TOPIC 1

OVERVIEW OF ENTREPRENEURSHIP

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Learning Outcomes

At the end of this chapter, students are given the following competencies: Understand how the economic environment influence the selection of new business ventures. Use of relevance information to help screening potential new business venture. Able to use basic SWOT Analysis technique to review options of new business venture.

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Contents

Environmental Screening Analysis of Business Opportunities Selection of Business Opportunities Development of new Business Concept Initial Plan for New Business Ventures

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Definition
Entrepreneurship:

is the process of creating something new 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.

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WHO ARE THE ENTREPRENEURS?

Paradigm shifters, innovators and opportunists Key change catalysts and agents Wealth and employment creators Economic engine drivers Key actors of the Malaysian Economy

Entrepreneurs are made and not born

You can be the entrepreneur - if you have what it takes People who like to be their own boss People who has experienced a social disruption?

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WHY BECOME ENTREPRENEURS?

Definition of an entrepreneur French word entreprende meaning go between or enter to undertake. A person who undertakes to organize, manage and assume risks of business How people become entrepreneur ? by design and default. Entrepreneurs are created in good and bad economic times - Creative Destruction.

Challenges and rewards for an entrepreneur.

Many begins but few make it big.

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Screening the environment

Country Economic Scenario (Malaysia)

Historical ( 5 years trend) Current economic scenario GDP growth Industrial Growth Manufacturing / Services

Promoting Human Capital Knowledge based Industry Agriculture as a viable business Improve delivery services Improve maintenance of Assets R&D and innovation

Other Policy / Priority

Economic Policy

Five Years Plan RMK -9 Promoted Industry Biotechnology ICT Food Halal Food SMEs

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MALAYSIA: A MOST ENTERPRISING CULTURE AND NATION KnowledgeAgriculture-based led by Government Export textile & electronic goods Export high value added electrical & electronic goods based goods & services

Export of rubber, tin, palm oil & timber

Manufacture of import substitution goods

Knowledge Era Technology Era Industrial Era

1980s 1990s 2000s

Knowledge Driven

Agriculture Era
1960s

1970s

Labour Driven

Labour Driven

Investment Driven

Productivity Driven
Knowledge-based led by Private Enterprises

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Screening Environment
OPPORTUNITIES THREATS

Regional Economic/ Business trend

Government Policy / Initiatives

ENTREPRENEUR Strength
Global Economic/ Business trend

Weakness
Private Sectors Initiatives

Other Issues ( Education, Health, Social, Political, Culture)

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Steps to select new ventures

Step 4 Select one which is suitable to the
entrepreneur and develop business concept.

Step 3 Analyze specific opportunities which are feasible to venture. Step 2 Screening environment, evaluating self,
community & society, value and culture of the potential target group.

Step1

Identify Customers needs and wants

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Step 1 : Identifying customer needs & wants

Needs & Wants

Products
Something physical which can satisfied customer needs and wants.

Needs : something basic which people must have. Example: clothing, house, food, health, basic education, protection etcs.
Wants: desire to have more than basic needs. Wants will be fulfill after the basic needs were being fulfilled. Examples: cars, bigger house, traveling, golf club, latest fashions, jewelry etcs.

Services
Non-physical but able to fulfill customer needs and wants

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Step 2 : Screening environment, evaluating self, community & society, value and culture of the potential target group.

Analyze Environment
Population structure, Income, taste, preferences Country export & imports Local resources and new technology Industry linkages Government and Private development projects Global and Regional development Currents issues, social, rules & regulations.
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Self
Experience Knowledge & skills Financial standing Interest Networking

Community
Norm

Step 3: Analyzing the feasibility of Opportunities

Legal perspective

Market Competition level

Funding

Analyze

Technology availability Raw material supply

Feasibility

Expertise & manpower Logistic Sustainability

Risks Level
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Step 4: Select New Ventures

Market Competition level / Marketing Plan Operational Plan ( Technology, Supply Chain)

Analyze

Organizational & Admin. Plan ( Expertise & manpower )

Viability

Funding ( working capital, fixed assets) Profitability ( ROI, ROE, Pay back, Cash Flow, Risks Level

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Step 4 ( cont: )
New venture selected. Prepare Details Business Plan. Execute Plan

Monitor and Improvement.

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Example business opportunities

AGRICULTURE

Forestry

Fishery

Plantation

Poultry

Veneer Plywood Logging Furniture Sawn timber

Fishing Equipment Deep-sea fishing Fish Processing Wholesales/ distributions

Clearing plantation Planting Processing Wholesale/ distribution Nursery

Poultry farming Processing Wholesales/ Supplies

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Industrial Linkages
BACKWARD FORWARD

OIL INDUSTRY

Explorations engineering Steel Fabrications Oil Rigs construction Engineering Servicing Equipment components

Petroleum Refinery Petroleum Trading Engine Oil products Hydrocarbon raw material Plastic / resin products

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Business Opportunities
High Risks

Business Risk
Risk could be transfer insurance (fire, loss etc)
Controlled risk but not 100% - market forecast quality products,

Financial Risk
Liquidity level
Loan Credit Currency exchange

Uncontrolled risk : economy recession, currency value, disaster

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Business and Level of Risks

Alternatives Entry Level of Risk Expect Examples ed returns
Low Food Stall Tailor Gen. Trading

Easy

Low

Medium

Medium

Medium

Mini Market Auto Services

Public Transport Constructions Heavy Industry

Difficult

High

High

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Conclusion

SWOT ANALYSIS.

S = Strength W = Weakness O = Opportunity T = Threat

SWOT is use to evaluate new business opportunities. Entrepreneur will choose one which is fit to his /her objective / vision.

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SWOT Analysis

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