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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