Entrepreneurship for

Engineers
Hawassa University Institute of Technology
Department of Industrial Engineering

2013/2021

Target Group:
WSEE Engineering 5th year

PPT #1 By: Sitotaw A.

Outlines:
 Introduction
 Entrepreneurs
 Entrepreneurial Characteristics, Backgrounds, and Skills
 Entrepreneurship
 Correlations of some terms
 Sources of new ideas
 SWOT Analysis
 Project Feasibility Study
 Business Plan
 Project work
The Foundations of
Entrepreneurship
 The World of the Entrepreneur
• Every year in the U.S., entrepreneurs launch 850,000
new businesses.
• Entrepreneurial spirit - the most significant economic
development in recent history.
• Study: 11.3% of adult population in the U.S. is actively
involved in trying to start a new business.
• Though there is no statistically justified result,
entrepreneurship skills and understandings are growing
rapidly in Ethiopia as well.
• GEM (Global Entrepreneurship Monitor)
study
Globally 9.4% of adults are actively engaged in
trying to start a business.
Men are twice as likely as women to start a
business.
Nearly one-third of global entrepreneurs are
between the ages of 25 and 44.
 What is an Entrepreneur?
The word ‘entrepreneur’ is derived from French word
‘Entreprendre’ which was used to designate an
organizer of musical or other entertainments.
Entrepreneur is one who creates a new business in the
face of risk and uncertainty for the purpose of
achieving profit and growth by identifying
opportunities and assembling the necessary resources
to capitalize on them.
“The function of entrepreneurs is to reform or
revolutionize the pattern of production by
exploiting an invention or, more generally, an
untried technological possibility for producing a
new commodity or producing an old one in a new
way, opening a new source of supply of materials
or a new outlet for products, by reorganizing a
new industry . . . .”
- Joseph Schumpter
• “Entrepreneur is a change agent” - Frank Young

• “Entrepreneurs are those people who have the

ability to see and evaluate business opportunities,
together with the necessary resources to take
advantage of them and to initiate appropriate
action to ensure success”- ILO
• An entrepreneur is a bearer of risk, which is non-
insurable.
To an economist –
– an entrepreneur is one who brings resources labor materials and
other assets into combinations that make their value greater than
before also one who introduces changes innovations and a new order.

To a psychologist -
– An entrepreneur is such a person typically driven by certain forces
need to obtain or attain something to experiment to accomplish or
perhaps to escape authority of others.

The same person is seen by a capitalist philosopher as -

– one who creates wealth for others as well who finds better ways to
utilize resources and reduce waste and who produces jobs others are
glad to get (Karl Vesper).
Entrepreneurial Characteristics,
Backgrounds, and Skills
Entrepreneurial Characteristics, Backgrounds, and Skills
Entrepreneurial Characteristics:
• Wickham, 2001, identified the following 13 characteristics
of successful entrepreneurs.
– Hard work. They put a lot of effort in to developing their
ventures.
– Self Starting. They do not need to be told what to do.
– Setting of Personal Goals. They tend to set themselves clear
and demanding goals.
– Resilience. They do not pick themselves up after things have
gone wrong but learn positively from experience and use
that learning to increase the chances of success the next
time around.
– Confidence. They demonstrate they believe in themselves
and in their venture.
Entrepreneurial, cont.…
– Receptiveness to New Ideas. They recognize their
limitations and the possibilities that they have to improve
their skills.
– Assertiveness. It means a commitment to outcomes, not
to means. True assertiveness relies on mutual
understanding and is found on good communication skills.
– Information Seeking. They are characterized by
inquisitiveness. They are never satisfied by the
information they have at any one time and constantly
seek more. They question more than they make
statements when communicating.
– Eager to Learn. They are always receptive to a chance to
improve their skills and to develop new ones.
Entrepreneurial, cont.…
– Attuned to Opportunity. They constantly search for
new opportunities. They are never really satisfied
with the ways things are any moment in time.
– Receptive to Change. They always are willing to
embrace change in a positive fashion.
– Commitment to Others. They are not selfish. They
recognize the value that other people bring to their
ventures and the importance of motivating those
people to make the best effort they can on its behalf.
– Comfort with Power. They can become very powerful
figures. They are aware of the power they possess
and recognize at as an asset. They are not afraid to
use it and never let themselves be intimated by it.
Entrepreneurial, cont.…

Entrepreneurial Background:
• While a wide variety of aspects of an entrepreneur’s
background have been explored, only a few have
differentiated the entrepreneur from the general
populace or managers.
• The background areas explored include
– Childhood Family Environment,
– Education,
– Personal Values,
– Age And
– Work History.
Entrepreneurial, cont.…
a. Childhood Family Environment
• This includes birth order, parent’s occupation and social status, and
relationship with parents.
• Birth Order. The impact of birth order has had conflicting research results
since Hennig and Jardin found that female executives tend to be the
firstborn.
• Parent’s Occupation and Social Status. In terms of the occupation of the
entrepreneurs’ parents, there is strong evidence that entrepreneurs tend
to have self-employed or entrepreneurial fathers. Having a father who is
self-employed provides a strong inspiration for the entrepreneur. As one
entrepreneur stated, “My father was so consumed by the venture he started and
provided such a strong example, it never occurred to me to go to work for anyone else”.
• Relationship with parents. Some parents are supportive and encourage
independence, achievement, and responsibility which appears to be most
important for entrepreneurs. Entrepreneurs tend to grow up in middle -
to upper-class environments, where families are likely to be relatively
child centered.
Entrepreneurial, cont…

b. Education
• While it is frequently stated that entrepreneurs are less
educated than the general population, the research
findings indicate that this clearly is not the case.
Education was important in the upbringing of the
entrepreneurs.
• Entrepreneurs have cited an educational need in the
areas of finance, strategic planning, marketing
(particularly distribution), and management.
• The ability to deal with people and communicate clearly
in the written and spoken word is also important in any
entrepreneurial activity.
Entrepreneurial, cont.…

c. Personal Values
• While there have been many studies indicating that
personal values are important for entrepreneurs,
frequently these studies fail to indicate that entrepreneurs
can be differentiated on these values from managers,
unsuccessful entrepreneurs, or even the general populace.
d. Age
• Here, it is important to differentiate between
entrepreneurial age (the age of the entrepreneur
reflected in the experience) and chronological age.
• Entrepreneurial experience is one of the best predictors
of success, particularly when the new venture is in same
field as his/her business experience.
Entrepreneurial, cont.…

e. Work History
• This is a negative displacement in the decision to launch
a new entrepreneurial venture, but it is also important
in the growth and eventual success of the new venture.

Dissatisfaction, challenge, frustration, and boredom in the

one’s existing job often motivates the launching of a new
venture
While
once the decision to launch has been made, the previous
technical and industry experience is important .
• It is generally easier to start a second, third, or fourth venture
than it is to start the first one. This is because of experience!
Entrepreneurial, cont.…

Entrepreneurial Skills:
• A skill is simply knowledge which is demonstrated by
action. An entrepreneur is someone who has a good
business idea and can turn that idea into reality.
• Turning an idea into reality, calls upon two sorts of skills.
– General management skills are required to organize the
physical and financial resources needed to run the venture.
This includes strategy skills, planning skills, marketing skills,
financial skills, project management skills and time
management skills.
– People management skills are needed to obtain the
necessary support from others for the venture to succeed.
This includes leadership skills, motivation skills, delegation
skills, communication skills and negotiation skills.
 Characteristics of Entrepreneurs
• Desire for responsibility
• Preference for moderate risk
• Confidence in their ability to succeed
• Desire for immediate feedback
• High level of energy
• Future orientation – serial entrepreneurs
• Skilled at organizing
• Value achievement over money
 Types of Entrepreneurs
• Based on Type of Business
– Business entrepreneur:
– Trading entrepreneur
– Industrial entrepreneur
– Corporate entrepreneur
– Agricultural entrepreneur
• Based on Motivation
– Pure entrepreneur
– Induced entrepreneur
Cont. …
• Based on stages of Development
– First generation entrepreneur
– Second generation entrepreneur
– Classical entrepreneur
• Based on Gender and Age
– Man entrepreneur
– Woman entrepreneur
– Young entrepreneur
– Middle-aged entrepreneur
– Old entrepreneur
 What is an entrepreneurship?
“Entrepreneurship is the dynamic process of
creating incremental wealth. The wealth is
created by individuals who assume the major
risks in terms of equity, time, and/or career
commitment or providing value for some
product or service.
The production service may or may not be new
or unique but value must somehow be infused by
the entrepreneur by receiving and allocating
the necessary skills and resources.”
- Robert C. Ronstad
 Entrepreneurship
• One characteristic of entrepreneurs stands out:
Diversity!

• Anyone – regardless of age, race, gender, color,

national origin, or any other characteristic – can
become an entrepreneur (although not everyone
should).
 Forms of Entrepreneurship
• The Individual Entrepreneur: An individual who
started, acquired, or franchised his or her own
independent organization
• Intranpreneur: who does entrepreneurial work
within large organizations.
• The Entrepreneurial Organization: An organization
can create an environment in which all of its
members can contribute in some fashion to the
entrepreneurial function.
 Benefits of Entrepreneurship

• Vital roles of entrepreneurs in the economic

development of a country include:
Capital formation
Improvement in per capital income
Generation of employment
Balanced regional development
Improving in living standards
Backward and forward linkages
Growth of infrastructural facilities
 Drawbacks of Entrepreneurship
 Uncertainty of income
 Risk of losing your entire investment
 Long hours and hard work
 Lower quality of life until the business gets
established
 High levels of stress
 Complete responsibility
 Discouragement
Correlations of some terms
Entrepreneur and Entrepreneurship
Entrepreneur Entrepreneurship
Refers to a person; Refers to a process, activity, function
of;
 Visualizer  Vision
 Creator  Creation
 Organizer  Organization
 Innovator  Innovation
 Technician  Technology
 Initiator  Initiative/initiation
 Decision maker  Decision/ decision-making
 Planner  Planning
 Leader  Leadership
 Programmer  Action
 Risk- taker  Risk-taking
 Communicator  Communication
 Administrator  Administration
 Entrepreneur and Intranpreneur
Points Entrepreneurs Intrapreneur
Dependenc  is independent in his  is dependent on the
y business operation entrepreneurs i.e. owner. An
Intrapreneur is semi-
independent.
Raising of  Raises funds required  Depends up on the industry in
funds for the organization in which he works for getting the
his own initiatives. finance.
Risk  Bears the full risk  Bears the risk of the business
involved in his which is a small part of the
business. entire business.
Ownership  Is the real owner of the  Is not the real owner of the
business business, rather he works for the
business
Profit  Takes the profit of the  Doesn’t take profit out of
business innovations but he can be
provided with a variety of pre-
requisites for his innovation.
 Entrepreneurship and Management

Entrepreneurship is different from management.

Entrepreneurship involves initiating changes in production,

whereas management involves the ongoing coordination of

the production process.

“Entrepreneurship is a discontinuous phenomenon, appearing

to initiate changes in the production process … and then

disappearing until it reappears to initiate another change”.

- Paul H Wilken
 Points Entrepreneur Manager
Motive  The main motive of an  Main motive of a manager is
entrepreneur is to start a to render services in an
venture for his personal enterprise already set by
gratification. someone else.
Status  Owner  Servant
Risk  Assumes risk and uncertainty  Manager does not bear any
risk involved in enterprise.
Rewards  Profits, which are highly  Salary which is certain and
uncertain and not fixed. fixed
Innovation  Entrepreneur himself thinks  A manager simply executes
over what and how to produce plans prepared by the
goods to meet the changing entrepreneur.
needs of the customers. Hence
he acts as innovator/change
agent.
Qualificatio  An entrepreneur needs to  A manager needs to possess
n possess qualities and distinct qualifications in
qualifications like high terms of sound knowledge in
achievement motive, management theory and
originality in thinking, practice.
foresight, risk bearing ability
 Creativity and Innovation
Creativity – the ability to develop new ideas and to
discover new ways of looking at problems and
opportunities;
thinking new things.

Innovation – the ability to apply creative solutions to

problems or opportunities to enhance or to enrich
people’s lives;
doing new things.
 What is Innovation?
 Producing something new
 Commercializing or extracting value from ideas
 Schumpeter’s resolves innovation into five types:
 New product or substantial change in existing product -
“The introduction of a new good (product)”.....
 The introduction of a new method of production (process)...
 The opening of a new market...
 The opening of a new source of supply...
 Changes in industrial organization - The carrying out of a
new organization of any industry, like the creation or breach
of a monopoly position.
 Incremental innovation = improvements on existing products
 Disruptive innovation = game changers
 Cont…
• An inventor falls in love with the invention
and will not try modify the invention to make
it more commercially feasible.
• Entrepreneurship – the result of a
disciplined, systematic process of applying
creativity and innovation to the needs and
opportunities in the marketplace.
• Entrepreneur falls in love with the
organization (the new venture) and will do
anything.
 Cont…
 According to Joseph Schumpeter, the rate of economic progress
of a nation depends up on a nation its rate of innovation which
in turn depends upon the distribution of entrepreneurial talent
in the population.
 According to Meir and Baldwin, “development does not occur
spontaneously as a natural consequence when economic
conditions in some sense are right. A catalyst is needed .
 Thus,
– Entrepreneurs are the key to the creation of new enterprises.
– They are regarded as the nation builders and wealth creators.
– They are the agents who initiate economic activity to create
wealth.
The Commercialization Process or Entrepreneur process
The Creative Process
Idea Germination:
The seeding stage of a new idea
Recognition

Preparation:
Conscious search for
Knowledge
Rationalization
Incubation:
Subconscious Assimilation
Of information
Fantasizing
Illumination:
Recognition of Idea as being
Feasible
Realization
Verification:
Application or test to prove
Idea has value
Validation
Thank you!