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2
Chapter
ISSUES IN
ENTREPRENEURSHIP
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ISSUES IN ENTREPRENEURSHIP
AT THE END OF THIS CHAPTER, YOU WILL BE ABLE
TO:
– Define small and medium-sized enterprises.
– Analyze the principles and role of business ethics in
entrepreneurship.
– Explain the social responsibilities of entrepreneurs.
– Understand the application and importance of information
and communication technology in a company.
– Discuss the advantages and disadvantages of e-commerce.
– Explain how the entrepreneurial culture can be developed
and the role of the government in developing the culture.
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SMALL AND MEDIUM-SIZED
ENTERPRISES
Small and Medium Enterprises (SMEs)
are companies involved in local industries
Responsible for supplying equipment and
components to local and multi-national
companies
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SME IN MALAYSIA
Coastal Contracts Bhd (marine transportation)
Hai-O Enterprise Bhd (cosmetics)
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SME IN MALAYSIA
NTPM (paper products)
Success Transformer (electrical manufacturing)
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MICRO-SIZED ENTERPRISES
A micro enterprise has full-time
employees of less than 10 persons or
annual sales turnover of less than
RM250,000.
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SMALL-SIZED ENTERPRISES
A small enterprise has full-time employees
of between 5 and 50 persons or annual
sales turnover of between RM250,000 and
less than RM10 million.
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MEDIUM-SIZED ENTERPRISES
A medium enterprise has full-time
employees of between 51 and 150
persons or annual sales turnover of
between RM10 million and RM25 million.
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SMALL AND MEDIUM ENTERPRISES
SMEs play a crucial role in the economic
development of a country and provide the
base to further develop entrepreneurship
talent among individuals.
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29/9ROLES OF SMALL AND
MEDIUM ENTERPRISES (SMES)
Source of innovation and creativity
Test ground for entrepreneurs
Career opportunities for productive individuals
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BUSINESS ETHICS
A branch of ethics that examines ethical rules and
principles within a commercial context and the
various moral or ethical problems that can arise in
a business setting as well as any special duties or
obligations that apply to persons engaged in
commerce
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IMPORTANCE OF BUSINESS
ETHICS
Social responsibility
Commitment to the profession
Good time management
Personal initiative
Continuous improvement
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PRINCIPLES OF ETHICS
Identify and accept the rights of customers
Be trustworthy
Carry out a genuine profession
Provide clear information
Adhere to fair competition
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SOCIAL RESPONSIBILITIES OF
ENTREPRENEURS
Responsibilities towards Customers
Responsibilities towards Staff
Responsibilities towards Creditors
Responsibilities towards Environment
Responsibilities towards Suppliers
Responsibilities towards Competitors
Responsibilities towards Society/Community
Responsibilities towards Government
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IMPORTANCE OF INFORMATION AND
COMMUNICATION TECHNOLOGY IN A
COMPANY
Attracts a large number of customers
The company can be visited without time
restrictions
Gives an image of a well-established company
Minimizes management costs
Disseminates business information
Reduces the size of filing
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ADVANTAGES OF E-COMMERCE
Faster and easier transactions
Remains open all the time
Removes barriers of global trading
Low operational costs and better services
No need of physical company set-ups
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E- Commerce
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DISADVANTAGES OF E-COMMERCE
Risk of being cheated
No guarantee of product quality
Tendency to have mechanical failures
Customer loyalty
Threats to security and privacy
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DEVELOPING
ENTREPRENEURIAL CULTURE
Having a clear direction
Maximising self-potential
Planning strategically
Managing time effectively
Being creative and innovative
Increasing work quality continuously
Seizing opportunities
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How Companies Can Work
Together
Merger: two companies legally become one
• All assets and liabilities being merged out of
existence become assets and liabilities of
surviving company
Stock acquisition: acquired company becomes
subsidiary of acquiring company
Asset acquisition: assets but not liabilities
become assets of acquiring firm
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Example of Merger Companies
IJM Corporation Berhad
The decision to merge three companies – IGB
Construction Sdn Bhd, Jurutama Sdn Bhd, and
Mudajaya Sdn Bhd
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How Companies Can Work
Together
Joint venture: parties work together for lengthy
or indeterminate period of time
– Form NEW, third entity
– Divide ownership and control of new entity, determine
who will contribute what resources
– Advantage: two entities can remain focused on their
core businesses while letting joint venture pursue the
new opportunity
– Downside: governance issues and economic fairness
issues create friction and eventual disbandment
(discontinuation)
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How Companies Can Work
Together
Acquisition: acquired company becomes
subsidiary of purchasing company
– Most permanent
– Forms of acquisitions
• Merger
• Stock acquisition
• Asset acquisition
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Tutorial 2
1. Define small and medium-sized enterprises.
2. Analyze the principles and role of business ethics in
entrepreneurship.
3. Explain the social responsibilities of entrepreneurs.
4. Discuss the advantages and disadvantages of e-
commerce.
5. Explain how the entrepreneurial culture can be
developed and the role of the government in developing
the culture.
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