Module 10: Engineering Entrepreneurship

Chapter Objectives

At the end of this chapter, you will be able to:

• Discus the basic of entrepreneurship and

it’s risks

• Identify, analyze, evaluate and choose

business opportunity

• Develop new business idea and create

product life cycle

• Search government and private agencies

that will support the business venture

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 Case Study 1 – Google

• Founded 1998 (20 yrs ago) by Larry Page & Sergey Brin
PhD students at Stanford University

• Specializes in Internet-related services and products:

online advertising technologies, search engine,
cloud computing, software, and hardware

• Company formed with $25 million venture capital from

Kleiner Perkins Caufield & Byers and Sequioa Capital

• Even though the founders hold 14% share,

they control 56% shares through super-voting stock

• “to those with focus and passion, all things are possible”

• “simple ideas can make a difference”

 Defining Entrepreneurship
Barringer Entrepreneurship is the process by which
(2008) individuals pursue opportunities without
regard to resources they currently control

Schumpeter Entrepreneurship as a firm that operates

(1934), and and implements combinations of new
Dollinger activities such as product development,
(1995) market research, sourcing for raw
materials, manufacturing approaches and
new organizational structures.

Cole (1969) Entrepreneurship as activities that result

in benefits through the development of
profit-oriented business.

Stevenson, Entrepreneurship as individual

Roberts and preparedness to compete for
Grousbeck opportunities without considering the
(1989) resources in hand
 Defining Entrepreneurs

Kirzner Entrepreneurs are individuals who are

(1979) always alert about the business
opportunities that have not be seen by
others
Kuratko and Entrepreneur is one who undertakes to
Hodgets organise, manage and assume the risk
(1992) of business
Daft (1997) He or she who assumes the financial
and legal risks of ownership and
receives the business profits
Peter Entrepreneur as someone who actually
Drucker searches for change, responds to it, and
(1985) exploits change as an opportunity
 Characteristics of Entrepreneurs

o Commited to his/her work

o Always strive for excellence,
o Focus on his/her work,
o Confident to do business
o Discipline
o Innovative and creative
o Able to lead and manage
o Responsible and trustworthy
o Has a mission and vision
o Dare to take risk and never
give up
Entrepreneurial Concept

Innovativeness

Willing to
take risks Creativity

Entrepreneurial
Concept

Willing to
Flexibility search for
alternatives
Initiative
Entrepreneurial Ecosystem
 Innovation and Entrepreneurship
 Creativity:
 Creativity evokes the desire to
produce products or processes
that can bring benefits,
appropriateness and value to any
tasks which are more heuristic
than algorithm.
 Creative innovation can be
achieved either by
- synthesis
- adaptation
- creation
 Three types of creativities:
- technological creativity
- product creativity
- marketing creativity
 Innovation:
 Is the process by which
entrepreneurs convert
opportunities into marketable
ideas.
 Is a combination of the vision to
create a good idea and the
perseverance and dedication to
remain with the concept through
implementation.
 Is a key function in the
entrepreneurial process.
 Is the specific function of
entrepreneurship.
 Case Study 2 – Thomas Edison

• American businessman and the greatest inventor ever lived

with more than 1000 patents under his name.

• He is credited to invention that found its way in electric

generation, mass communication, sound recording and even
entertainment. His most well known light bulb invention
remains as the symbol of creativity.

• It was reported that Edison failed more than 10,000 times in

his effort to find the perfect material that will glow and lasting
for the incandescent light. On the failure he simply said, “I
have not failed. I’ve just discovered 10,000 ways that wont
work”.

• General Electric Company, he founded in 1892, posted $121

billion in revenues and asset exceeding $300 billion in 2018.
Intellectual Properties
Starting a Business

Entrepreneurship
activity planning

Identifying the market

Price setting strategy

Marketing strategy

Developing skilled
manpower

Total project cost

 Starting a Business

There are four (4) major steps to be performed by an entrepreneur

before starting the business.

Step 1:
Identifying
Step 3: Evaluate
Customer
Business
Needs and
Opportunities
Requirements

Step 2:
Step 4: Selecting
Analyzing
Business
Environmental
Opportunities
Assessment,
and Develop
Personal and
Business Plan
Social Values
 Step 1 - Identifying Customer Needs and
Requirements

 Each business opportunity starting

at the need and requirements of
customers for a product.

 Basic needs is something that must

be acquired, such as food, clothing,
shelter, education and security.

However, people also have a

requirement that a desire or a
personal desire for something better
than basic.

The requirement of a person can be

influenced by culture, education
level, level of ability and personality.

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 Step 2 - Analyzing Environmental Assessment,
Personal and Social Values
In search of business opportunities there are three important things that need to
be considered. The environment, self-assessment and the community.

2.1 Environment Scanning 2.2 Self Assessment (SWOT)

-Population structure, income and tastes -Experience
-Studies on the import & export data -Knowledge and skills
-Studies on local resources -Financial position
-Industrial chain -Interest
-Government and private development plans -Networking

2.3 Social Values

- Culture and norms
- Local Ethics
- Local perception
- Taboo

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 Step 3 - Evaluate Business Opportunities

 The process of evaluating business opportunities to help entrepreneurs

choose one of the best business opportunities.
 With all this attention, commitment and efforts of entrepreneurs to focus
on only a business opportunity only.
 Here are some processes that can be taken by entrepreneurs in evaluating
the best business opportunities.

• Legality
• Monopoly power and the level of
competition
• Capital Requirement
• Risk

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 Step 4 - Selecting Business Opportunities and
Develop Business Plan
 After all the processes and measures undertaken, it is up to entrepreneurs
to choose the best business opportunities.
 Further action after choosing the best business opportunity is to provide a
(Business Plan) Administration and Operation Plan, Marketing Plan and
Financial Plan.

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 Preparing a Business Plan

A written document that details the

proposed venture:
› Describes the current status, expected
needs, and projected results of the new
business.
› Covers the project, marketing, research
and development, manufacturing,
management, critical risks, financing, and
milestones or a timetable.
› Demonstrates a clear picture of what that
venture is, where it is projected to go, and
how the entrepreneur proposes it will get
there—a roadmap for a successful
enterprise.
Essentials Elements of a Good
Business Plan
 Good Business Plan
 Keep the plan respectably short
 Be focused
 Organize and package the plan
appropriately
 Orient the plan toward the future
 Avoid exaggeration
 Highlight critical risks
 Give evidence of an effective
entrepreneurial team
 Do not over-diversify
 Identify the target market
 Capture the reader’s interest
 Financial Plan

 The financial section of the plan must demonstrate the financial viability of
the business. A careful reader of the plan will scrutinize this section.
 The financial plan should begin with an explanation of the funding that will
be needed by the business during the next three to five years along with an
explanation of how the funds will be used.
 This information is called a sources and uses of funds statement.
 The next portion of this section includes financial projections, which are
intended to further demonstrate the financial viability of the business
 The financial projections should include three to five years of pro forma
income statements, balance sheets, and statements of cash flows.
 It is important to remember that the business plan should be based on
realistic projections.
 for the numbers in their projIf it is not and the company gets funding or
financing, there will most certainly be a day of reckoning. Investors and bankers
hold entrepreneurs accountable for the numbers in their projections.
Financial Planning Process
Components of Financial Plan

https://www.bplans.com/construction_carpenter_business_plan/executive_summary_fc.php
Components of Financial Plan

https://www.bplans.com/construction_carpenter_business_plan/executive_summary_fc.php
 Breakeven Analysis

 The breakeven point is the level of operation at which a business neither

earns a profit nor incurs a loss.
 It is a useful planning tool because it shows entrepreneurs minimum level of
activity required to stay in business.
 With one change in the breakeven calculation, an entrepreneur can also
determine the sales volume required to reach a particular profit target.
 Marketing Plan
Elements of marketing plan
1. Description of products or services.
– Describes the products or services offered by the company in detail (the
uniqueness).
– Eg. Brand, Quality, Design, Packaging, Protection,
2. Target market
– Explain about the customers’ profile in the target market.
– Do a segmentation: demographic factors such as age, occupation, gender,
education level, social class of income.
 Marketing Plan

Elements of marketing plan

3. Market Size
 Is usually estimated in unit of products
or sales (which would be in RM) or
both.
4. Competitors
 List at least 3 competitors in the same
target market, together with their
strengths and weakness.
5. Market Share
 Is computed as a percentage of the
market size.
6. Sale Forecast
 Is done on a monthly basis for the first
year of business and extended to cover
sales for the second and third year on a
yearly basis.
 Marketing Plan
7. Marketing Strategy
• Is a stage to determine whether the
business is able to enter the market or
compete with other competitors in the
market and in the same business sectors.
i. Product/service strategy
• Brand, quality, packaging, protection, ease of
use, product differentiation, attractiveness,
safety, labeling, design.
ii. Pricing strategy
• Cost-based pricing, value based pricing,
competition-based pricing and factors affecting
price.
iii. Distribution strategy
• Sales directly to customers, through retailers,
wholesalers or agents.
iv. Promotion strategy
• Advertising, sales promotion, publicity through
flyers, pamphlets, business cards.
 Operational Plan

› This section of the plan deals with the day-to-day operations of the
company.
› An overview of the manufacturing plan (or service delivery plan) should be
followed by a description of the network of suppliers, business partners,
and service providers that will be necessary to build the product or produce
the service the firm will
› Any risks or regulations pertaining to the operations of the firm should be
disclosed, such as non-routine regulations regarding waste disposal and
worker safety.
 Operational Plan
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The entrepreneurs should focus on areas where a distinct advantage

exists.
1. Operational /innovation Process
› The key steps in the operational
process towards producing the
products or services of the company.
2. Process Flow Chart
› The operational process of the
company is depicted in the form of a
flow chart.
3. Production Schedule/Capacity Planning
› Operational outputs
4. Material Requirements
› Raw materials (price, quantity, name
of suppliers)
 Operational Plan

5. Manpower Planning
› All the employees under the operation
section of the business are listed according
to the relevant position.
6. Schedule of Task and Responsibilities
› Lists the main tasks and responsibilities of
each position.
7. Remuneration Plan
› EPF and SOCSO.
8. Machines and Equipment
› All machines and equipment must be listed
together with the estimated price, number
of units and suppliers’ name.
 Operational Plan

9. Operational Layout Plan

 Draw the floor plan of the operational
space.
10. Location of operations
 Site of business operations (building)
11. Operational Overheads
 Consist of water, electricity, telephone
and gas facilities.
12. Operational Budgets
 Capital expenditures/fixed asset
expenses
 Working capital/monthly expenses
 Other expenses
 Support Systems
1. Financial Support System
2. Entrepreneur and Management Training
3. Technological Support
4. Infrastructure Support (location and
premise)
5. Marketing Support
6. Research and project Recognition
7. Informational Support
 Support Systems
Financial Support
 Majlis Amanah Rakyat (MARA)
 Commercial Banks
 Bank Pembangunan Infrastruktur
Malaysia Berhad (BPIMB)
 Malaysian Industrial Development
Finance Berhad (MIDF)
 Bank Pertanian Malaysia Berhad
 SME Bank
Training Support
 Majlis Amanah Rakyat (MARA)
 Malaysian Entrepreneurship
Development Centre (MEDEC)
 State Economic Development
Corporation (SEDC)
 National Productivity Corporation
(NPC)
 Support Systems

Technical Support Logistical Support

• Palm Oil Research Industry
Malaysia (PORIM)
• Forest Research Institute of
Malaysian (FRIM)
• Malaysian Institute of
Microelectronic System
(MIMOS)
• Urban Development Authority
(UDA)
• Majlis Amanah Rakyat
(MARA)
• State Economic Development
Corporation (SEDC)
 Support Systems
Marketing Support
• Federal Agricultural Marketing
Authority (FAMA)
• Malaysian External Trade
Development Corporation
(MATRADE)
• Ministry of International Trade
and Industry (MITI).
Research and Standards
Support
• Standard and Industrial Research
Institute of Malaysia (SIRIM)
• Malaysian Palm Oil Board (MPOB)
• Research Rubber Institute
Malaysia(RRIM)
• Malaysian Agricultural research and
Development Institute (MARDI)
 Summary
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 For a successful business, entrepreneur must be able to

recognized opportunity and market segment.

 In order to prepare a good business plan entrepreneur

must prepare (1) financial plan, (2) marketing plan, and (3)
operational plan.

 Various support systems are available to nurture and

support entrepreneurial effort by creative and innovative
next generation.