Entrepreneurship

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Entrepreneurship is the act of being an entrepreneur, which can be defined as "one who undertakes
innovations, finance and business acumen in an effort to transform innovations into economic goods". This
may result in new organizations or may be part of revitalizing mature organizations in response to a
perceived opportunity. The most obvious form of entrepreneurship is that of starting new businesses
(referred as Startup Company); however, in recent years, the term has been extended to include social and
political forms of entrepreneurial activity. When entrepreneurship is describing activities within a firm or
large organization it is referred to as intra-preneurship and may include corporate venturing, when large
entities spin-off organizations.[1]

According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship Monitor,
"by the time they reach their retirement years, half of all working men in the United States probably have a
period of self-employment of one or more years; one in four may have engaged in self-employment for six
or more years. Participating in a new business creation is a common activity among U.S. workers over the
course of their careers." [2] And in recent years has been documented by scholars such as David Audretsch to
be a major driver of economic growth in both the United States and Western Europe.

Entrepreneurial activities are substantially different depending on the type of organization and creativity
involved. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-
time) to major undertakings creating many job opportunities. Many "high value" entrepreneurial ventures
seek venture capital or angel funding (seed money) in order to raise capital to build the business. Angel
investors generally seek annualized returns of 20-30% and more, as well as extensive involvement in the
business.[3] Many kinds of organizations now exist to support would-be entrepreneurs including specialized
government agencies, business incubators, science parks, and some NGOs. In more recent times, the term
entrepreneurship has been extended to include elements not related necessarily to business formation
activity such as conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial
mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political
entrepreneurship, or knowledge entrepreneurship have emerged.

The entrepreneur is a factor in microeconomics, and the study of entrepreneurship reaches back to the work
of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries, but was largely ignored
theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in
business and economics in the last 40 years. Donald Trump is one such example.

In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph
Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and
Friedrich von Hayek. In Schumpeter, an entrepreneur is a person who is willing and able to convert a new
idea or invention into a successful innovation.[4] Entrepreneurship employs what Schumpeter called "the gale
of creative destruction" to replace in whole or in part inferior innovations across markets and industries,
simultaneously creating new products including new business models. In this way, creative destruction is
largely responsible for the dynamism of industries and long-run economic growth. The supposition that
entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory
and as such is hotly debated in academic economics. An alternate description posited by Israel Kirzner
suggests that the majority of innovations may be much more incremental improvements such as the
replacement of paper with plastic in the construction of a drinking straw.
Entrepreneurship Thrives in an Enabling Culture

The East African Standard — allafrica.com

Published on October 12, 2005

Research reveals that there is a powerful connection between the culture of a people and its propensity to be
entrepreneurial. Kenya, for example, has national sub-cultures which have important implications for
creating an entrepreneurial economy.

That would mean that in the effort to build greater entrepreneurship, it is useful to first understand the
culture of a people and work with it, not against it. Let us begin with two fundamental questions: What is
culture? Why is it important?

The Webster's Third International Dictionary yielded the following on the definition of culture: "the body of
customary beliefs, social norms, and material traits constituting a distinct complex of tradition of a social,
religious, or social group."

We learn a few things about entrepreneurship reading between the lines of this definition. One -
entrepreneurship can be collective. Two - entrepreneurship can be indigenous and three - entrepreneurship
can be social. I will leave the last two and explore the first.

But first, why is culture important? Studies suggest that there are cultural traits that enable certain societies
and peoples to be more or less entrepreneurial. For example the Global Entrepreneurship Monitor (GEM) of
the year 2000 claims (whether accurately or inaccurately) that the Japanese culture presents major barriers to
entrepreneurial behaviour by its members.

Conversely, the same research ascertains that the American culture enables rewards and even celebrates
entrepreneurial behaviour. The GEM conclusion is that there is a strong connection between cultural
characteristics and how entrepreneurial a society, and therefore, an economy is.

I have used the Japanese and American examples by design. These nations represent two generally polarised
types of cultures: the collectivistic Eastern culture and the individualistic Western culture. This dichotomy
has been linked theoretically and empirically to entrepreneurship and economic development.

Thus, in Western cultures, entrepreneurship is seen as a highly individualistic endeavour. A very different
form is observed in collectivist cultures, with a number of entrepreneurial ventures being family,
cooperatives, partnerships or community endeavours. Today the world's strongest economic growth is not
occurring in the West but rather in the East and particularly in East Asia. The "Five dragons" of Singapore,
Hong Kong, Japan, South Korea, and Taiwan are each experiencing substantial growth. China is also
experiencing enormous growth.

There were two distinct trading patterns evident in pre-colonial Kenya. These are localised trade and
transnational trade. Local trade was carried out between communities adjacent to one another.

Unwritten but narrated history teaches that local trade thrived between agricultural and pastoral
communities.

The initiator of the trade was the community not an individual.

Transnational trade was carried out between distant communities, whether of African origin or at inter
continental level.

There were three dominant trading and therefore entrepreneurial communities in pre-colonial Kenya: the
Kamba, the Swahili and the Somali.
Narrated history has it that the Kamba trade was so widely recognised that the British colonialists made
Machakos (a Kamba homeland) the centre of economic activity.

It is said that it was here too that the Indian rupee was first introduced into Kenya.

But all that was in the pre-colonial era. Indeed colonialism brought in and cemented individualistic
entrepreneurship.

Kenyan Indians seem to have perfected collective entrepreneurship.

In collective entrepreneurship individuals are important, but the whole is far greater than the sum of the
individuals, and social commitment balances economic commitment.

Kenya boasts of a long history of the cooperative movement and hence the good germs of collective
entrepreneurship. Kenya's collective entrepreneurship may also be traced in the concept of African socialism
which we attempted to incorporate into national planning after independence.

The prevailing women groups in Kenya are a unique form of collective entrepreneurship.

It should not be lost to memory that this unique form has its roots in the "Harambee" motto of pulling and
pooling together itself uniquely Kenyan.

The lesson we ought to learn here is that individualistic and collective entrepreneurship can and should co-
exist for the betterment of Kenya.

Concepts such as K-Rep's village banks need to be nurtured, piloted, adapted, diffused and adopted in the
country's development agenda.

Management and the Entrepreneur

By: Gordon L. Simpson

Toronto Managing Partner of The Mansis Development Corporation, Gordon has conducted extensive
workshops and seminars on the supervisory and management topics in which Mansis specializes,
including performance management, delegation, the hiring and selection process, employee
performance problems and performance appraisal. In addition he has worked with many organizations
in a consulting capacity in areas related to human resource management, implementing change and
team building, and has published articles for a variety of magazines and news publications.

The small business owner/operators and entrepreneurs in general, have contributed much to our
economy. We need their innovation and risk-taking to create wealth, generate employment and fuel
the economy.

Despite their valuable contributions, it is also fair to say that they could be more successful if they
recognized the point where good management should take over the lead role in directing the activities
of their organization. By their very nature, entrepreneurs sometimes are not good managers. The skills
they possess, so critical to launch an enterprise, are not the same skills required for its long term
success. All new businesses reach a stage where experienced managers need to take over
responsibility for the continued growth of a company.

It is not easy for entrepreneurs or owner/operators of small businesses, who have worked hard to get
a business going, to cede operational control to someone else. Most feel, quite understandably, that it
is their company, their invention, idea, product or service and therefore they must retain control to be
successful. It is difficult for this group to grasp the idea that a time will arrive when new skills are
needed to take the business to the next stage in its development and beyond. Venture capitalists, and
other potential investors, place a high premium on the quality of management when making a decision
on whether to invest in a new venture or not. Experienced investors and some business schools,
believe that quality management with a marginal product or service is a better investment than a
better product/service with the inventor, innovator or start-up person remaining in charge.

A skill set of particular importance is in the category of people management. Most entrepreneurs and
small business owner/operators have little experience in the motivation and management of people.
And this is a critical issue for all managers. Increasing competition and accelerating change in
consumer taste and employee demands and expectations pose a constant challenge to all organization
leaders.
.
Success for organizations lies in the commitment and high productivity by all employees from senior
management to the rank and file. Achievement of goals and objectives in the long term depends on the
performance of all employees. This requires an understanding of motivation and the skills necessary to
create a working environment where all employees can willingly work to the best of their ability.
Interpersonal skills are therefore very important but are often lacking in entrepreneurs and
owner/operators of small businesses.

The benefits of well trained workers using the most advanced technology can be nullified by poor
people management practices by managers. It is management that is the link between employees and
increased commitment, superior product quality, excellence in customer service and productivity.
Competent management is of critical importance to the success of all new enterprises.

It therefore behooves entrepreneurs and owner/operators of small businesses to factor into their
business plans the appropriate time to step back and bring in experienced management. It is better to
have a smaller piece of a large pie than 100% of a failed business.

EntreEpreneurship in India: New & Emerging Sectors

Panel Summary
India, one of the rapidly growing economies with human capital, has a distinct global competitive advantage in terms
of cost and quality. While the picture of India in the popular business press is more about its dominance in software
and business process outsourcing, the scale and market opportunities in India are much more extensive and very
appealing.

Newly established and mid-sized companies provide innovation and cost-effective operations which hold the key to
meeting the global challenge of rising demand from developed countries and competition from other developing
economies in many emerging markets such as education, energy, pharmaceuticals, infrastructure and food
processing. This Panel will focus on challenges and opportunities an entrepreneur will face, while trying to establish a
start-up in India.

The purpose of this panel will be two-fold. First, it will focus on the general entrepreneurial culture that is slowly
developing in India and the challenges entrepreneurs are likely to face given societal and political constraints. Second,
in discussing entrepreneurship, the panel will focus on different sectors where there is scope for entrepreneurship and
new emerging opportunities. The Panel will have experts from different emerging sectors who can weigh in on the
issues that focus on India's current and future potential. This panel will provide practical, working knowledge to the
future entrepreneurs.
20 good opportunities in India for entrepreneurs

There is certainly no formula to become a successful entrepreneur. Some may succeed

and make good profits, others sink along the way. Which are the most lucrative sectors for
entrepreneurs? Here's a list of 20 good opportunities entrepreneurs can look at...

1. Tourism

Tourism is a booming industry in India. With the number of domestic and international
tourists rising every year, this is one hot sector entrepreneurs must focus on. India with its
diverse culture and rich heritage has a lot to offer to foreign tourists. Beaches, hill stations,
heritage sites, wildlife and rural life, India has everything tourists are looking for.

But this sector is not well organised. India lacks trained professionals in the tourism and
hospitality sectors. Any business in this sector will thrive in the long run as the demand
contuse to grow every year. Foreign tourist arrivals during January-March were 15.63 lakh
with a growth rate of 12.8 percent, compared to 13.86 lakh during the first three months
last year.

2. Automobile

India is now a hot spot for automobiles and auto-components. A cost-effective hub for auto
components sourcing for global auto makers, the automotive sector is potential sector for
entrepreneurs. The automobile industry recorded a 26 per cent growth in domestic sales in
2009-10.

The strong sales have made India the second fastest growing market after China. India
being one of the world's largest manufacturers of small cars with a strong engineering
base and expertise, there are many segments that entrepreneurs can focus on in India's
automobile and auto components sector.

Textiles

India is famous for its textiles. Each state has its unique style in terms of apparels. India
can grow as a preferred location for manufacturing textiles taking into account the huge
demand for garments. Places like Tirupur and Ludhiana are now export hubs for textiles. A
better understanding of the markets and customers' needs can boost growth in this sector.
4. Social ventures

Many entrepreneurs are taking up social entrepreneurship. Helping the less privileged get
into employment and make a viable business is quite a challenge. There are many who
have succeeded in setting up social ventures. With a growing young population in rural
areas who have the drive and enthusiasm to work, entrepreneurs can focus on this
segment.
5. Software

India's software and services exports are likely to rise with export revenue growth
projected at 13 to 15 percent to hit about $57 billion by March 2011.
With one of the largest pool of software engineers, Indian entrepreneurs can set higher
targets in hardware and software development.

The information technology enabled services have contributed substantially to the

economy. With more companies outsourcing contracts to India, business to business
solutions and services would be required. Entrepreneurs can cash in on the rise in demand
for these services with innovative and cost effective solutions.

6. Engineering goods

India continues to be one of the fastest growing exporters of engineering goods, growing at
a rate of 30.1 per cent. The government has set a target of $110 billion by 2014 for total
engineering exports. Entrepreneurs must capitalise on the booming demand for products
from the engineering industry.
. Franchising
India is well connected with the world. Hence, franchising with leading brands who wants
to spread across the country could also offer ample opportunities for young entrepreneurs.
With many small towns developing at a fast pace in India, the franchising model is bound
to succeed.

8. Education and Training

There is a good demand for education and online tutorial services. With good facilities at
competitive rates, India can attract more students from abroad. Unique teaching methods,
educational portals and tools can be used effectively to make the sector useful and
interesting.
Food Processing
India's mainstay is agriculture. Entrepreneurs can explore many options in the food grain
cultivation and marketing segments. Inefficient management, lack of infrastructure, proper
storage facilities leads to huge losses of food grains and fresh produce in India.

Entrepreneurs can add value with proper management and marketing initiatives. The
processed food market opens a great potential for entrepreneurs be it fast food, packaged
food or organic food. Fresh fruits and vegetables too have a good demand abroad. A good
network of food processing units can help potential exporters build a good business.

10. Corporate demands

There will be a good demand for formal attire with more companies opening their offices in
India. People who can meet this demand in a cost effective way can make a good
business. With corporate gifting getting very popular, this is also a unique business to
explore.
. Ayurveda and traditional medicine

India is well known for its herbal and ayurvedic products. With increasing awareness about
the ill-effects allopathic medicines, there will be a huge demand for cosmetics, natural
medicines and remedies.

12. Organic farming

Organic farming has been in India since a long time. The importance of organic farming
will grow at a fast pace, especially with many foreigners preferring only organic products.
Entrepreneurs can focus on business opportunities in this sector. There are many small-
time farmers who have adopted organic farming but the demand is still unmet, offering
many opportunities for those who can promote organic farming on a large scale.

Media

The media industry has huge opportunities to offer young entrepreneurs. With the huge
growth of this segment, any business in this field will help entrepreneurs reap huge
benefits. Television, advertising, print and digital media have seen a boom in business.
Digitisation, regionalisation, competition, innovation, process, marketing and distribution
will drive the growth of India's media and entertainment sector, according to Ficci.
14. Packaging
With China invading the markets with cheap plastic goods and packaging materials, there
is a good opportunity to develop good packaging materials to meet domestic and foreign
demand. There is a huge demand various sectors like agriculture, automotive, consumer
goods, healthcare infrastructure and packaging sectors for plastics.

Floriculture

India's floriculture segment is small and unorganized. There is a lot to be done in this
lucrative sector. The global trade in floriculture products is worth $9.4 billion. With a 8 per
cent growth, it is expected to grow to $16 billion by 2010. India's share in world trade is just
0.18 per cent.

This is a huge market to be tapped considering the rising demand for fresh flowers. More
awareness and better farming and infrastructure can boost exports.

16. Toys

Another evergreen industry is toy manufacturing. India has potential to manufacture cost
effective and safe toys for the world. With Chinese toys being pulled up for toxins, the
market for safe and good quality toys beckons Indian entrepreneurs.

17. Healthcare sector

India's healthcare sector is dismal. The private sector can play a vital role in developing
this sector. With medical tourism also gaining momentum, the sector can attract foreigners
who are looking for cost effective treatment in countries like India.
18. Biotechnology
After the software sector, biotechnology opens a huge potential. Entrepreneurs can look at
a plethora of options with the application of biotechnology in agriculture, horticulture,
sericulture, poultry, dairy and production of fruits and vegetables.
19. Energy solutions
In a power starved nation, the need to develop cost effective and power saving devices is
gaining more significance. There is a huge demand for low-cost sustainable energy saving
devices as well.

The government has already unveiled the National Solar Mission which has set a target of
20,000 MW of solar generating capacity by the end of the 13th Five Year Plan.

Prime Minister Manmohan Singh had urged the industry to see the huge business
opportunity and set up 'Solar Valleys' on the lines of the Silicon Valleys. These solar
valleys can become hubs for solar science, solar engineering and solar research,
fabrication and manufacturing. So there is a big opportunity for entrepreneurs in this sector
as well.

20. Recycling business

E-waste will rise to alarming proportions in the developing world within a decade, with
computer waste in India alone to grow by 500 per cent from 2007 levels by 2020,
according to a UN study. This sector opens a viable business opportunity for
entrepreneurs in terms of e-waste management and disposal.

Stages in Planning for a New Business Venture

This lesson is designed to be used in the classroom or as a homework task to support the
teaching and learning of Planning for a New Business Venture in BTEC Business.

Stages in Planning for a New Business Venture

This resource is designed specifically for Unit 5 of the Edexcel BTEC qualification, 'Business Enterprise'.

Aim

The aim of this resource is to lead you through the stages that have to be followed in planning for a new
business venture. In reality, the new business venture could be one being developed by an existing business,
which may have decided to branch out into another area or develop a new plant etc. Alternatively, it could
be an entirely new business venture being set up by an individual or a small group or people.

The assessment for the BTEC National expects you to look at the venture from the point of view of a new
business for self-employment. This resource will, therefore, look at the business plan with this in mind.
Images: Self-employment businesses can range from a newsagent to a DJ. Copyright: Stephen Lewis,
stock.xchng and Guido Giardino, stock.xchng

At the end of the resource, you will have built up a business plan incorporating all the main areas for
consideration. These are:

• Financial Planning - looking at sources of finance, forecasts of cash flow, sales, costs
and so on.
• Marketing - looking at ways in which the marketing of the venture will be carried out.
• Legal Framework - ensuring that all the legal requirements of setting up a new
venture are adhered to and considered.
• Operational Planning - looking at the nitty-gritty of everyday production issues -
securing supplies, hiring staff, deciding on production methods and so on.
• Self-Development Planning - what skills do you have and what do you lack in order
to run the business successfully?
• Networking - who do you need to know and how do you get to know them to ensure
your business takes off?
• Framework of the phenomenon
• Once the variation and complexity in new venture creation is recognized, It then is
necessary to find a framework for systematically discovering and evaluating the
similarities and differences among new ventures (Mc Kelvey, 1982).“A framework for
describing new venture creation integrates four major perspectives in entrepreneurship:
characteristics of the individual(s) who start the venture, the organization which they
create, the environment surrounding the new venture and the process by which the new
venture is started.”
• 1. Individuals are people involved in starting a new organization;
• 2. Organization is the kind of firm that is started;
• 3. Environment is the situation surrounding and influencing the new organization;
• 4. New venture process is the actions undertaken by the individuals to start the venture.
• Individuals
• An entrepreneur is viewed as a risk taker (Palmer, 1971), “a captain of industry”, a
community builder, an innovator. In every case researchers attributes his capacity in
part to his background, his personality, his attitude and his experience. He is an
ambitious leader who combines land, labor, and capital to often create and market new
goods or services. The term entrepreneur is applied to the type of personality who is
willing to take upon himself a new venture or enterprise and accepts full responsibility
for the outcome. Researchers tried to develop a psychological profile of the
entrepreneur in order to measure his psychological characteristics and to understand
his capabilities. Brockhanus in 1982 found some psychological characteristic that can
be useful to find some difference among types of entrepreneur:
• ♣ Need for achievement
• ♣ Locus of control
• ♣ Risk taking propensity
• Other researchers found more important to look at individual characteristic:
• ♣ Job satisfaction
• ♣ Previous work experience
• ♣ Entrepreneurial parents
• ♣ Age
• ♣ Education
• Process
• Eight researchers made a list of some action that an entrepreneur have to do to create
a new venture. This list is based on theoretical studies and on general observation.
They found six common behaviours:
• ♣ Locate a business opportunity;
• ♣ Accumulate resources;
• ♣ Market product and services;
• ♣ Produce the product;
• ♣ Build an organization;
• ♣ Respond to government and society.
• Environment
• The environment influences the individuals and the group. The social environment of an
individual is the culture that he was educated and/or lives in, and the people and
institutions with whom the person interacts. Members of the same social environment
will often think in similar styles and patterns even when their conclusions differ. It is
important for the start of a new venture to have a highly supportive entrepreneurial
environment. In many studies two different views of the environment have been
developed:
• ♣ Environmental determinism;
• ♣ strategic choice.
• Environmental determinism, also known as climatic determinism or geographical
determinism, is the view that the physical environment, rather than social conditions,
determines culture. The environment is seen as an outside set of conditions to which
the organization must adapt. The fundamental argument of the environmental
determinists was that aspects of physical geography, particularly climate, influenced the
psychological mind-set of individuals, which in turn defined the behaviour and culture of
the society that those individuals formed (Aldrich, 1979; Aldrich & Pfeffer, 1976; Hannan
& Freeman, 1977).
• Strategic choice is a theory in which forces and variables in the external environment
are dynamic, and that business strategies are affected by the interactions between
these factors. The environment is seen as a reality that organizations create through the
selectivity of their own perceptions (Child, 1972; Starbuck, 1976; Weick, 1979).
• In 1982 Bruno and Tyebjee found factors that can stimulate entrepreneurship, such as:
• ♣ venture capital availability;
• ♣ presence of experienced entrepreneurs;
• ♣ technically skilled labor force;
• ♣ accessibility of suppliers;
• ♣ accessibility of customers or new markets;
• ♣ governmental influences;
• ♣ proximity of university;
• ♣ availability of land or facilities;
• ♣ accessibility of transportation;
• ♣ attitude of the area population;
• ♣ availability of supporting services;
• ♣ living conditions.
• The competitive environment was the subject of the Porter’s studies (1980). Porter's five
forces analysis is a framework for the industry analysis and business strategy
development. It uses concepts developed in Industrial Organization (IO) economics to
derive five forces which determine the competitive intensity and therefore attractiveness
of a market. Attractiveness in this context refers to the overall industry profitability. The
five environmental force are:
• ♣ Barriers to entry;
• ♣ Rivalry among existing competitors;
• ♣ Pressure from substitute products;
• ♣ Bargaining power of buyers;
• ♣ Bargaining power of suppliers.
• Organization
• New venture creation is the organizing of new organization, in the Weickian sense: “To
organize is to assemble ongoing interdependent actions into sensible sequences that
generate sensible outcomes” (Weick, 1979). Strategic choice variables are considered
by Porter as characteristic of the organization and he choose three strategies that firms
should choose to be more competitive: overall cost leadership, differentiation, focus.
• Conclusion
• Any new venture is a mix of variables from the four dimensions. Variables from each
dimension interact with variables from other dimensions. All of the four dimension have
to be investigated. Past researchers combined two or more of the dimension. This is the
first framework that combines the four dimension of venture creation giving the
opportunity to study the infinite possible patterns. Thanks to this approach we can
appreciate the high degree of complexity in the interaction of these variables within the
multidimensional phenomenon of venture creation. This framework can be useful to
make more comprehensive the description of a new venture.