TABLE OF CONTENTS:

1.0 Introduction 2.0 Research Objective 3.0 Literature review 4.0 Foundations of Entrepreneurship:

2 2 3 4

5.0 Small and Medium Enterprise (SME) Industry Sector:

6.0 Factors Influencing The Probability Of New Venture Success

7.0 Conclusion

8.0 References

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ENTREPRENEURSHIP
1.0 INTRODUCTION: The concept of entrepreneurship was first established in the 1700s, and the meaning has evolved ever since. Many simply equate it with starting ones own business. Most economists believe it is more than that.To some economists, the entrepreneur is one who is willing to bear the risk of a new venture if there is a significant chance for profit. Others emphasize the entrepreneurs role as an innovator who markets his innovation. Still other economists say that entrepreneurs develop new goods or processes that the market demands and are not currently being supplied. In the 20th century, economist Joseph Schumpeter (1883-1950) focused on how the entrepreneurs drive for innovation and improvement creates upheaval and change. Schumpeter viewed entrepreneurship as a force of creative destruction. The entrepreneur carries out new combinations, thereby helping render old industries obsolete. Established ways of doing business are destroyed by the creation of new and better ways to do them.Business expert Peter Drucker (1909-2005) took this idea further, describing the entrepreneur as someone who actually searches for change, responds to it, and exploits change as an opportunity. A quick look at changes in communicationsfrom typewriters to personal computers to the Internetillustrates these ideas.Most economists today agree that entrepreneurship is a necessary ingredient for stimulating economic growth and employment opportunities in all societies. In the developing world, successful small businesses are the primary engines of job creation, income growth, and poverty reduction. Therefore, government support for entrepreneurship is a crucial strategy for economic development. 2.0 OBJECTIVE OF THIS RESEARCH: The research which aims to answer the following questions:  What are the Principles and Foundations of Entrepreneurship?  What are the nature and role of Entrepreneurial function in a Business/Organisational Context?  What are the applications of Entrepreneurship to a designated Industry sector?

In order to understand the Principles and Foundations of Entrepreneurship we are to undergone the case study where issue on the Entrepreneurship and solution over that issues are analysed. 3.0LITERATURE REVIEW: Drucker identified entrepreneurs as people who see change as the standard, echoing Heraclitus of Ephesus, the Greek philosopher who said, The only constant in life is change. Entrepreneurs regard change as essential and welcome it as beneficial to the lives of big corporations and small businesses alike. However, the kind of change implied here, Drucker clarified, is typically not the kind that can be brought about simply by deciding to create it. Rather, it is created by entrepreneurs who actively go looking for existing change in order to exploit it. Entrepreneurship is not solely basedon purposeful information. Within corporations, those who look for change are considered thetroublemakers who often end up starting their own companies. Corporate organizationalstructures, layers and silos inhibit employee creativity, as well as thwart efforts to improve thecustomer experience. In many cases, they are programmed for inflexibility, leaving employeesno longer agile enough to cope with change.The opportunity to create wealth and being their own boss has attractedmany to be entrepreneurs. Evidently, this has amplified the studies on smalland medium enterprises (SME) growth and more importantly, the formaland informal attributes associated with the entrepreneurs who have led theircompanies successfully to growth-stage. The common research areas citedin the literature are such as entrepreneurs leadership, entrepreneurialorientation, management skills, competencies, human capital, personalitytraits and circle of network. McClelland (1961) asserted that qualitiesassociated with a high need for achievement contribute to the success of newventure. Begley and Boyd (1987) found that entrepreneurs (founders)scored significantly higher than small business managers (non-founders) inneed for achievement, risk-taking propensity, and tolerance of ambiguity.Brockhaus (1982) reviewed a number of psychological characteristics andconclude that need for achievement, internal locus of control and a risktakingpropensity as attributes contributing to the success of new businessstart-ups. On the other hand, Brockhaus and Horwitzs (1986) empiricalfindings showed that entrepreneurs with internal locus of control strive forhigh achievement.Mill (1984) suggested that risk taking is a key factor in distinguishingentrepreneurs from managers. It is believed that entrepreneurs take greaterdegree of risk especially in areas where they have control or competencies inrealizing the profit. Many studies have included risk taking as a majorentrepreneurial characteristic.

Mitton (1989) confirmed that entrepreneurseagerly undertake the unknown and uncertain circumstances, thus theentrepreneurial inclined individuals are expected to display more toleranceof ambiguity than others. As far as innovativeness is concerned, Mittonsuggested that it is the focal point of entrepreneurship and an essentialentrepreneur characteristic. Indeed entrepreneurial literatures show thatentrepreneurs are significantly more innovative than non-entrepreneurs (Ho&Koh, 1992; Robinson & Sexton, 1994).

4.0 FOUNDATIONS OF ENTREPRENEURSHIP: There is no one definitive profile. Successful entrepreneurs come in various ages, income levels, gender, and race. They differ in education and experience. But research indicates that most successful entrepreneurs share certain personal attributes, including:         Creativity Dedication Determination Flexibility Leadership Passion Self-Confidence Smarts.

Creativity: is the spark that drives the development of new products or services or ways to do business. It is the push for innovation and improvement. It is continuous learning, questioning, and thinking outside of prescribed formulas. Dedication: is what motivates the entrepreneur to work hard, 12 hours a day or more, even seven days a week, especially in the beginning, to get the endeavour off the ground. Planning and ideas must be joined by hard work to succeed. Dedication makes it happen. Determination: is the extremely strong desire to achieve success. It includes persistence and the ability to bounce back after rough times. It persuades the entrepreneur to make the 10th phone call, after nine have yielded nothing. For the true entrepreneur, money is not the motivation. Success is the motivator; money is the reward. Flexibility: is the ability to move quickly in response to changing market needs. It is being true to a dream while also being mindful of market realities. A story is told about an entrepreneur who started a fancy shop selling only French pastries. But customers wanted to

buy muffins as well. Rather than riskingthe loss of these customers, the entrepreneur modified her vision to accommodate these needs. Leadership: is the ability to create rules and to set goals. It is the capacity to follow through to see that rules are followed and goals are accomplished. Passion: is what gets entrepreneurs started and keeps them there. It gives entrepreneurs the ability to convince others to believe in their vision. It cant substitute for planning, but it will help them to stay focused and to get others to look at their plans. Self-confidence: comes from thorough planning, which reduces uncertainty and the level of risk. It also comes from expertise. Self-confidence gives the entrepreneur the ability to listen without being easily swayed or intimidated. Smarts: consists of common sense joined with knowledge or experience in a related business or endeavour. The former gives a person good instinct, the latter, expertise. Many people have smarts they dont recognize. A person who successfully keeps a household on a budget has organizational and financial skills. Employment, education, and life experiences all contribute to smarts. Every entrepreneur has these qualities in different degrees.The most important strategy is to be aware of strengths and to build on them. In contrast, some people are attracted to entrepreneurship by the advantages of starting a business. These include:  Entrepreneurs are their own bosses. They make the decisions. They choose whom to do business with and what work they will do. They decide what hours to work, as well as what to pay and whether to take vacations.  Entrepreneurship offers a greater possibility of achieving significant financial rewards than working for someone else.  It provides the ability to be involved in the total operation of the business, from concept to design and creation, from sales to business operations and customer response.  It offers the prestige of being the person in charge.  It gives an individual the opportunity to build equity, which can be kept, sold, or passed on to the next generation.

 Entrepreneurship creates an opportunity for a person to make a contribution. Most new entrepreneurs help the local economy. A fewthrough their innovations contribute to society as a whole. One example is entrepreneur Steve Jobs, who cofounded Apple in 1976, and the subsequent revolution in desktop computers. Some people evaluate the possibilities for jobs and careers where they live and make a conscious decision to pursue entrepreneurship. 5.0 SMALL AND MEDIUM ENTERPRISE (SME) INDUSTRY SECTOR: Micro and small or medium-sized enterprises (SMEs) make important contributions to development.The growth of a healthy, competitive SME sector will be maximised when here is a strong enterpriseculture in the society at all levels; a continuous growth in the quality stock of independent business;maximum potential for growth of existing small businesses: and a highly supportive economic, social andstakeholder environment. Micro, small and medium-scale enterprises (SMEs) make important contributions to economic andsocial development. In all economies they constitute the vast majority of business establishments areusually responsible for the majority of jobs created and account for one third to two thirds of the turnoverof the private sector. In many countries they have been the major engine of growth in employment and outputover the last two decades. In developing countries they are seen as a major self-help instrument forpoverty eradication. In transition economies, the main target countries of this publication, they provide thebest illustration of the changes in ownership structures, business culture and entrepreneurial behaviour overthe past decade. 6.0 FACTORS INFLUENCING THE PROBABILITY OFNEW VENTURE SUCCESS Entrepreneurship is an attractive career choice. But many decisions have to be made before launching and managing a new business, no matter its size. The entrepreneurs challenge is to balance decisiveness with cautionto be a person of action who does not procrastinate before seizing an opportunityand at the same time, to be ready for an opportunity by having done all the preparatory work possible to reduce the risks of the new endeavour. Preparatory work includes evaluating the market opportunity, developing the product or service, preparing a good business plan, figuring out how much capital is needed, and making arrangements to obtain that capital.Through careful analysis of entrepreneurs

successes and failures, economists have identified key factors for up-and-coming business owners to consider closely. Taking them into account can reduce risk. In contrast, paying them no attention can precipitate the downfall of a new enterprise. Motivation:What is the incentive for starting a business? Is it money alone? True, many entrepreneurs achieve great wealth. However, money is almost always tight in the start-up and early phases of a new business. Many entrepreneurs do not even take a salary until they can do so and still leave the firm with a positive cash flow. Strategy: What is the strategy for distinguishing the product or service? Is the plan to compete solely on the basis of selling price? Price is important, but most economists agree that it is extremely risky to compete on price alone. Large firms that produce huge quantities have the advantage in lowering costs. Realistic Vision:Is there a realistic vision of the enterprises potential? Insufficient operating funds are the cause of many failed businesses. Entrepreneurs often underestimate start-up costs and overestimate sales revenues in their business plans. Some analysts advise adding 50 per cent to final cost estimates and reducing sales projections. Only then can the entrepreneur examine cash flow projections and decide if he or she is ready to launch a new business. CASE STUDY: Issues on entrepreneurship and Solutions or Ideas for those Issues. 1. Being Fastest with the Most: Here the aim from the start is to eventually land a Leadership position being the first with the most. The entrepreneur aims at leadership ifnot at dominance of a new market or industry. Blackberry provides a good example. Withthe undeniably compelling nature of mobile e-mail, it was no big surprise that the (RIM)Blackberry unit became popular so fast. Being first-to-market, its premium pricing didntseem as expensive as it does in todays much more competitive landscape. But, now thecompany is being squeezed and needs to redefine its marketing strategy. 2.Hit Them Where They Arent: In this strategy the innovator doesnt create a major newproduct or service. Instead it takes something just created by somebody else and improves upon it. Drucker called it creative imitation because the innovator reworksthe product or service, coming up with a slightly more desirable option. Take the iPhonefor example. Apple entered the market of mobile phones at a time when it was matureand saturated. But, the difference was found in the iPhones revolutionary product design.As a

cross between a mobile phone and a lap top computer, the Phone took the marketstandard and turned it on its head. 3.Entrepreneurial Judo: In this case, the strategys success feeds on what is unfortunatelyhighly common among American companies: complacency. It takes what the marketleader considers its strengths and turns those strengths into the very weaknesses thatdefeat it. In Druckers Innovation and Entrepreneurship, Entrepreneurial

Strategies(Corpedia Online Program), he gives this example: When the Japanese became theleaders in numerous U.S. markets (e.g., copiers, machine tools, consumer

electronics,automobiles, etc.) they always used the same strategy. If, for example, an Americancompany saw its high profitability as its greatest strength, then it probably meant the firmfocused on the high end of the market, leaving the mass market undersupplied andunderserviced. The Japanese moved in with low-cost products that had minimum featuresand the American companies didnt even put up a fight. However, because the Japanesehad taken over the mass market, they soon had the cash flow to then move in on the highendmarket, too. It didnt take long before they dominated both. 4.Changing Economic Characteristics: Under all of the other strategies presented byDrucker, the innovator has to create an innovative product or service. In this one, thestrategy itself is the innovation. Using this strategy, the company actually converts anexisting product or service into something new by changing its utility, its value and itseconomic characteristics. Post conversion, there is new economic value and newcustomers, but no new product or service. Its a commonly used strategy in the high-techindustry. Pricing is one of the most successful ways to change the economiccharacteristics of a product or service. Drucker used the example of Yahoos situation few years back. With the internet designed as an information network, most providerscharged access for it, (e.g. hosting an email address). But, Yahoo, among others, gaveaway internet access because it was paid for by advertisers who ran ads the customerswould see when they went online. Yahoo asked, Who is the customer? The answer wasthat the customer is the supplier who wants access to a potential customer. This changedthe characteristics of the industry. 5. Ecological Niche: This strategy aims at control. It obtains a practical monopoly in a smallarea. In the most successful of the ecological niche strategies, the whole point is to be soinconspicuous that despite the products being essential to a process; no one will likelytry to compete, making them virtually immune to competition. Three distinct nichestrategies fall

under this category.One of these is called the toll-gate strategy. Being in a toll-gate position means oncethe product is developed and patented, it is in such high demand no one will do withoutit. An example comes from Givun Imaging, an Israeli company that developed the firstingestible video camera at a size so small it fits inside a pill. The device enables doctorsto view the small intestine from the inside, helping medical professionals to diagnosecancer and digestive disorders. Used across the world, doctors couldnt do without it.More importantly, price was not an issue. Givun Imaging was the first, putting itself inone of the most desirable positions a company could occupy.In addition to his list of strategies, Drucker offered several important caveats toemphasize the connection between entrepreneurial strategy and innovation. Stated differently,before implementing one of Druckers strategies, its important to make sure its the right One. Some entrepreneurial strategies fit better in certain situations, while other strategies work betterin combination with another. One entrepreneur may combine two or even three into one strategy. These are his guidelines: The strategies are not mutually exclusive. The strategies are not always sharply differentiated. Each strategy fits certain kinds of innovation and does not fit others. Each strategy requires specific behaviour on the part of the entrepreneur. Each strategy has its own limitations and carries its own risks. 7.0 CONCLUSION: Most economists agree that entrepreneurship is essential to the vitality of any economy, developed or developing.Entrepreneurs create new businesses, generating jobs for themselves and those they employ. In many cases, entrepreneurial activity increases competition and, with technological or operational changes, it can increase productivity as well.Others agree that the benefits of small businesses go beyond income. Hector V. Baretto, administrator of the U.S. Small Business Administration (SBA), explains, Small businesses broaden the base of participation in society, create jobs, decentralize economic power, and give people a stake in the future.Entrepreneurs innovate and innovation is a central ingredient in economic growth. As Peter Drucker said, The entrepreneur always searches for change, responds to it, and exploits it as an opportunity. Entrepreneurs are responsible for

the commercial introduction of many new products and services, and for opening new markets. A look at recent history shows that entrepreneurs were essential to many of the most significant innovations, ones that revolutionized how people live and work. From the automobile to the airplane to personal computers individuals with dreams and determination developed these commercial advances. 8.0 REFERENCES: Begley, T. M., & Boyd, D. B. (1987). Psychological characteristicsassociated with Performance in entrepreneurial firms and smallbusinesses. Journal of Business Venturing, 2, 79-93. Brockhaus, R. H. (1982). Psychology of the Entrepreneur.In D. L. SextonKent, C.A., and K. H. Vesper (Eds.), Encyclopedia ofEntrepreneurship. Englewood Cliffs, NJ: Prentice-Hall, Inc., 39-71. Brockhaus, R. H. Sr., &Horwitz, P. S. (1986).The psychology of theentrepreneur. In Sexton, D. L., and Smilor, R. W. (Eds.), The Art andScience of Entrepreneurship. Cambridge, MA: Ballinger, 25-48 Drucker, P.F. (1985) The Practice of Innovation, Innovation and Entrepreneurship Practice and Principles, Harper & Row, New York, pp. 19-33 Drucker, P.F. (1985) The Practice of Entrepreneurship, Innovation and Entrepreneurship Practice and Principles, Harper & Row, New York, pp. 141-188 Drucker, P.F. (1985) Entrepreneurial Strategies, Innovation and Entrepreneurship Practice and Principles, Harper & Row, New York, pp. 207-243 Ho, T. S., &Koh, H. C. (1992). Differences in psychological characteristicsbetween entrepreneurially inclined and non-entrepreneurially inclinedaccounting graduates in Singapore. Entrepreneurship, Innovation andChange: An International Journal, 1, 243-254. Mitton, D. G. (1989). The complete entrepreneur. Entrepreneurship: Theoryand Practice, 13, 9-19. Terpstra, D., & Olson, P. (1993). Entrepreneurial start-up and growth: Aclassification of problems. Entrepreneurship: Theory and Practice, 17,5-20.

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