FUNDAMENTALS OF ENTREPRENEURSHIP

• BEN 142
• MODEL ANSWER 1
• DEPARTMENT OF BUSINESS STUDIES
• PRESENTED BY P. SAMUTELA 2024
What is entrepreneurship
• Entrepreneurship refers to the process of conceptualizing, creating, and
managing a business venture while taking on financial risks in the hope of
achieving profit and success.
• According to Peter F. Drucker ‘’Entrepreneurship is defined as a
systematic Innovation ,which consists in the purposeful and organized
search for changes. And it is the systematic analysis of the opportunities
such changes might offer for Economic and social Innovation.
• Entrepreneurship is the Dynamic Process of creating incremental wealth.
• In a nutshell, entrepreneurship involves decision
making,innovation,implementation, forecasting of the future,
independency and success.
ENTREPRENEURSHIP DEFINED
CONTINUATION
Entrepreneurship is a philosophy and the way one thinks, one acts and
therefore it can exist in any situation, be it business or government or
in the field of education ,science and technology.
Entrepreneurship is the ability to create and build something from
practically nothing
It is the knack of sensing opportunity where others see chaos and
confusion
In summary entrepreneurship is a dynamic process of vision,change
and creation . It requires an application of energy and passion towards
the creation and implementation of new ideas and creative solutions.
EMERGING FORMS OF ENTREPRENEURSHIP

• One-person enterprises and the self-employed

• businesses which employ no staff This form of entrepreneurship includes
persons undertaking business activities, which, irrespective of their legal
status, whether incorporated or not, contribute an important part to the
person’s income and hence go beyond hobby activities
• Part-time entrepreneurs: part-time entrepreneurship as being often a
necessity-based way of earning a living, and observe
• that such businesses are characterized by low-growth ambitions and low
survival rates. Part-time
• entrepreneurs can be employed, retired, enrolled in education or training
programmes, or
EMERGING FORMS OF ENTREPRENEURSHIPS CONT

• Parallel entrepreneurs: running two or more businesses at

the same time: entrepreneurs running several different
businesses in parallel. The flow of knowledge and hence of
business opportunities allows particularly active
entrepreneurs to set up and run several businesses at the same
time. These businesses may be based on common synergies,
such as addressing the same customer base, but offering the
supply of different products and services.
• Serial entrepreneurs; starting up a business after selling,
closing or introducing new management to a previous one
• Business transfers and successions; the transfer of management or
ownership to a new entrepreneur while the business continues to operate
• Business transfers can take place in different situations.
• These include: Transfer from parents to a son or daughter, a traditional
generational change.
• After passing the entrepreneurial stage of business development, a
company will typically face new strategic options and managerial
challenges that are likely to demand a fresh injection of skills. At this
stage, it is common to introduce new management skills and perhaps to
transfer ownership to a professional board.
Creativity as a Prerequisite to Innovation

• Creativity is “the ability to bring something new into

existence” – “ability” not the “activity” of bringing something
new into existence. A person may therefore conceive of
something new and envision how it will be useful, but not
necessarily take the necessary action to make it a reality.
• Innovation is the process of doing new things. Innovation is
the transformation of creative ideas into useful application,
but creativity is a prerequisite to innovation.
The Creative Process

Creative process

Incubation
Subconscious
Preparation assimilation Illumination
Conscious of Recognition
search for information of idea as
knowledge Fantasizing being
Rationalizatio feasible Verification:
Idea germination n Realization Application or
The seeding stage
test to prove idea
of the new idea
has value
Recognition
Validation
 Elements of the Innovation Process

Translation of creative idea into useful application

Analytical Organizing Commercial

implimantation
planning resources application

To provide:
To obtain: To accomplish: Value to
To identify:
Materials Organization, customers,
Product design,
technology, product design, reward for
market strategy,
human manufacturing, employees,
financial need
resources, capital services satisfaction for
founders
 Invention & Innovation

• Invention vs Innovation

The creation of Results in new

Invention knowledge
something new

The transformation
Innovation of the idea or Results in new products,
resources into useful services, or processes
application
 ADDITIONAL READING

• Innovation: refers to the process of introducing something new or significantly improving existing products,
services, processes, or ideas to create value.
• Characteristics: It involves creativity, research, development, and implementation of new or improved
concepts, leading to a tangible result.
• Methodical Approach: Innovation often involves a systematic approach, which may include research, testing,
analysis, and iteration to bring about a novel solution or advancement.
• Examples: Developing a groundbreaking technology, creating a new business model, or inventing a unique
product are examples of innovation.
• Intuition: Intuition is a gut feeling, instinct, or immediate understanding without the need for conscious
reasoning or analysis.
• Characteristics: It is a subconscious process based on past experiences, knowledge, and unconscious pattern
recognition.
• Subjective and Personal: Intuition is subjective and varies from person to person. It's often difficult to explain
or articulate logically.
• Role in Decision Making: Intuition can influence decision-making, especially in situations where there's
 Characteristics of Entrepreneurs
1. Self confidence & multi-skilled – make product, market
it & count the money - & have confidence to move
through unchartered waters.
2. Confident in face of difficulties & discouraging
circumstances
3. Innovative skills – not an inventor in traditional sense
but able to carve out new niche in the market, often
invisible to others
4. Results-oriented
5. A risk-taker – taking measured risk
6. Total commitment – hard work, energy & single-
mindedness are essential elements of entrepreneurial
CHARACTERISTICS OF SUCCESSFUL
ENTREPRENEURS
6. Independent & achiever
7. Opportunity grabber
8. Information seeker
9. Believer in quality and efficiency
10. Managerial skill and strong team builder
11. Hard working spirit
12. Go getter & never say die spirit
13. Independent and self confident
Leaders ,Entrepreneurs,managers,visionaries
• Leaders:
• Focus: Leaders are individuals who guide, motivate, and inspire others
towards a common goal or vision. They focus on influencing and
empowering people to achieve objectives.
• Traits: Effective leaders possess strong communication, empathy,
decision-making, and motivational skills. They often lead by example
and encourage collaboration and innovation within a team or
organization.
• Role: They can be found in various settings, not limited to business,
and can lead teams, organizations, communities, or movements.
VISIONARIES
Focus: Visionaries are individuals who conceptualize and
articulate a compelling vision of the future. They have a clear,
forward-thinking perspective and can inspire others by sharing
their innovative ideas.
Traits: Visionaries are imaginative, creative, and possess a deep
understanding of trends and possibilities. They often challenge
the status quo and envision unconventional paths to achieve their
goals.
Role: They play a pivotal role in driving change, sparking
innovation, and steering organizations or industries toward new
directions.
MANAGERS
• Focus: Managers are responsible for planning, organizing, and
overseeing day-to-day operations to ensure that tasks and processes
are efficiently carried out to achieve predefined goals.
• Traits: Good managers excel in organization, delegation, problem-
solving, and resource allocation. They focus on maintaining stability,
implementing strategies, and meeting specific targets within a set
structure.
• Role: They typically operate within established systems and structures,
overseeing teams or departments in various fields, ensuring
operational efficiency and productivity.
ENTREPRENEURS
Focus: Entrepreneurs are individuals who identify opportunities, take
calculated risks, and create new ventures or businesses to capitalize on
those opportunities.
Traits: Entrepreneurs are innovative, risk-tolerant, resilient, and highly
adaptable. They combine creativity with a business-oriented mindset
to bring new ideas or solutions to the market.
Role: They initiate and manage startup ventures or businesses,
assuming various roles, including that of a leader, visionary, and
sometimes a manager, especially in the early stages of their venture.
 THE ROLE OF ENTREPRENEURSHIP IN ECONOMIC
DEVELOPMENT
1. Entrepreneurship can be applied in start-up as well as in established businesses
2. Statistical data & analyses of several countries show that small industries have grown faster
than large industries, large industries loose jobs while small industries create new workplaces
3. Most economists agree that entrepreneurship is essential to any economy –
entrepreneurship aids the economy, entrepreneurship is essential to the vitality of any
economy – developed or developing
4. Entrepreneurs create new business, generate jobs for themselves & those they employ, in
many cases, entrepreneurship activity increases competition &, with technological or
operational changes, it can increase productivity
5. Entrepreneurs innovate & innovation is central ingredient in economic growth – Peter
Drucker said, “The entrepreneurs are always searchers for change, responds to it, & exploits it
as an opportunity.”
6. Innovations improve the quality of life by multiplying consumers’ choices. They enrich
people’s lives
7. For all these reasons, governments should pursue policies that encourage entrepreneurship
 ADDITIONAL READING
I. Innovation and Creativity: Entrepreneurs are often the driving force behind new ideas,
products, and services. They bring innovation to the market, introducing novel solutions to
existing problems or creating entirely new markets. This innovation stimulates economic
growth and enhances competitiveness.
II. Job Creation: Small and medium-sized enterprises (SMEs), typically led by entrepreneurs,
are significant contributors to job creation. As businesses grow, they require additional
manpower, thereby reducing unemployment rates and providing opportunities for people to
earn a living.
III. Economic Growth: Entrepreneurial activities contribute to the overall economic expansion.
Successful entrepreneurs generate income, pay taxes, and reinvest in their businesses. This
cycle of investment and growth leads to increased productivity and higher gross domestic
product (GDP)
IV. Technology Transfer: Entrepreneurs often adopt and adapt new technologies to enhance
their products and services. This technology transfer contributes to the overall development
of industries and can lead to increased efficiency and productivity.
 Additional Reading continuation
A. Diversification of the Economy: Entrepreneurship promotes a diversified economy by encouraging the development of
various industries and sectors. A diversified economy is often more resilient to economic downturns and less dependent on a
single industry.
B. Global Competitiveness: Entrepreneurial ventures that expand internationally contribute to a country's global
competitiveness. They bring in foreign exchange, increase market reach, and expose local businesses to international best
practices and standards.
C. Social Impact: Entrepreneurship can address social issues by creating businesses that focus on social responsibility, ethical
practices, and sustainable development. Social entrepreneurship, in particular, aims to solve societal problems while
generating economic value.
D. Fostering a Culture of Initiative: Entrepreneurship encourages a culture of initiative, risk-taking, and self-reliance. It
promotes a mindset of problem-solving and resilience, essential for navigating the challenges of a dynamic and competitive
global economy.
E. Wealth Generation: Successful entrepreneurs have the potential to accumulate wealth, both for themselves and their
communities. Wealth creation can lead to higher living standards, improved infrastructure, and increased investment in
education and healthcare.
F. Regional Development: Entrepreneurship can play a vital role in regional development by creating economic hubs and
fostering local industries. It helps reduce regional disparities by promoting economic activities in areas that may otherwise be
economically underdeveloped
In summary, entrepreneurship is a powerful driver of economic development, contributing to innovation, job creation, economic
growth, and overall societal well-being. Policymakers and societies often recognize the importance of fostering an environment
The concept of the window& corridor
principle
A window is a time horizon during which opportunities exist before something
else happens to eliminate them.
Literally, every successful product and service has had an optimal period of time
for commercialization.
Those introduced too early have usually failed, and those introduced too late
suffered from crowded markets.
The corridor principle suggests that opportunities evolve from entrepreneurs being
positioned in similar work or having had experience with related ventures so that
when a window opens it is easy for them to move quickly into new venture.
A corollary is that as a venture becomes expert in one activity, related
opportunities evolve, and many of them are more rewarding than the initial
activity.
 Types of entrepreneurs
• The necessity entrepreneur (NE), who is a person who started a business because he/ she “has no
better choices for work”.
• The opportunity entrepreneur (OE), who is a person who started a business to take advantage of
a business opportunity
• Lifestyle entrepreneurs prioritize the creation of a business that supports their desired lifestyle.
Their primary motivation is to achieve a work-life balance and design a business that aligns with
their personal goals and values.
• Cultural Entrepreneurs: Cultural entrepreneurs are individuals who start businesses related to
arts, culture, or creative industries. They may include artists, musicians, writers, and others who
turn their passion for creativity into a business venture.
• Hustler Entrepreneurs: Hustler entrepreneurs are known for their relentless work ethic and
determination. They may not necessarily focus on innovative products or services, but they excel
in executing ideas through hard work, persistence, and adaptability.
• Imitator Entrepreneurs: Imitator entrepreneurs replicate successful business models or ideas
with minor variations. While they may not be the originators of the concept, they capitalize on
proven models and tailor them to specific markets or niches.
TYPES OF ENTREPRENEURS
CONTINUATION
i. Small Business Entrepreneurs: These entrepreneurs typically start and operate small businesses. They
may be motivated by a desire for independence, personal fulfillment, or to meet the needs of a local
community. Examples include restaurant owners, boutique proprietors, or service providers.
ii. Scalable Startup Entrepreneurs: These entrepreneurs aim to create scalable and high-growth startups.
They often seek venture capital funding and focus on disruptive innovations. Their goal is to rapidly
expand their businesses and capture a significant market share. Examples include founders of tech startups,
biotech companies, and other high-growth industries.
iii. Social Entrepreneurs: Social entrepreneurs are driven by a desire to address social or environmental
issues. They create businesses with a mission to make a positive impact on society. Profitability is often
secondary to the social or environmental goals. Examples include organizations working on clean energy,
poverty alleviation, or education initiatives.
iv. Serial Entrepreneurs: Serial entrepreneurs are individuals who start and manage multiple businesses over
their career. After achieving success with one venture, they move on to new opportunities. These
entrepreneurs thrive on innovation and enjoy the challenge of building and growing businesses.
v. Corporate Entrepreneurs (Intrapreneurs): Entrepreneurs within established companies are often
referred to as intrapreneurs or corporate entrepreneurs. They work on innovative projects within the
framework of a larger organization, aiming to bring new products or services to market and drive growth
from within.