CHAPTER ONE

THE NATURE OF ENTREPRENEURSHIP

Historical Origin of Entrepreneurship
• In the 17th Century :
• Contractual agreement with the government to provide stipulated products or to perform service
• 18th Century : Richard Cantillon
• An entrepreneur is a risk taker
• Differentiation of the entrepreneurial role from capital providing role.
• In the late 19th and early 20th Century :
• The entrepreneur organizes and operates an enterprise for personal gain
• In the middle of the 20th Century
• The notion of an entrepreneur as an inventor as established
• Revolutionize the pattern of production by exploiting an invention or more generally untried
technological possibility of production
Definitions of Entrepreneurship and Entrepreneur
Entrepreneurship is the process of identifying opportunities in the market place, arranging
the resources required to pursue these opportunities and investing the resources to exploit
the opportunities for long term gains

Entrepreneurship is the processes through which individuals become aware of business

ownership then develop ideas for, and initiate a business.

Entrepreneurship can also be defined as the process of creating something different and
better with value by devoting the necessary time and effort by assuming the accompanying
•In general, the process of entrepreneurship includes five critical elements.
These are:

1) The ability to perceive an opportunity.

2) The ability to commercialize the perceived opportunity i.e. innovation

3) The ability to pursue it on a sustainable basis.

4) The ability to pursue it through systematic means.
5) The acceptance of risk or failure.
An entrepreneur can be defined as follows:
1) An entrepreneur is any person who creates and develops a business idea and takes the
risk of setting up an enterprise to produce a product or service which satisfies customer
needs.
2) A professional who discovers a business opportunity to produce improved or new goods
and services and identifies a way in which resources required can be mobilized.
3) An entrepreneur is an individual who has the ability to identify and pursue a business
opportunity; undertakes a business venture; raises the capital to finance it; gathers the
necessary resources needed to operate the business venture; sets goals; initiates
appropriate action to ensure success; and assumes all or a major portion of the risk!
Types of Entrepreneurs
1. The individual entrepreneur: someone who started; acquired or franchised his/her own independent organization.
2. Intrapreneur: a person who does entrepreneurial work within large organization.
• There are two facts about intrapreneurship
a. The Intrapreneur’s context is often large and bureaucratic organization whereas the individual entrepreneur operates in the broader,
more flexible economic market place.

b. Intrapreneurs are individuals who often engage in the entrepreneurial actions in large organizations without the blessing of their
organizations.

3. The Entrepreneurial Organization: An organization can create an environment in which all of its members can contribute in

some function to the entrepreneurial function.

•An organization that creates such an internal environment is defined as entrepreneurial organization.
 Role of Entrepreneurs in Economic Development


Improvement in per capita Income/Wealth Generation

Generation of Employment Opportunities

Inspire others Towards Entrepreneurship

Balanced Regional Development

Enhance the Number of Enterprise

Provide Diversity in Firms

Economic Independence

Combine Economic factors

Provide Market efficiency

Accepting Risk

Maximize Investor’s Return
 Who Becomes an Entrepreneur?

1)The Young Professional

2)The Inventor
3)The Excluded
Qualities of an Entrepreneur
Opportunity-seeking
Persevering
Risk Taking
Information-seeking
Goal Setting
Planning
Persuasion
Networking
Building Self-confidence
 Cont…nd
 Listening to Others
Demonstrating Leadership
Demanding for Efficiency
Demanding for Quality
Quality benefits
 Reduction of waste
 Cost-effectiveness
 An increase in market share
 Better profitability
 Social responsibility
 Reputation
• Entrepreneurial Skills
I) General Management Skills: required to organize resources needed to run the venture.

 Strategy Skills

 Planning Skills

 Marketing Skills

 Financial Skills

 Project Management Skills

 Time Management Skills

2)People Management Skills: it is essential to link with people.
Communication Skills
Leadership Skills
Motivation Skills
Delegation Skills
Negotiation Skills
The Entrepreneurial Tasks
1) Owning Organizations
2) Founding New Organizations
3) Bringing Innovations to Market
4) Identification of Market Opportunity
5) Application of Expertise
6) Provision of leadership
7) The entrepreneur as manager
 Wealth of the Entrepreneur
•Wealth is money and anything that money can buy.
•It includes money, knowledge and assets of the entrepreneur.
•Who Benefits from the entrepreneur’s Wealth?
• Employees
• Investors
• Supplier
• Customers
• Local community
• Government
• Entrepreneurship and Environment
It is may be healthy or unhealthy.
Phases of Business Environment
1. External environment: Political, economical, socio-cultural,
technological, legal ,and demographic environments.
2. Internal environment: raw material, production/operation,
Finance, and human resource.
 Environmental Factors Affecting
Entrepreneurship
• Sudden changes in Government policy.
• Sudden political upsurge.
• Outbreak of war or regional conflicts.
• Political instability or hostile Government attitude towards
industry.
• Excessive red-tapism and corruption among Government
agencies.
• Ideological and social conflicts.
• Unreliable supply of power, materials, finance, labor and other
inputs.
• Rise in the cost of inputs.
• Unfavorable market fluctuations.
 Creativity, Innovation and Entrepreneurship
• Creativity
• It is defined as the tendency to generate or recognize ideas,
alternatives, or possibilities
• It is the ability to come up with new idea
• Steps in the Creative Process
• Opportunity or problem Recognition
• Immersion
• Incubation
• Insight
• Verification and Application
 Barriers to Creativity

• Searching for the one • Becoming overly specialized

‘right’ answer • Avoiding ambiguity
• Focusing on being logical • Fearing looking foolish
• Blindly following the rules • Fearing mistakes and failure
• Constantly being practical • Believing that ‘I’m not
• Viewing play as frivolous creative
 Innovation
• It is a means to the exploitation of opportunity.
• It is the implementation of new idea.
• Four types of innovation
• Invention
• Extension
• Duplication
• Synthesis
 The Innovation Process

• Analytical planning
• Resources organization
• Implementation
• Commercial application
 Areas of Innovation
• New product
• New Services
• New Production Techniques
• New Way of Delivering the Product or Service to
the Customer
• New Operating Practices
• New Means of Informing the Customer about the
Product
• New Means of Managing Relationship within the
Organization
From Creativity to
Entrepreneurship
Thank you!!!