BA 108: Entrepreneurship

Theory & Principlesby

MPIRIIRWE COMFORT

Course description and objectives:

• The course introduces the students to the basic concepts in entrepreneurship, identification of opportunities, business evaluation and analysis. It provides students with the skills needed to effectively organize, create, develop, and manage own business. The course gives students an opportunity to make creative business decisions to meet current needs of business venture.

Course objectivesThe course aims at enabling students to:• Understand what entrepreneurship is and who an entrepreneur is.

• Identify, evaluate, and select business opportunities.

• Perform a self-evaluation to match their own characteristics with that of an entrepreneur.

• Carry out feasibility and viability of an investment opportunity

• Analyze and exploit the Entrepreneurial Environment provided by the political frame work.

Learning outcomes

At the end of the course the students should be able to;

• Perform self evaluation to match business opportunities

• Analyse the entrepreneurial environment• Analyse start-up survival, sustainability of an investment opportunity ,

• identify their own personal entrepreneurial potential, ability, and competences

• identify, and exploit business opportunities and resources

Content outline

• Entrepreneurship-Scope, (3 Hrs) Introduction, Entrepreneurship Defined, Importance of Entrepreneurship, Barriers to Entrepreneurship

• Entrepreneurship theories: (5 Hrs) Economic theories; Sociological theories ; Psychological theories ; Entrepreneurial Process;

• The Entrepreneur, (3 Hrs) Entrepreneur defined; Types of entrepreneurs; Emergence of entrepreneurs; Entrepreneurial traits

• Creativity and Innovation: (5 Hrs) Creativity and innovation defined; creativity and innovation processes; barriers to creativity and innovation; Factors that enhance creativity and innovation

• Feasibility study and analysis: (8 Hrs) Feasibility and Viability analysis; Idea generation; Process of carrying out a feasibility study; Feasibility Analysis Aspects; Components of a Feasibility report (Market feasibility, Technical feasibility, Financial feasibility, Operational feasibility)

• Business planning: (8 Hrs) Types of business plans; Uses of business plans; Users of business plans; Business Plan development process (Strategic focus review, Environmental Audit/Analysis, Developing Goals and Objectives, Developing appropriate strategies, Developing implementation plan, Developing a monitoring and control plan)

• Components of a business plan: (8 Hrs) Cover page, Table of Contents, Introduction, Company background; Shareholders/ Ownership; Legal status of the business; Vision, Mission, Core Values; Environmental Analysis; Target Market; PEST Analysis; SWOT Analysis; Supplier Analysis; Competitor Analysis.

• Business Strategies:- (5 Hrs) Marketing; Financial, Production, Procurement, IT, Human Resources; Implementation Plan:- Activity Timeframes, Budgets; Monitoring and Control Plan

Indicative sources

• Gupta, C.B. and Srinivasan, N.P. (1996) Entrepreneurship Development, Sultan & Chand & Sons Publishers, New Delhi, India

• Holt, D (2001), Entrepreneurship: New Venture Creation, Prentice Hall International, New Delhi, India

• Kumar, S. (2003) Entrepreneurship Development, New Age International publication.

• Peters, H. & Peters, M. (1995) Entrepreneurship: Starting, developing and managing a new enterprise. Richard Irwin Inc. London

• Robert, D & Peters, H (1992), toward an organization model for entrepreneurial education.

• Thomas, W., & Scarborough, N.M. (2004) Effective small business management: An entrepreneurial approach, Prentice Hall International, New Delhi, India

• Thompson, A. (2000) Understanding the proof of Business Concept, New Age International publication.

• Timmons, J.A., & Spinelli, S., (2003) New Venture Creation : Entrepreneurship for the 21st Century Boston : 6th Ed, McGraw-Hill

• Wickham, P.A (2004) Strategic Entrepreneurship 3rd Ed, London Pitman Publishing

INTRODUCTION TO ENTREPRENUERSHIP

• Entrepreneurship and enterprising behavior are important learning objectives in Uganda today.

• Worldwide, entrepreneurship is becoming a ‘hot topic’ in many educational institutions not only as an avenue for improving competitiveness of nations and communities in the globalised markets, but also as a means of increasing creativity and flexibility required in today’s fast changing environment.

• Although entrepreneurship is commonly associated with starting and running one’s own businesses, it can also be considered as away of life that is dominated by, and thrives on challenges.

• Entrepreneurial training therefore comes down to a lot of lessons in how to live, and be more effective human being – a winner.

• It is about appreciating and thriving in challenges, being happy and successful in whatever you attempt, by always thinking out new innovative ideas and being able to communicate the idea to other people logically and with passion.

• Entrepreneurship trains us to think extremely clearly, communicate well and position our idea as a winner.

• It trains us to sell the idea to various stakeholders by demonstrating how and why it is better than the other ideas out there competing for resources.

• It trains us to plan, set up goals and measure progress toward those goals. This means learning to make hard choices, set priorities and stick with them.

• Entrepreneurship is about always looking into the future and deciding what’s important.

• It is therefore important to promote entrepreneurship education in Uganda as a stimulus to enterprising behavior among not only those aspiring to start and run business enterprises, but also those wishing to develop the necessary survival skills in today’s fast changing world.

The Entrepreneurship Course

• A course in entrepreneurship was first offered at the Harvard Business School in 1947 and as an MBA major at the University of Southern California in 1972.

• An Interest Group on Entrepreneurship was formed in 1974 as a part of the Division of Business Policy and Planning of the Academy of Management, and achieved full status as the Entrepreneurship Division of the Academy of Management in 1987.

• Although more than 20 different journals on entrepreneurship or small business are published today, the first such journal “The Journal of Small Business Management” was only started in 1963.

• Most of the subject matter in entrepreneurship has been developed in the past 25 years, which implies that much of the material is still ambiguous and under research, with very few empirically tested hypotheses and even fewer generalizations.

 

• Moreover, Entrepreneurship is largely a multidisciplinary field, having originated from a number of disciplines mainly economics, sociology, and psychology.

• Although many experts criticize the ambiguity associated with lack of agreed definitions and generalizations, it is important to note that this is a characteristic of a young and fast growing field that breeds dynamism and progress.

Who is an entrepreneur?What do you think?

Definition of an entreprenuer

• A universal definition of an entrepreneur is still elusive.

• Indeed, some scholars have argued that a single universally accepted definition of an entrepreneur is not important because entrepreneurs by nature strive for change, thus creating a large diversity of characters that end up being referred to as entrepreneurs.

• What is required, they argue, is clear awareness of the phenomenon being discussed when people talk about entrepreneurs

The Middleman - Richard Cantillon (1751)

• Richard cantillon (1751) was the first to use the word entrepreneur in the form it is used today. He was borrowing from the French word “entreprendre”, which literally means “to undertake” but also has another connotation that means “an in between taker – someone who gets between a supplier and the market and takes a profit by facilitating the exchange process.” He described an entrepreneur as a “Risk taker” who bought at certain prices and sold at uncertain prices.

The merchant - J. B. Say (1800)

• J.B say (1800) defined an entrepreneur as one who shifts economic resources from an area of lower to an area of higher economic yield. According to this definition, a maize trader who buys maize in the village, and brings to town where the price (yield) is higher is an entrepreneur.

•  

The Risk Taker - Knight, (1921)

•  However, (knight, 1921) introduced the element of uncertainty in the definition of entrepreneurs. He defined Entrepreneurs as the organizer of uncertainty, that is, they recognize and seize opportunities that result from uncertainty, eg not everyone bringing maize from the rural to the urban market, where yields are higher, qualifies to be an entrepreneur. The element of uncertainty has some input in the definition. He distinguishes between uncertainty and risks that can be insured. The element of uncertainty, which inevitably results in higher risks, is needed to reap the entrepreneurial profits.

The Innovator – Joseph Schumpeter (1934)

• The nearest definition to today’s entrepreneur is based on Schumpeter, who defines an entrepreneur as one who destroys the existing economic order by introducing new products and services, by creating new forms of organization, or by exploiting new raw materials.

• In this regard, an entrepreneur is normally viewed as a deviant who goes against or beyond the norm, social custom, and tries out the unfamiliar products, methods or services.

The arbitrageur- kirzner (1973)

• In the 21st Century, information has become a basis for competitive advantage. As a result Kirzner (1973) defined an entrepreneur as one who exploits information imperfections in order to bring an inherently disequilibrium market into eventual equilibrium in order to make a profit.

• Once an entrepreneur recognizes a market opportunity, and opportunities are abundant in a situation of disequilibrium, he acts on it to improve his position. In so doing, he helps to move an inherently disequilibrium market closer to equilibrium. This is the basis of the definition of an entrepreneur, as an arbitrageur that equilibrates markets.

Other Definitions ;

• Entrepreneurs are people who always search for change, respond to it and exploit it as an opportunity. (Drucker, 1986)

• Entrepreneurs are especially motivated and talented individuals who see potentially profitable opportunities and organize resources in order to exploit them (Saha, 1989).

• An Entrepreneur is one who specializes in taking judgemental decisions about the coordination of scarce resources (Carson, 1982)

• Holt (1992) proposed that "Entrepreneurs are those who incubate new ideas, start enterprises based on those ideas...have vision for growth, commitment to constructive change, persistence to gather necessary resources, and energy to achieve unusual results."

• An entrepreneur is one who sees a need and brings together resources to meet that need.

DEFINING ENTRPRENEURSHIP

• The definitions of an entrepreneur are varied and not very useful in their diversity. To attempt to overcome these limitations, some scholars have moved from trying to define entrepreneurs to describing what entrepreneurs do.

• What entrepreneurs do is called entrepreneurship and people who engage in entrepreneurship are called entrepreneurs. This argument moves us from viewing entrepreneurship as a personality but a process.

• Each definition is somewhat restrictive since entrepreneurs are found in all professions: education, medicine, research, law, architecture, engineering, social work, accounting, procurement, marketing ,etc.

• To include all types of entrepreneurial behavior, the following definition of entrepreneurship apply this course unit;

 

• Robert Ronstadt (2002) , …… Entrepreneurship is the dynamic process of creating incremental wealth. The wealth is created by individuals who assume the major risks in terms of equity, time, and/or career commitment or provide value for some product or service.  

• Holt H David (2001) …… Entrepreneurship seeks to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by products

 • Peters Michael and Hisrich Robert (2002) ,,,,,,, Entrepreneurs is the process of creating something different 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.

• A recent conference on Entrepreneurship defined it as an attempt to create value through recognition of business opportunities, the managernent of risk appropriate to the opportunity, and through the communicative and managerial skills to mobilize human, financial, and material resources necessary to bring the project to fruition/completion

• In general, Entrepreneurship is a process that defines what entrepreneurs do and how they go about doing their act that eventually leads to them being referred to as entrepreneurs. In reality, what entrepreneurs do vary widely in detail, however, there is a common pattern in all these activities that ultimately entrepreneurial activity and entrepreneurship. These patterns include

Accumulating and Using Experience

• This involves exploring, discovering and assessing ones surroundings; being geographically, physically and mentally mobile in order to learn with an aim of knowing and expanding knowledge. 

• It is this knowledge that is developed into familiar patterns that manifest itself in know-how, know-who, know-where, know-what, know-when and know-why that enables entrepreneurs to easily spot and exploit opportunities almost instinctively.

• Knowledge breeds experience which makes the strange more familiar as factors keep repeating themselves in ever increasing clarity.

• Experience enables entrepreneurs to master the fundamentals, which allows them to effectively react to situations and improvise with intuition.

Thinking and Acting Systematically

• involves understanding how variables impact on each other; continually adjusting ends, means, values, and circumstance with an awareness that all four of these decision dimensions are variables and partial determiners of each other. It's this fluid view of the variables that allows entrepreneurs the flexibility to determine the ends, forge the means, shape circumstance, and understand their value limits. 

• This calls for complete understanding of the policies, procedures, and rules of the system; including how and when to stretch them beyond the limits and when to strictly adhere to them.

Continually Testing the Limits

• means continually analysing all limits and elements of the situation, one’s abilities and willingness to act, and the ability and willingness to act of allies and adversaries.

• It involves appreciating that the world has no defined rules of fairness, and that the playing field is never level.

• So testing limits involves determining which way the field slants and how to slant the field in one’s favour in order to keep winning.

Committing to a worthy "Cause

• This means having a strong sense of mission, and pursuing it with an obsession/passion.

• It is this obsession that drives entrepreneurs to ignore negative signals, social or cultural norms, and possibly law in the pursuit of their objectives.

•   They have a clear understanding of cultural norms and the law, which they embrace. They are quick to hold their competitors to them whenever it suits them, but find a way around them without loosing credibility when they threaten or block their “Cause”

Embracing competence• It involves recognizing one’s competence and limits, and those of other; recognizing and always being attracted to talented people. This involves attracting, recruiting, managing, developing and rewarding talents.

Shaping and Adapting to situations

• It involves reading situations and shaping both oneself and the situations to their advantage; having the flexibility to adjust their ethics to fit the situation by emphasizing purpose over principle. By allowing situations to dictate actions contradictions sometimes result calling for the entrepreneur’s creativity to maintain credibility.

Taking Fast Action means recognizing the importance of being first, fast and right, striving to seize and take full advantage of being first, fast and recognizes that action skills that get results are more important that perfections that result from immaculate planning.

Making Significant and Enduring change entrepreneurs’ actions have significant impact on the economic, social, cultural ,and political scene By detecting similarities where everyone sees difference and differences where all a significant and enduring difference

•END OF THE LECTURE •GOOD EVENING