APT 3083 Week 01 Wickham

APT 3083 STRATEGIC ENTREPREURSHIP week 01 The Nature of Entrepreneurship
Mohammad nizamuddin bin abdul rahim

Fakulti keusahawanan & perniagaan
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The Nature of Entrepreneurship
What is entrepreneurship?
Origin lies in 17th century France : Entrepreneur was an individual commissioned to undertake a particular commercial project by someone with money to invest. Concepts derived:
Entrepreneurship What the entrepreneur
Entrepreneurial Is an adjective describing how the entrepreneur undertakes what they do particular style to what entrepreneurs do.
Entrepreneurial process In which the entrepreneur engages is the means through which new value is created as a result of the project entrepreneurial
does
week 01 APT 3083 STRATEGIC ENTREPREURSHIP
venture
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What is entrepreneurship?
Entrepreneurs: Has economic & social dimension Wealth creation is a general managerial activity Characterized by a particular approach to wealth creation
Is an individual who lives & functions within a social setting

Are not characterized by every action they take, but by a particular set of actions aimed at the creation of new wealth with their ventures. Can be considered as: A manager undertaking an activity i.e. in terms of the particular tasks they perform & the way they undertake them week 01 An agent of economic change i.e. in terms of the effects they have on economic systems & the changes they drive An individual i.e. in terms of their
psychology,
personality personal characteristics
&
APT 3083 STRATEGIC ENTREPREURSHIP
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The entrepreneur perspectives

The entrepreneurs tasks The role of entrepreneur
The entrepreneur as a person

The great person social misfit personality type personality trait social development approaches cognitive approaches
Owning organizations founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
Combination of economic factors providing market efficiency accepting risk maximizing investors returns processing of market information
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Owning organizations founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
Ownership lies with those who invest in the business & own its shares the principals whereas the actual running is delegated to professional managers or agents. Entrepreneur owns & manage their own business dual roles. BUT!!! many people are also recognized as entrepreneur even if they do not own the venture they are managing.
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Owning organizations Founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
General perception entrepreneur as someone who has established a new business organization. Entrepreneur is recognized as the person who undertakes the task of bringing together the different elements of the organization (people, property, productive resources, etc.) & giving them a separate legal identity.
BUT!!! They are also entrepreneurs who buy into organizations, develop them, or absorb them into existing organizations.
make organizational world.

Entrepreneurs
major
changes
in
their
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Innovation is a crucial part of the entrepreneurial process. Innovation as fundamental to the entrepreneurial process of wealth creation. Innovations encompasses any new way of doing something so that value is created. It can mean a new product or service, and can also include new way of delivering an existing product or service, new methods of informing the customer about a product & promoting it to them, new ways of organizing the company, or even new approaches to managing relationship with other organizations.
Innovation is doing something in a way which is new, different & better.

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An opportunity is a gap in a market where the potential exists to do something better & thereby to create value.
If they are to be exploited, they must actively sought out.

Entrepreneurs must constantly scan the business landscape watching for the gaps left by existing players in the marketplace.
Having identified them, the entrepreneur must pursue them with a suitable innovation.
The real value is created when that opportunity is exploited by something new which fills the market gap.
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Entrepreneur are characterized by the way they bring some sort of expertise to their jobs.
They have a special ability in deciding how to allocate scarce resources in situation where information is limited.
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One special skill that entrepreneurs would seem to contribute to their ventures is leadership. In order to drive their innovation to market, they have to lead other people, both from within their organization & from people outside such as investors, customers & suppliers.. Leadership is an important factor in entrepreneurial success & it is often a skill that is exhibited well by the entrepreneur.
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It would seem that entrepreneurs take on no task that is fundamentally different from the tasks performed by ordinary managers at some time or other.
Entrepreneur is a manager!
To distinct entrepreneur from an ordinary manager, it must be in terms of what the entrepreneur manages, how they manage, their effectiveness and the effect they have as a manager.
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The entrepreneurs tasks primary economic factors: the raw materials that nature offers up, the physical & mental labor that people provide, and 3 The role of entrepreneur

Entrepreneurship as a kind of 4th factor which acts on the other 3 to combine them in productive ways. Innovation is simply finding new combinations of economic factors.
capital.
Value is created by combining these 3 things in a way which satisfies human needs.

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The entrepreneurs tasks The most efficient economic systems is one in which unimpeded markets determine the price at which goods are bought & sold. Efficient means that resources are distributed in an optimal way, that is the satisfaction that people can gain from them is maximized. week 01 The role of entrepreneur

Entrepreneurs provide efficiency by creating a competitive market and being willing to accept a lower profit themselves and offer the goods at a lower price.
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The entrepreneurs tasks The lack of knowledge about the future is called uncertainty. If we know the likelihood of various possibilities then uncertainty becomes The role of entrepreneur

Entrepreneurs are good at managing the situations where risk is high; that is, when faced with a situation of high uncertainty they are able to keep their heads, to continue to communicate effectively, & to carry on making effective decisions.
risk.
Entrepreneur accept risk on behalf of other people. They provide a service by taking this risk off peoples hands. week 01
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The entrepreneurs tasks The role of entrepreneurs is one of maximizing the returns that shareholders get from their investments. They create & run organizations which generate long-term profits on behalf of the investors that are higher than would otherwise have been the case. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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The role of entrepreneur

Entrepreneurship takes into account the interests of a wide variety of stakeholders groups, not just those of investors.

Entrepreneurs keep an eye out for information that is not being exploited.
By taking advantage of this information, they make markets more efficient & are rewarded out of the revenues generated. week 01
This information is information about
opportunities.
Entrepreneurs are information processors is which in turn pursue opportunities & provide competitive efficiency..
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Entrepreneurs are often regarded as a great person.
Entrepreneurs can certainly be inspiring, & may provide motivating role models.

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Entrepreneurs are social misfits at heart.

Someone is an entrepreneur for an essentially negative reason; they are unable to fit into existing social situations. As a result the entrepreneur is driven to create his or her own situation. It is this that provides the motivation to innovate & build new organizations. Many entrepreneurs achieved success after comparatively unhappy & lackluster careers working as professional managers.
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Often they relate their inability to fit into the established firm as a factor in driving them to start their own venture.
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Entrepreneurs are often characterized by privation & hardship which left the person with a lack of self-esteem, a feeling of insecurity & a repressed desire for control.
This leads to rebellious & deviant behavior which limits the persons ability to fit into established organizations.
Entrepreneurial activity is a way of coming to terms with this. It provides not only a means of economic survival but also an activity which enables a reaction against anxiety left by psychological scars. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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There is a common impression that entrepreneurs tend to be flamboyant extroverts who are spontaneous in their approach & rely on instinct rather than calculation.
Detailed studies, however, have shown that all types of personality perform equally well as entrepreneurs.
Personality type, as measured by personality test does not correlate strongly with entrepreneurial performance & success. E.g., introverts are just as likely to be entrepreneurs as are extroverts. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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David McClelland identified a need for achievement as the fundamental driving trait in the personality of successful entrepreneurs.
Other factors which have also been viewed as important include:

the need for autonomy the need to be in control of a situation a desire to face risk creativity a need for independence the desire to show leadership qualities. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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Entrepreneurs are not born, they are made. A number of factors are seen as significant to the social development of entrepreneurs. In general, they fall into one of the three broad categories:
innate factors such as intelligence, creativity, personality, motivation, personal ambition, etc. acquired learning, training, experience in incubator organizations, mentoring, existence of motivating role models, etc. social - birth order, experiences in family life, socioeconomic group & parental occupation, society & culture, economic conditions, etc. week 01
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Cognitive science is the branch of psychology that attempts to develop an understanding of how we as humans obtain & process information & use it to make sense of the world.

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Entrepreneurship: a style of management

An entrepreneur is a manager. They are someone who manages in an entrepreneurial way. Entrepreneurial management is characterized by three features: A focus on change Entrepreneurs are managers of change A focus on opportunity Entrepreneurs are attuned to opportunity. They constantly seek the possibility of doing something differently & better. They innovate to create value. Entrepreneurs are more interested in pursuing opportunity.
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Organization-wide management The entrepreneurs manages with an eye to the entire organization.
They bring people. Money, ideas & resources together to build new organizations & to change existing ones.
They benchmark themselves against organizational objectives.
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Entrepreneurship: a style of management

Entrepreneurial managers as venturers Entrepreneurs as a manager who is willing to venture to create change & to pursue opportunity rather than just to maintain the status quo & conserve resources. The effective entrepreneur does all these things when appropriate. There are times when the status quo is worth sustaining, & times when it is unwise to expose resources. Part of the skill of the effective entrepreneur is knowing when not to venture. However, when the time is right, the entrepreneurial manager is willing to step forward.

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The human dimension: leadership, power & motivation

One characteristic that distinguishes entrepreneurs from their more conventional colleagues it would likely be found not in their strategies or analytical insights but in the human dimensions; the way in which they use leadership & power & their ability to motivate those around them. Leadership
The power to focus & direct the organization

Power The ability to influence the course of action within the organization Motivation The process of encouraging an individual to take particular courses of action week 01 APT 3083 STRATEGIC ENTREPREURSHIP
Self motivation why am I doing this? Learning from mistakes Enjoying the rewards
Motivation of others understanding personal
drives Setting goals Offering support Using rewards
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Types of Entrepreneur
Copyright 2011 by Mohammad Nizamuddin bin Abdul Rahim, UMK
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Types of Entrepreneur classifying entrepreneurs
Two main approaches in entrepreneurs classification

Entrepreneurs themselves Entrepreneurs ventures
Nascent entrepreneurs
Those planning to start up an initial venture Those running a single business At an early stage of venture development when they are still actively learning are referred to as novice entrepreneurs. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
Singular entrepreneurs
Opportunist entrepreneurs
Who were interested in maximizing their returns from short-term deals
Craftsmen
Who attempted to make a living by privately selling their trade or products.
Were not so much interested in profits as in being able to earn a stable living from their specialist skills.
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Entrepreneurs themselves Entrepreneurs ventures
Nascent entrepreneurs
Singular entrepreneurs Craftsmen Income-orientated

Whose main aim is to secure a steady income
Opportunist entrepreneurs
Growth-orientated
Who pursued opportunities to maximize the potential of their venture.
Independenceorientated
Whose main ambition was to work for themselves. Preferred stability to growth; willing to limit the scope of their ventures
Expansionorientated
Who take the risk of expanding their business & face the challenge of changing their role from being craft operators to being managers of craft operators
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week 01

Entrepreneurs themselves Entrepreneurs ventures Frederick Webster (1977)
Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business

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Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
Brings people, money & materials together to create an entirely new organizations; The classic type of entrepreneur, who identifies an unexploited opportunity & then innovates in order to pursue it

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Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
Goes beyond merely creating a new firm Their innovation is of such importance that a whole industry is created on the back of it They develop not only new products, but also a whole technology to produce them

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Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
A manager who operates within an established firm but does so in an entrepreneurial fashion Usually occupying the chief executive or a senior managerial role, they are called upon to be innovative & to provide dynamism & leadership to the organization, particularly when it is facing a period of change Administrative entrepreneurs are often referred to as intrapreneurs. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
Is an entrepreneur who takes responsibility for owning & running their own venture The business may be small because it is in an early stage of growth, or the owner may actually wish to limit the size of their business because they are satisfied that it gives them a reasonably secure income & control over their life

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Entrepreneurs themselves Entrepreneurs ventures Frederick Webster (1977) Further classifies entrepreneurial venture by the ratio of the amount that is expected to be received as a result of the ventures success (the perceived payoff) & the number of investors involved (the principals). Large payoff: many participants i.e. a major venture with the risk spread widely over a large number of investors. Small payoff: few participants i.e. a limited venture with the risk taken on by a few key investors only. Large payoff: few participants i.e. a major venture with the risk taken on by a few key investors. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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Entrepreneurs themselves Entrepreneurs ventures Landaus (1982) classification of entrepreneurial types
High
Risk bearing
Gambler
Entrepreneur
Low
Consolidator
Dreamer
Low
High
Innovativeness

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High
Risk bearing
Gambler
Entrepreneur
Gambler is the entrepreneur characterized by a low degree of innovation & a high level of risk. The gamble, of course, arises from the fact that without a significant innovation, the entrepreneur is taking a big chance in being better able to deliver value than existing players in the market.
Low
Consolidator
Dreamer
Low
High
Innovativeness

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High
Risk bearing
Gambler
Entrepreneur
Consolidator is the entrepreneur who develops a venture based on low levels of both innovation & risk. This consolidates in that it is really, at best, a marginal improvement on what existing players are doing. Although risk are low, so too must be expected returns.
Low
Consolidator
Dreamer
Low
High
Innovativeness

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High
Risk bearing
Gambler
Entrepreneur
Dreamer is the entrepreneur who attempts to combine a high level of innovativeness with low risk. All entrepreneurs would love to operate here. However, the dream cannot be realized as all innovation, by its nature, introduces risk. The more significant & hence potentially valuable, the innovation, the greater the risk of the unknown.
Low
Consolidator
Dreamer
Low
High
Innovativeness

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High
Risk bearing
Gambler
Entrepreneur
Entrepreneur combines a high level of innovativeness with high risk. This is where true entrepreneurs operate. They must accept risk, but by understanding their innovation & why it appeals to the market, they minimize & manage the risks.
Low
Consolidator
Dreamer
Low
High
Innovativeness

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Technology-based entrepreneurs
- Are specially important in modern business as it is they who are taking advantage of new scientific developments, especially in the areas of IT, biotechnology & engineering science, & offering their benefits to the wider world. Landaus (1982) classification of entrepreneurial types Investors are attracted by the high growth potential of their ventures. Jones-Evan (1995) fourfold categorizations:
Research technical entrepreneur Producer technical entrepreneur User technical entrepreneur Opportunist technical entrepreneur
Pure research entrepreneur
Research-producer entrepreneur
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Research technical entrepreneur

Those whose incubation has been in P roducerenvironment. technical entrepreneur research

Who have been based in academic research environments & who have not had significant commercial experience
User technical entrepreneur Opportunist technical entrepreneur

Who while working in an academic or industrial research environment have had exposure to commercial decision making
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Research technical entrepreneur Producer technical entrepreneur

Those whose incubation has U ser technical entrepreneur included an exposure to decision making in a commercial setting along with experience in O pportunist technical entrepreneur technological development
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Research-producer entrepreneur An individual whose main experience has been commercially based but has involved contact with, & the development of knowledge about, a technical development. This may be because they have been employed in its marketing or sales, or perhaps in procuring that technology for a business.
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One who has no previous exposure to technology but has seen a commercial opportunity in relation to it & has pursued that with a new venture. This type of entrepreneur may call upon a general technical knowledge base & are keen to develop an understanding of the new technology & what it offers.
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The approach to classifying technical entrepreneurs is useful for two key reasons: Landaus (1982) classification of entrepreneurial types
Jones-Evan (1995) fourfold categorizations:
Reason 1
Research technical entrepreneur Producer technical entrepreneur User technical entrepreneur

Reason 2
While in command of the technical aspects of what they are doing, may need support with the commercial management of their ventures. May call upon dedicated technical experts to underpin their commercial moves.
Opportunist technical entrepreneur
It enables investors to judge the managerial balance of the ventures to which they are called upon to commit themselves. An investor seeks not only a good idea, but also one that has a clear market potential & is backed by a managerial team that can not only invent but also deliver that invention to the customer profitably. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Assessment based on: -Employment - managerial - financial - technical; and - strategic criteria

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Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Undertakes a venture to keep occupied during their retirement.

The business is small & based on personal expertise. It is privately funded & has no long-term strategic ambitions.

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Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Are also retired nut show more ambition for their ventures than do senior citizens
They often possess administrative experience & their business are bigger, drawing on a wider range of technical skills Strategic goals may be explicit & employees may be invited to make a personal investment in the future of the venture

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Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Are younger entrepreneurs who aim to make a living from making deals
They may have only limited industrial & technical experience & rely on networks of personal contact Their ventures may be moderately large, but they tend not to have long-term strategic goals. The main aim is to maximize short-term profits. Fund is provided through retained earnings, family contributions & personal loans

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Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Are also younger entrepreneurs who run moderate-sized ventures

Their motivation is based less on short-term profit & more on the sense of achievement & independence that running their own venture gives them They serve a variety of end markets & their ventures may be based on hightechnology products Financing is through retained profits, family contributions & private investment

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Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Are motivated in much the same way as idealists

Their ventures are much larger, reflecting success in the marketplace A variety of products are offered Corporate goals & strategy tend to be much more explicit than in the idealists venture Investment is drawn from a wider variety of sources, including institutional & international agencies week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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Types of Entrepreneur serial & portfolio entrepreneurship

Entrepreneurs are driven by a desire for autonomy, prestige & a sense of achievement, as much as, if not more than, by a desire to make money. This is most evident in that group of entrepreneurs who, having led one business success, move on to start another. Such entrepreneurs, called serial entrepreneurs (sometimes referred to as habitual entrepreneurs), gain their rewards from the establishment & building of businesses, not their long-term management. Serial entrepreneurs, as well as being interested in the start-up & early growth phase of the venture, may also have particular decision-making expertise in these areas of business development, & therefore gain their personal competitive advantage in relation to managing this stage. An entrepreneur who can point to a record of success will also be a more attractive proposition to an investor than one who cannot. The capital generated from an initial venture (retained profits or money made through its sales) may provide a source of funds to start up a new venture. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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The establishment of additional ventures may also reflect the strategic concerns of the entrepreneur. It may be that the competitive advantage gained in the initial business can be successfully transferred to a subsequent one. Further, several businesses may be a way of diluting risk. Management buyouts & buy-ins are fruitful area for serial entrepreneurs. Serial entrepreneurs may be sub-divided into two types:
Portfolio entrepreneurs
Who start new businesses in sequence, only running one at any time.
Sequential entrepreneurs
Those who run simultaneously. several businesses

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Serial entrepreneurs might be classified in the following way:
Defensive serial entrepreneurs

Those who undertake subsequent ventures because of a forced exit from an earlier one. Need not be because of failure, but might be because the venture was sold, or floated on the stock market to pay off venture capital investment.
Opportunist serial entrepreneurs

Those who undertake subsequent ventures because they perceive the opportunity for financial gain, perhaps on a short-term entry-exit basis.
Group-creating serial entrepreneurs

Those who undertake serial entrepreneurship because creating a number of businesses is fundamental to the strategy they are pursuing. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
Deal-making serials use acquisition
as a major part of gaining the new businesses.
Organic serials start new businesses

from scratch & grow them.
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Types of Entrepreneur entrepreneurship & small business management: a distinction

Distinction: - Serve different economic functions -Pursue & create new opportunities differently - fulfill the ambitions of their founder & managers in different ways 3 essential characteristics which distinguish them: Innovation Entrepreneurial venture Usually based on a significant innovation Usually based on a significantly new way of doing something Small business Usually involved in delivering established product or service. an
It is not doing anything essentially in a global sense

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3 essential characteristics which distinguish them: Potential for growth Entrepreneurial venture Usually has a great deal more potential for growth Creates its own market Small business Operates within an established industry & is unique only in terms of its locality. It is limited in its growth potential by competitors in adjacent localities. Operates within a given market

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3 essential characteristics which distinguish them: Strategic objectives Entrepreneurial venture Strategic objectives: - Growth targets - Market development - market share - market position Objectives Small business

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End of lesson 01

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APT 3083 Week 01 Wickham

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APT 3083 STRATEGIC ENTREPREURSHIP week 01 The Nature of Entrepreneurship

Mohammad nizamuddin bin abdul rahim

The Nature of Entrepreneurship

Entrepreneurship What the entrepreneur

week 01 APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

Is an individual who lives & functions within a social setting

personality personal characteristics

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

make organizational world.

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

Innovation is doing something in a way which is new, different & better.

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

If they are to be exploited, they must actively sought out.

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

week 01 APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

APT 3083 STRATEGIC ENTREPREURSHIP

The Nature of Entrepreneurship

The entrepreneur perspectives

The role of entrepreneur

The entrepreneur as a person

The Nature of Entrepreneurship

The entrepreneur perspectives

The entrepreneur as a person

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