship is a process of identifying opportunities

and investing the resources to exploit it for a profit.
 Is the processes through which individuals become aware
of business ownership, then develop ideas for, and initiate
a business.
 Entrepreneurship is a process of creating something
different and better with value by devoting the necessary
time and effort by assuming the accompanying financial,
psychic and social risks and receiving the resulting
monetary reward and personal satisfaction.
 Entrepreneurship is the art of identifying viable business
opportunities and mobilizing resources to convert those
opportunities into a successful enterprise through
creativity, innovation, risk taking and progressive
imagination.
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 Con’t…
It refers to an individual’s: ability to turn ideas
into action involving and engaging in socially-
useful wealth creation through application of
innovative thinking and execution to meet
consumer needs, using one’s own labor, time and
ideas.
 In General, the process of entrepreneurship
includes five critical elements. i.e:
 The ability to perceive an opportunity.
 The ability to commercialize the perceived
opportunity i.e. innovation
 The ability to pursue it on a sustainable basis.
 The ability to pursue it through systematic means.
 The acceptance of risk or failure.
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 Definition of Entrepreneur from different
perspectives i.e. from the economist, psychologist and capitalist
philosopher’s point of view.
• To an economist, one who brings resource, labor, materials,
and other assets into combination that makes their value
greater than before.
• To a psychologist, a person typically driven by certain
forces need to obtain or attain something, to experiment, to
accomplish or perhaps to escape the authority of others.
• For capitalist philosopher, one who creates wealth for
others, who finds better way to utilize resources and reduce
waste and who produce job others are glad to get.
• In general, entrepreneur refers to the person and
entrepreneurship defines the process.
• All entrepreneurs are business persons, but not all business
persons are entrepreneurs.
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 1.4 Types of Entrepreneurs
 The individual entrepreneur: is someone who
started; acquired or franchised his/her own
independent organization.
 Intrapreneur: is a person who does entrepreneurial
work within large organization.
 The Entrepreneurial Organization: An organization
that create an environment in which all of its
members can contribute in some function to the
entrepreneurial function.

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 1.5 Role of Entrepreneurs in Economic Development

 Improvement in per capita Income/Wealth

Generation
 Generation of Employment Opportunities
 Inspire others towards Entrepreneurship
 Balanced Regional Development
 Enhance the Number of Enterprise
 Provide Diversity in Firms
 Economic Independence
 Combine Economic factors
 Provide Market efficiency
 Accepting Risk
 Maximize Investor’s Return
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 1.6 Entrepreneurial Competence and Environment

1.6.1 Entrepreneurial Mindset

1.6.1.1 Who Becomes an Entrepreneur?
• The Young Professional
• The Inventor
• The Excluded

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 1.6.1.2 Qualities of an
Entrepreneur

To be successful, an entrepreneur should have the

following qualities:
 Opportunity-seeking
 Persevering
 Risk Taking
 Demanding for efficiency and quality
 Information-seeking
 Goal Setting
 Planning
 Persuasion and networking
 Building self-confidence
 Listening to others
 Demonstrating leadership
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 1.6.1.3 Entrepreneurial Skills
 General Management Skills: are skills
required to organize the physical & financial
resources needed to run the venture. i.e:
 Strategy Skills
 Planning Skills
 Marketing Skills
 Financial Skills
 Project Management Skills
 Time Management Skills

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 People Management Skills
 Communication Skills
 Leadership Skills
 Motivation Skills
 Delegation Skills
 Negotiation Skills
• All these different people skills are
interrelated.
• Here entrepreneurial performance results from
a combination of industry knowledge, general
management skills; people skills and personal
motivation.
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 1.6.1.4 The Entrepreneurial Tasks

 Owning Organizations
 Founding New Organizations
 Bringing Innovations to Market
 Identification of Market Opportunity
 Application of Expertise
 Provision of leadership
 The entrepreneur as manager
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 1.6.1.5 Wealth of the Entrepreneur
Wealth is money and anything that money can buy.
Who Benefits from the entrepreneur’s Wealth?
 Employees:
 Investors: stockholders/lenders.
 Suppliers
 Customers
 The local community
 Government

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 1.6.2 Entrepreneurship and
Environment
1.6.2.1 Phases of Business Environment
Business environment may be classified into two broad
categories; namely external and internal environment.
External Environment
 Economic Environment
 Legal Environment
 Political Environment
 Socio-Cultural Environment
 Demographic Environment
Internal Environment;
 Raw Material
 Production/Operation
 Finance
 Human Resource
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 1.6.2.2 Environmental Factors Affecting Entrepreneurship

Environmental factors which hinder

entrepreneurial growth are;
• Sudden changes in Government policy.
• Sudden political upsurge.
• Outbreak of war or regional conflicts.
• Political instability or hostile Government
attitude towards industry.
• Excessive corruption among Government
agencies.

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 con’t…
• Ideological and social conflicts.
• Unreliable supply of power, materials, finance,
labor and other inputs.
• Rise in the cost of inputs.
• Unfavorable market fluctuations.
• Non-cooperative attitude of banks and
financial institutions.
• Entrepreneurship is environmentally
determined.

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 1.7 Creativity, Innovation and Entrepreneurship

1.7.1 Creativity; is a process of assembling ideas

by recombining elements already known but wrongly
assumed to be unrelated to each other.
key elements of this definition;
• Process: implies that, it is more likely a skill than
an attitude, and that you can get better at it
with practice.
• Ideas: creativity results in ideas that have
potential value.
• Recombining: the creative process is one of putting
things together in unexpected ways.
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 1.7.1.1 Steps in the Creative
Process
Step 1: Opportunity or problem Recognition; A person
discovers that a new opportunity exists or a problem needs
resolution.
Step 2: Immersion; the individual concentrates on the
problem and becomes immersed in it.
Step 3: Incubation; a person does not appear to be working
on the problem actively; however, the subconscious mind is still
engaged.
Step 4: Insight; the problem-conquering solution flashes
into the person’s mind at an unexpected time, such as on the
verge of sleep, during a shower, or while running. Insight is also
called the Aha! Experience.
Step 5: Verification and Application; the individual sets
out to prove that the creative
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 1.7.1.2 Barriers to Creativity

There are a numerous barriers to creativity, i.e.

 Searching for the one ‘right’ answer
 Focusing on being logical
 Blindly following the rules
 Constantly being practical
 Viewing play as frivolous
 Becoming overly specialized
 Avoiding Ambiguity
 Fearing looking Foolish
 Fearing mistakes and failure
 Believing that ‘I’m not
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creative
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 1.7. 2 Innovation

 Innovation is the implementation of new idea at

the individual, group or organizational level.
 It is a process of intentional change made to rate
value by meeting opportunity and seeking advantage
 Types of Innovation; there are 4 types of
innovation.
1. Invention - the creation of a new product,
service or process
2. Extension - the expansion of a product, service
or process
3. Duplication - replication of already existing
product, service or process
4. Synthesis - the combination of existing concepts
and factors into a new formulation.
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 1.7.2.1 The Innovation Process
• Analytical planning: carefully identifying the
product or service features, design as well as the
resources that will be needed.
• Resources organization: obtaining the required
resources, materials, technology, human or capital
resources
• Implementation: applying the resources in order
to accomplish the plans

• Commercial application: the provision of values

to customers, reward employees and satisfy the
stakeholders.
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 1.7.2.2 Areas of Innovation
 New product
 New Services
 New Production Techniques
 New Way of Delivering the Product or Service to
the Customer
 New Operating Practices
 New Means of Informing the Customer about the
Product
 New Means of Managing Relationship within the
Organization
 New Ways of Managing Relationships between
Organizations
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 1.7.3 From Creativity to Entrepreneurship

 Creativity, is the ability to develop new

ideas and to discover new ways of looking at
problems and opportunities.

 Innovation, is the ability to apply creative

solution to those problems and opportunities
in order to enhance people’s lives or to enrich
society.

Entrepreneurship = creativity + innovation.

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