Entrepreneurship

By: Malka
Yasmeen
 Nature and development of Entrepreneurship

The word entrepreneur is French and, literally translated as between-taker or go-between.

Earliest Period:
And example of earliest definition of an entrepreneur as a go-between is Marco Polo,
who attempted to establish trade routes to the far East.
Marco Polo would sign a contract with money person(venture capitalist) to sell his goods.
Middle Ages:
The term entrepreneur was used to describe a person who managed large production projects.
This individual did not take any risks, but managed the projects using resources provided by
government of the country.
A typical entrepreneur was the in charge of great architectural works, such as castles, public
buildings and cathedrals.
17th century:
The connection of risk with entrepreneurship developed in 17th century.
Entrepreneur was a person who entered in to contract with government to perform services or
supply products. Since, the contact price was fixed, any resulting profits or losses were the
entrepreneurs.
 Entrepreneurship
One entrepreneur in this period was John Law, a Frenchman, who was allowed to
establish a royal bank.
The bank eventually was evolved into an exclusive franchise to form a trading
company- The Mississippi Company. Unfortunately he raised the companys stock
prices higher than its assets, leading to the collapse of the company.
18th century:
The person with capital was differentiated with the person who needed capital.
In other words, entrepreneur was distinguished from the capital provider.
One reason for this differentiation was industrialization throughout world.

Venture capitalist:
A venture capitalist is a professional money manager who makes risk investment to
obtain high rate of return on investment.
 Entrepreneurship
19th and 20th Centuries:
In late 19th and early 20th centuries, entrepreneur was not distinguished from
managers.
In the middle of 20th century, the concept of entrepreneur as an innovator was
established.
An individual developing something is entrepreneur.
Concept of newness and innovation is an integral part of this definition.
Definition of Entrepreneur Today:
In almost all of definitions of entrepreneurship, there is an agreement that we are
talking about is a kind of behavior that includes:
1. Initiative taking
2. Organizing and reorganizing the social and economical mechanism
3. The acceptance of risk or failure.
 Entrepreneurship

Entrepreneurship is the process of creating something new with value

by devoting necessary time and effort, assuming the financial, psychic and social
risks, and receiving the resulting rewards of monetary and persoanal satisfaction
and independence.

This definition stresses four basic aspects of being an entrepreneur,

1. Creating something new of value
2. Requires the devotion of necessary time and efforts.
3. Reward of being an entrepreneur
4. Independence and personal satisfaction.
Entrepreneurs versus Inventors
Inventor:
An individual who creates something new for the first time
Falls in love with inventions.
Motivated by his or her own work and personal ideas
Mostly tend to be well educated
Measures achievement by the number of inventions and number of patents granted.
Inventor enjoys the process of inventing
Entrepreneur:
Falls in love with organization.
Will do almost everything to ensure its survival and growth.
Highly motivated
Inventors work requires expertise of entrepreneur.
 The Entrepreneurial Process
The process of pursuing a new venture, whether it be a new products into existing
markets, existing product into new markets and/or the creation of a new
organization.
The process has four distinct phases
1. Identification and evaluation of the opportunity
2. Development of business plan
3. Determination of required resources
4. Management of the resulting organization

1- Identify and Evaluate the Opportunity:

The process by which an entrepreneur comes up with the opportunity for new venture
is opportunity identification.
Entrepreneur do not have formal mechanism for identifying business opportunities,
some are: consumers, business associates, members of distribution system and
technical people.
 The Entrepreneurial Process
Often consumers are best sources of ideas for a new venture.
If only there was a product that would be..
This comment can result in the creation of a new business.
Once the opportunity is identified, it is then carefully screened and evaluated.
Evaluating Opportunity:
It is the most critical element of entrepreneurial process.
It allows entrepreneur to asses whether the specific product or service has the return
needed compared to the resources required.
This process involves looking at the length of window of opportunity, its real and
perceived value, its risks and returns, its uniqueness etc.
The market size and length of window of opportunity are the primary bases for
determining the risks and rewards.
Finally the opportunity must fit the personal skills and goals of entrepreneur.

The time period for creating the new venture is window of opportunity
 The Entrepreneurial Process
Opportunity analysis/assessment is one method of evaluating opportunity.
Opportunity assessment plan includes:
Description of product or service
An assessment of opportunity
An assessment of entrepreneur and team
Specifications of all activities and resources needed.
Source of capital to finance initial venture as well as its growth.

Following questions to be answered for opportunity assessment:

What market need does it fit?
What social conditions underlies this market need?
What competitors exists in this market?
Where is the money to be made in this activity?
What market research data is required?
 The Entrepreneurial Process
2- Develop a Business Plan:
The description of the future direction of the business is Business Plan.
This is a very time consuming phase of entrepreneurial process. It includes:
Title page
Table of content
Executive summary
Major section
1. Description of business
2. Description of industry
3. Technology plan
4. Marketing plan
5. Financial plan
6. Production plan
7. Organizational plan
8. Summary
Appendix
 The Entrepreneurial Process
3-Manage the Enterprise:
The operational problems of the growing enterprise must also be examined
This involves implementing a managerial style and structure
Determining the key variables for success.
A control system must be establish so that any problem area can be quickly
identified and solved.
 Types of Start-Ups
There are three categories;
Lifestyle Firm:
A small venture that supports the owner and usually does not grow.
This type of firm may grow after several years to 30 or 40 employees and have annual revenues of
about $2 Million.
Foundation Firm:
Type of company formed from research and development
This firm can grow in 5 to 10 years from 40 to 400 employees and from $10 million to $20 in
yearly revenues.
This type of start-up rarely goes public.
High-potential venture:
These firms are also called gazelles(fast growing firms)
Is the one that receives the greatest investment interest and publicity.
Its growth is far more rapid
After 5 to 10 years it could employ around 500 employees with $20 million to $30 millions in
revenue
 Future of Entrepreneurship
The future of entrepreneurship is very bright.
Entrepreneurship education throughout the world is also growing
The increase in course offerings has been accompanied by an increase in academic
research.
Various governments are taking an increased interest in promoting the growth of
entrepreneurship.
Individuals are encouraged to form new businesses with government support.
Societys support of entrepreneurship will also continue.
The media have played and will continue to play an important and constructive role
to promote entrepreneurship.
Large companies are showing interest in their special form entrepreneurship-
corperate entrepreneurship. These companies are increasingly interested in
investing on their R&D.
 Corporate Entrepreneurship
A process that goes on inside an existing firm and that may lead to new business
ventures, the development of new products, services and processes and the renewal
of strategies.
Is one method of stimulating, and then investing on individuals in an organization
who think that something can be done differently and better.
Hyper competition has forced companies to have an increased interest in areas as
new product development, diversification, increase productivity and decreasing
costs methods.
Characteristics of entrepreneurial environment in organization:
New ideas are highly encouraged
Trial and errors encouraged.
Failure are allowed.
Volunteer programs.
Appropriate reward system.
 Corporate Entrepreneurship
Support of top management
Resources are available.
No opportunity parameters.
Barriers to new product creation and development is called opportunity parameters.
Leadership characteristics of corporate entrepreneur:
Understanding about the environment.
Visionary and flexible.
Encourage teamwork.
Encourage open discussion.
Persistence.
Builds a coalition of supporters.