Transcript File

ENTREPRENEURIAL SKILLS
ENT3001/3003/4003
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LECTURE #1 & 2
INTRODUCTION TO ENTREPRENEURSHIP
INTRODUCTION TO ENTREPRENEURSHIP
Objectives
 Explain the concept of entrepreneurship
 Outline the rewards and drawbacks of
entrepreneurship
 Identify the main personal , entrepreneurial
characteristics (PEC’s) of successful entrepreneurs
 Identify Supporting Enabling factors (SEF’s)
 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
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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)

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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

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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
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Concept of Entrepreneur


Comes from the French meaning
“between-taker” or “go-between”
Earliest Period



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
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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.
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Concept of Entrepreneur

19th & early 20th Century



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

Middle 20th Century and Beyond




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.
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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
Someone who perceives an
opportunity and creates an
organization to pursue it
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REASONS FOR BECOMING AN
ENTREPRENEUR
To increase earnings
 To introduce a new and creative idea
 To provide a needed service
 To enjoy the satisfaction of developing your own
successful venture
 To become your own boss

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REASONS FOR BECOMING AN
ENTREPRENEUR
independence
 enjoyment, challenge, more room for creativity
 personal satisfaction
 feeling of autonomy and freedom

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REWARDS OF ENTREPRENEURSHIP
Opportunity to gain control over ones own
destiny
 Opportunity to reach one’s full potential
 Opportunity to benefit financially
 Opportunity to contribute to society and be
recognized for one’s 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
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established
DRAWBACKS OF
ENTREPRENEURSHIP

Which drawbacks are most disturbing to you and why?

Can anything be done to reduce them?
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HOW TO REDUCE THE DRAWBACKS
OF ENTREPRENEURSHIP
Mental preparation
 Planning – Develop a thorough Business Plan
 Research
 Training
 Start small
 Start & operate business on the side
 Start early

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KEY ELEMENTS IN
ENTREPRENEUR’S BACKGROUND
√
√
√
√
√
Supportive childhood family environment
Having a parent who is self-employed helps
Education is important
Aged 22 – 45 when starting venture
Work history: dissatisfied with company job but
has technical knowledge
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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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PEC’S OF (SUCCESSFUL) ENTREPRENEURS
Committed to success
 Have high work standards
 Self-motivated & able to
motivate others
 Enjoy working and sharing
ideas with people at all levels
 Hardworking
 Enthusiastic and Optimistic
 Accept Responsibility
 Are good leaders

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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PEC’S OF (SUCCESSFUL)
ENTREPRENEURS
Trustworthy people
with integrity
 Disciplined and
determined
 Committed to their
projects
 Self confidence

Enjoy a challenge
 Energetic, always on
the go
 Information seeking
 Persuasive and good
networkers

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PEC’S OF (SUCCESSFUL)
ENTREPRENEURS
There is really no neat set of behavioral
attributes that allow us to separate
entrepreneurs from non-entrepreneurs
 From studies done, it has been observed that
entrepreneurs have a greater desire to be in
control of their own fate, having a strong desire
to be successful / high achiever

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PEC’S OF (SUCCESSFUL)
ENTREPRENEURS
Are PECs innate or can they be taught?
 Two opposing schools of thought:

1.
True entrepreneurs are born with special personality
traits that create business. These traits cannot be taught
or learned.
2.
Entrepreneurial tendencies can be learned and developed
through experience and business training.
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SUPPORTING & ENABLING FACTORS
(SEF’S)

Supporting and Enabling factors (SEF’s) 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 SEF’s concedes that for success to
occur the entrepreneur must have PEC’s as well
as SEF’s which contributes to success.
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SUPPORTING & ENABLING FACTORS
(SEF’S)
Work experience
 Prior business experience
 Finance knowledge
 International experience
 Technical support
 Recession / crisis
 Outside support
 Owning assets
 Family support
 Market growth

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ENTREPRENEURSHIP – THE FEAR OF
FAILURE
 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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FACTORS INFLUENCING THE GROWTH
OF ENTREPRENEURSHIP
Capital
Ideas
Technology
People
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
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.
Sometimes motivated by necessity – it is said
that “necessity is the mother of invention”
Some persons have no option but to hustle
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Social Factors
The
fulfillment of being your own
boss

The desire for self actualization
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Social Factors Cont’d
The
role of the schools & other training institutions
Entrepreneurship
training is being introduced in schools
especially at the tertiary level
HEART
Trust/NTA ensures trainees are exposed to
entrepreneurship
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Social Factors Cont’d
The
role of women in
entrepreneurship
More women are engaging in
business – to support their
family and fulfill higher
aspirations.

FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Cultural factors
 Ethnic groupings
Some
ethnic groups (Chinese, Jews, Indians) have a tradition
of being involved in business in Jamaica.
Cultural
Cable
penetration
TV – showing foreign cultures; promoting wealth &
affluence
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
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
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Economic
High unemployment
Increases the availability of unskilled &
skilled labour at reasonable pay rates
The effect of interest rates

High rates reduce ability to repay loans, makes
loan financing unattractive for funding business

Stable exchange rates

Helps keep prices constant, builds business
confidence

FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Economic
Information & Communications age
Technology replacing employees
Technology increases business efficiency, but
reduces need for certain human skills.
Creativity, innovation & business start-up
seen as solutions
Opportunities are created for start-up of new
high tech businesses
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Economic
Globalization & Liberalization
Removal of trade barriers between
& within countries
Increases trade with the rest of the
world
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
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
FACTORS INFLUENCING THE GROWTH OF
ENTREPRENEURSHIP
Globalization
The world becoming “smaller”
Transportation & communication are easier
and faster
General state of change
Paradigm shifts taking place in expectations
& possibilities
FACTORS INFLUENCING THE GROWTH OF
ENTREPRENEURSHIP
Globalization
Technology used to do things better, to do new
things
Mobile technology
Empowering people. Bringing the world to you.
Control your view of the world at the touch of a button
Robotics, Management Information Systems, Expert
Systems,
Marketing possibilities via the Internet
Showcase your products and services to the world at
a small cost
FACTORS INFLUENCING THE GROWTH OF
ENTREPRENEURSHIP
Globalization
The
impact of liberalization on local &
international markets
Lowering/removal
Exporting
Lower
of barriers to trade of goods & services
possibilities
import cost, increased specialization, increased
export possibilities
FACTORS INFLUENCING THE GROWTH OF
ENTREPRENEURSHIP
Globalization
Mobility

of labour / jobs
Live anywhere / work anywhere
possibilities increasing via telecommuting,
telemarketing
FACTORS INFLUENCING THE GROWTH OF
ENTREPRENEURSHIP
Regionalization - one component of
Globalization
Regional
trading blocks
CARICOM
- Caribbean Common Market
Allows free movement of capital & labour

CSME
– CARICOM Single Market & Economy
Deepening the integration process, provides a unified market
for goods within CARICOM

FACTORS INFLUENCING THE GROWTH OF
ENTREPRENEURSHIP
Regionalization - one component of
Globalization
Regional
FTAA
trading blocks
– Free trade area of the Americas
Opening up of markets (North America,
Central America, South America & the
Caribbean)

NAFTA
– North American Free trade Agreement
(Canada, USA & Mexico)
EU
– The European Union
FACTORS INFLUENCING THE GROWTH OF
ENTREPERNEURSHIP
Political
What specifically have governments done to
promote entrepreneurship
Adopted
a capitalist free market economy for Jamaica
Encourages
the private sector to be the engine for
economic growth
FACTORS INFLUENCING THE GROWTH OF
ENTREPERNEURSHIP
Political
Encourage
& speak of the need for
entrepreneurship
HEART Trust/NTA created an entrepreneurial
unit for training, development & promotion of
entrepreneurship in Jamaica

FACTORS INFLUENCING THE GROWTH OF
ENTREPERNEURSHIP
Political
Government
Have
policies
been reducing Government ownership of
businesses by privatizing state owned enterprises (JPS,
the telecommunications sector, Air Jamaica, the sugar
companies, etc.)
FACTORS INFLUENCING THE GROWTH OF
ENTREPERNEURSHIP
Political
Government
policies
Government’s
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.
FACTORS INFLUENCING THE GROWTH OF
ENTREPERNEURSHIP
Political (Cont’d)
Business facilitation strategies
E-government
initiatives e.g. Jamaicatradepoint.com
To reduce bureaucracy and lost man-hours; one stop shop for
importers/exporters. Certain taxes can be paid on-line

Government
entering into bi-lateral agreements with friendly
governments to facilitate business.
FACTORS INFLUENCING THE GROWTH OF
ENTREPERNEURSHIP
Political (Cont’d)
Access
to loan and grant funds for
business start-up
The Jamaica Business Development
Company


JAMPRO Jamaica Trade & Invest
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Political (Cont’d)
Business
Low
facilitation strategies
interest rate schemes for business loans
Lowering
tape
of import duties, removal of unnecessary red
FACTORS INFLUENCING THE GROWTH OF ENTREPERNEURSHIP
Political (Cont’d)
Business
facilitation strategies
Provision
of technical assistance
(JBDC)
Tax
holidays for businesses which
create employment
National Infrastructure Improvements
e.g. Highway 2000; the potential benefits,
jobs, other economic spin-offs, the multiplier
effect

CHALLENGES TO THE GROWTH
OF ENTREPERNEURSHIP IN
JAMAICA
CHALLENGES TO THE GROWTH OF ENTREPERNEURSHIP IN JAMAICA
High
Input costs
Cost
of economic inputs- due to depreciating exchange
rate e.g. Imported materials, rent etc.
Security
Utility
and other costs
Transportation
Labour
of workers
laws – sometimes unfriendly to business
CHALLENGES TO THE GROWTH OF ENTREPERNEURSHIP IN JAMAICA
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
CHALLENGES TO THE GROWTH
OF ENTREPERNEURSHIP IN
JAMAICA
Geography
Where
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.
CHALLENGES TO THE GROWTH
OF ENTREPERNEURSHIP IN
JAMAICA
Anti-entrepreneurial Education System
The system tends to unfairly promote the
Sciences as superior to the Arts and other
creative endeavours
Entrepreneurship is traditionally promoted
as being for persons who are unable to
progress in the traditional professional
streams
CHALLENGES TO THE GROWTH OF
ENTREPERNEURSHIP IN JAMAICA
Open
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.
MISTAKES ENTREPRENEURS MAKE

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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MISTAKES ENTREPRENEURS MAKE
Overconfidence
 Uncontrolled Growth
 Poor Location
 Improper Inventory Control
 Incorrect Pricing
 Inability to make the “Entrepreneurial
Transition”

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HOW TO AVOID THE PITFALLS
Know your business in depth
 Set clear goals
 Develop a Solid Business Plan
 Learn to manage people effectively
 Manage Financial Resources
 Understand Financial Statements

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SUMMARY
 Concept
of Entrepreneurship
 Rewards
 PEC’s
of Successful Entrepreneurs
 Factors
 How
and drawbacks of Entrepreneurship
driving the growth of Entrepreneurship
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to avoid the mistakes of Entrepreneurship
END OF LECTURE #1 & 2
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TUTORIAL ACTIVITY
 What

List five of them
 What

are your strong PECs?
are your weak PECs?
List five of them
 You
will need to devise ways of improving
each weak area

Identify one specific strategy that you could
use to improve each weak PEC
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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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TOPIC TO BE REVIEWED FOR
DISCUSSION
Importance of Entrepreneurship in Economic
Development
 Assess
the impact of entrepreneurship on
national development.
Research the role of agencies which support the growth
of entrepreneurship
 What are the emerging business opportunities?

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