SMALL & MEDIUM ENTERPRISE &

ENTREPRENEURSHIP

by Robert Hisrich
Michael P. Peters
Dean Shepherd
The Nature & Importance of
Entrepreneurs

Chapter One
 • FOUNDER OF TURNER BROADCASTING SYSTEM
• STARTED CNN IN 1989
• ENTREPRENEUR WHO LOVES LIVING ON THE EDGE
• A RELENTLESS AND VIGILANT MANAGER

• WORLD’S THIRD RICHEST MAN

• GATES' VISION FOR THE COMPANY TO HAVE
(American Entrepreneur)
"A COMPUTER ON EVERY DESK AND IN
EVERY HOME
• NET WORTH US $ 58 BILLION

• THE VIRGIN GROUP HAS NOW EXPANDED INTO

INTERNATIONAL MUSIC MEGASTORES, AIR TRAVEL,
MOBILE,, MUSIC, INTERNET, DRINKS, RAIL, HOTELS
(English entrepreneur) AND LEISURE, WITH AROUND 200 COMPANIES IN OVER
30 COUNTRIES. YES, WE'VE BEEN BUSY!
• RICHARD BRANSON IS THE 236TH RICHEST PERSON
 Do the profile of these people fit your perception of
the career of an entrepreneur?

 What does it takes to start and operate a successful

business
To understand this better, learn about

NATURE & DEVELOPMENT OF ENTREPRENEURSHIP

 DECISION MAKING PROCESS INVOLVED IN BECOMING

ENTREPRENEUR

ROLE OF ENTREPRENEURSHIP IN THE ECONOMIC

DEVELOPMENT OF A COUNTRY
 Nature & Development Of
Entrepreneurship
 Historical Evolution Of Entrepreneurship
 Earliest Period
 Middle Ages
 17th Century
 18th Century
 19th & 20th Century
THE ABILITY TO INNOVATE CAN BE OBSRVED THROUGHOUT THE
HISTORY
Introduction to Entrepreneurship
Entrepreneur:
 the French term entrepreneur was first used to describe a “go-
between” or a “between-taker.”
 Individual who takes risk and starts something new.

› He or she is an individual who actively form or lead their own business and nurture
them for growth and prosperity.
UiTM Entrepreneurship Study Group

› A person who creates and manages change by the recognition of opportunities

(needs, wants, opportunities, problems, and challenges) and develops people and
manages resources to take advantage of the resources to take the opportunity and
creates a venture (business involving risk).
Eston Kimani, MIT
Definition of Entrepreneur Today
 Common behaviors Include:
› Initiative taking
› The organizing and reorganizing of social and economic
mechanisms to turn resources and situations to practical
account.
› The acceptance of risk or failure.
Economist : one who brings resources, labor,
material and other assets into combinations that make their
value greater than before and also who introduces changes,
innovations and a new order
Psychologist
such a person is driven by certain forces-
need to obtain or attain something, to experiment, to
accomplish, or perhaps to escape the authority of others

One businessman an entrepreneur is a threat, an

aggressive competitor
Another Businessman
same entrepreneur may be an
allay, source of supply, a customer who creates wealth for
others, as well as finds better ways to utilize resources, reduce
waste & produce jobs others are glad to get
Entrepreneurship

 Simple Definition
› Process of creating something new and assuming the
risks and rewards
• Entrepreneurship is dynamic process of creating incremental
wealth.
• The wealth is created by individuals who assume the major risks
or provide value for some product/service.
• The product/service may or may not be unique or new but
valuable by receiving and locating the necessary skills and
resources by Entrepreneur.
 All definitions of entrepreneurship includes

 Newness, organizing, creating, wealth and risk

taking

 Entrepreneurs are found in all professions

Architecture Research

Education
Medicine
Process of creating something new with value by
devoting the necessary time and effort, assuming
the accompanying financial, psychological, and
social risks; & receiving the resulting rewards of
monetary and personal satisfaction
 Four Aspects of being an entrepreneur
1. Creation process– creating something new
value to entrepreneur & audience for which it is developed
Audience can be:
• organizational buyers for business innovation.
• The hospital’s administration for new admitting procedure
and software
• Prospective students for a new course
• Constituency of new service provided by non profit
organization.
2. Entrepreneurship requires the devotion of the necessary time and
effort
3. Risk take a variety of forms, social, psychic and financial risks.
4. rewards of being entrepreneur– independence- personal satisfaction-
for profit entrepreneurs, monetary reward also comes into play
(some value as degree of success)
 What is Entrepreneurship?
 An Entrepreneur (ahn’tra pra nur) is
a person who recognizes a viable
idea for a business product or service
and carries it out. Any person (any
age) who starts and operates a
business is an entrepreneur.
 WHO ARE ENTREPRENEURS?
• Start with a vision

• Unhappy with current job

• Bring resources for new venture

• Hardworking

• Distinguishable
Experience filled with enthusiasm, frustration, anxiety
& hard work

There is highly failure rate due to such things as

Poor sales Financial

Risk Intense
Emotional competition
risk
Lack of Lack of managerial
capital talent

What then causes a person to make this difficult

decision ?
 The Entrepreneurial Decision Process

 Individuals have difficulty bringing their ideas to

the market & creating a new venture
 Yet entrepreneurial decisions have resulted in
several new businesses through out the world
 Despite recession- inflation- high interests rate,
lack of infrastructure-economic uncertainty &
high probability of failure
Deciding to become an entrepreneur by leaving present activity &
entails a movement from something to something----A
movement from present lifestyle to forming a new enterprise

Form new enterprise

Changing from present Desirable
life style 1. Cultural
2. Subcultural
 Work Environment 3. Family
4. Teachers
 Disruption 5. Peers

Possible
6. Government
7. Background
8. Marketing
9. Financing
10. Role Models
 Changing from present life style
Change Environment Disruption
 Negative force – retired
 Not  Relocated due to a move by
easy to leave career
 Two work environments other family member in a
dual-career family
1. R&D : individuals develop
 Who have been fired
new product ideas & leave to
 12% new business listings in
form their own companies
when these ideas are not the yellow pages increased
accepted by their employers during layoff period
 Educational degree-MBA
2. Marketing : become familiar
with customers unfilled  Student who is not
needs & wants- start promoted after receiving an
enterprise MBA-frustrated & start
new company
 What causes this personal disruption to
result in a new company being formed

When individual perceives that forming a new

enterprise is both

Desirable Possible

Aspects of a situation that make

Factors making It possible to
it desirable to start a new
create a new venture
company
 Desirability of New Venture Formation

Cultural
 American culture places a high value on being one’s own boss.
 Also on making money, being a success, all aspects of e-ship.
 High rate of Co. formation in US.
 In some countries establishing a new business and making money is not
as highly valued-failure might be disgrace.

Sub-cultrual
 No culture is totally for or against entrepreneurship
 Subcultures shape value system operate within cultural
framework.
 Silicon valley- subcultures support & even promote- forming of
Family new company –as one of the best occupations

 High % of the founders of Co’s had fathers OR mothers who valued

independence
 Independence permeates their entire family life.
 Encouraging their children’s company formation activities.
 Desirability of New Venture Formation

Teachers
 Encouragement by teachers- influence to regard Eship as a desirable & viable career
path
 No of “Eship” courses a person takes-increases probability of starting Venture
 Stanford is in the Silicon
 A strong education base is imp factor for “e” activity and CO. Formation.

Peers

 Important in deciding to form a company.

 Area with “E” pool and place where E & potential entrepreneurs can discuss
ideas-problems & solutions spawns more new companies than an area where these
are not available.
 Possibility of New Venture Formation

“What makes it Possible to form a New Company?

Government
 Provides infrastructure to help/support a new venture.
 More COs in US, due to roads-communication-transportation system-utilities-
& economic stability & better– Co. TAX RATE
 Repressive TAX RATE can suppress company formation-since Co wont have
money to start & grow.
Background
 E must have necessary background-Education, previous business
experience – gives skills needed to form & manage a new enterprise
 Entrepreneurs are not born: they develop

Marketing
 Understanding of market plays vital role in forming a new Co.
 Presence of market of sufficient size- must also be a level of marketing know-
how to put together the best total package of product, price, distribution &
promotion needed for successful product launching.
 A Co. is more easily formed when the driving force is more from market
demand than a technology push.
Possibility of New Venture Formation

Finance
 Financial resources must be readily available
 Most start up money comes from personal savings-credit-friends-
relatives, there is often a need for additional seed capital

Role Models

 Most powerful influence in making Co seem possible

 see someone else succeed makes it easier to picture yourself engaged
in a similar activity
 Frequent comment of E “if that person could do it, so can I”
Types of skills required in
Entrepreneurship
 Skills are classified into Technical, Business Management and personal
entrepreneurial.
 Technical Skills:
› Writing
› Oral communication
› Monitoring environment
› Technical Business Management
› Technology
› Interpersonal
› Listening
› Ability to organize
› Network Building
› Being A team Player
› Coaching
› Management Style
 Types of skills required in Entrepreneurship
 Business Management Skills:
› Planning and goal setting
› Decision making
› Human relations Areas involved in starting,
› Marketing
› Finance
developing and managing an
› Accounting enterprise.
› Management
› Control
› Negotiation
› Venture Launch
› Managing Growth
 Personal Entrepreneurial Skills
› Disciplined(inner control)
› Risk taker
› Innovative
Some differentiate managers from
› Change oriented
› Persistent
Entrepreneur.
› Visionary Leader
› Ability to manage change
 The future of Entrepreneurship
 In spite of the difference conceptual perspectives,
there are common aspects: risk taking, creativity,
independence & rewards.
 These shared attributes are driving force behind
the notion of eship in future.
 The future for “Eship” is bright – we are living in
the age of entrepreneur with Eship supported by
Educational institutes, Society,
Governmental units & Corporations.
 Educational institutes

• No of Universities & colleges offering at least 1

course in ‘Eship’ increases each yr.
• Faculty teaching eship & no. of endowed chairs(A
financial endowment is a transfer of money or
property donated to an institution including
salary, research & travel stipend) increases.
• Unique entrepreneurship programs like masters
programs in Eship.
• E education in world is also growing
• Uni’s doing research in eship, training courses &
education courses (degree credit is given).
• Few Uni’s Involved in enterprise creation where
uni members share profit and sales of new
venture.
• 1970’s – 90’s 400 universities offering E courses
 The future of Entrepreneurship

 Government
•
• taking increased interest in promoting growth of Eship.
• Individuals r encouraged to form new enterprises and are
provided Support as tax incentives, buildings, roads and a
communication system to facilitate this creation process.
• Encouragement by Govt should continue as it is
Understood that new enterprises create jobs & increase
economic output in the area.
 The future of Entrepreneurship
 Society

• Society support(motivation & encouragement) of

entrepreneurship will continue
• U.S entrepreneurial processes are considered honorable and
prestigious pursuits & entrepreneurs been revered by general populace.
• major factor of this societal approval is media-played powerful role by
reporting on the entrepreneurial spirit– and highlighting success cases of
this spirit.
• Articles(focus on pioneer spirit of today’s entrepreneurs) in newspapers-
uplifts the image of the entrepreneur & focuses on their contributions to
society
• Coverage by business magazines via special columns on ehsip and
venturing.
• TV on both national and local levels highlighted eship by featuring specific
issues and individuals involved in Entrepreneurial process.
• Local stations broadcast shows having special segments devoted to this
phenomenon.
 The future of Entrepreneurship

 Corporation

• Large companies special form of interests in entrepreneurship –

intrapreneurship- in the future
• Companies want to create more new business through intrapreneurship
particularly in light of hyper competition and need for globalization.