Entrepreneurship and

Enterprise Development

Course Code: MBA 711

Credit Hours: 2
 Climate setting
• Introduction
• Norms
• Time management
• Expectations
Instructor

Bereket Solomon (PhD)

[email protected]
 Introducing Ourselves

1. Name

2. Educational background

3. Work experience
 Class Rules/Norms
 All Mobiles silent or switch off!
 Active Participation
 Punctuality
 Ask questions anytime!
 Bring good mood!
 Side talk is forbidden
Expectations
 Mode of Delivery

 Brainstorming

 Lecture/ PPT

 Individual Reflection/
Presentation
 Group Assignment
 Assessment Scheme

• Group Assignment -----------------------------30%

• Individual Assignment --------------------------

20%
• Final Exam --------------------------------------50%

• Total----------------------------------------------100%
 Course Design/ Outline
CHAPTER 1: INTRODUCTION TO ENTREPRENEURSHIP

1. Historical Evolution of Entrepreneurship

2. Entrepreneurship in the Twenty-first Century

3. Definition, Meaning and Characteristics of

Entrepreneurship

4. Entrepreneurs and Owner-managers

5. Myths of Entrepreneurship

6. Barriers and Challenges of Entrepreneurship

7. Entrepreneurs and Intrapreneurs

 Course Design/ Outline
CHAPTER 2: ENTREPRENEURIAL
COMPETENCIES, INNOVATION & CREATIVITY
1. Entrepreneurial competencies

2. Types of Innovation

3. The Innovation Process

4. Developing Creativity and the Business Idea

5. Evaluating the business Idea

6. Types of Creativity

7. Process of Creativity
 Course Design/ Outline
CHAPTER 3: FUNDAMENTALS SMALL
BUSINESS
1. Meaning And Definition of Small Business
2. Characteristics of Small Business
3. Rationale With Small Business
4. Role of Small Business In Economic
Development
5. Reasons Why Many Small Businesses Fail
 Course Design/ Outline
CHAPTER 4: THE BUSINESS PLAN
1. The Marketing Plan
2. The Organizational Plan
3. The Financial Plan
 Course Design/ Outline
CHAPTER 5: SOURCE OF CAPITAL
1. Informal Risk Capital
2. Venture Capital
3. Going Public
 Course Design/ Outline

CHAPTER 6: STRATEGIES FOR GROWTH

11. Planning for Growth

12. New Products and Services
13. Growing the Business
14. Developing the Business Plan
15. Exit: Failure and Success
 Course Objectives
After completing the course, students should be able
to:
– Understand the concept entrepreneurship and
entrepreneur

– Describe the role of entrepreneurship and small

businesses in the economy

– Realize the characteristics of entrepreneur

– Generate business ideas and develop business plan

– Appreciate how to start, manage and finance a new

venture
 This is the Mindset…

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and you will forget

Show you,
and you may remember
Involve you,
and you will understand

Your participation is the Encourage you to share,

key element! and you will retain
16
16
 Brainstorming Question
Just take 5 to 10 minutes discuss with your
colleagues and reflect on the following
questions
• What is Entrepreneurship?
• Who is an Entrepreneur?
• What is Enterprise?
 Let’s begin with
“why”?
• To get rich? Follow a passion?
• Family employment creation?
• Opportunity driven?
• Just got laid off?
• To manage your own destiny?

There are lots of valid reasons to become an

entrepreneur, but you’d better know your
 What Is an Entrepreneur?

 There is no universally accepted definition of

entrepreneurship.
• Merriam-Webster:
– “one who organizes, manages and
assumes the risks of a business or enterprise.”
• Dictionary.com:

– “a person who organizes and manages

any enterprise, especially a business, usually
with considerable initiative and risk.”
 What Is an Entrepreneur?

Definition Entrepreneur and Entrepreneurship

• Entrepreneur is derived from the French entreprendre,

meaning “to undertake.”

• Entrepreneur is a person who tries to do something new,

visualizes a business opportunity, organizes the

necessary resources for setting up the business and
bears the risk involved

• An entrepreneur is a person who establishes his own

business with the intention of making profits

 What Is an Entrepreneur?
• An entrepreneur is a person who is action oriented,
highly motivated, takes risks to achieve goals
• The entrepreneur is commonly seen as an innovator, a
source of new ideas, goods, services, and business/or
procedures.
• Entrepreneurship is the process of designing,
launching and running a new business, which is often
initially a small business.

• The people who create these businesses are

called entrepreneurs.
 What Is an Entrepreneur?
• Entrepreneur is a person of very high aptitude
who pioneers change, possessing characteristics
found in only a very small fraction of the
population.
• A person who owns, operates, and takes the risk
of starting a business venture.
• They are often motivated by a spirit of
independence which leads them to believe that
– their success depends on raw effort and hard
 What Is an Entrepreneur?
To sum up in the light of the developments, there
are four key elements of entrepreneurs. These
are:
• Vision (identifying emerging opportunities)

• Innovation (creating new business or new ways

of doing something)
• Risk bearing (taking risk and facing uncertainty)

• Organizing (collection and coordination of the

necessary resources)
 Who Are Entrepreneurs?

• People who start and/or operate a business

• Individuals who discover market needs and launch

new firms to meet those needs
• Risk-takers who provide an impetus for change,
innovation, and progress
• Self-driven individuals who seek independence
and/or wealth
• The driving force behind today’s technological
advances and economic growth
 Enterprise, Entrepreneur and
Entrepreneurship

• An enterprise is the business

organization that provides;
• goods and services, creates jobs,
contributes to national income,
exports and overall economic
development.
 Cont’d …

• Entrepreneurship
–A process of innovation and new-
venture creation through four major
dimensions:
• individual,

• organizational,

• environmental,

• Process that is aided by collaborative networks in

government, education, and institutions.
 Cont’d …

• Entrepreneur
– A catalyst for economic change who uses
purposeful
• searching,
• careful planning, and
• sound judgment when carrying out the
entrepreneurial process
Cont’d …
 Historical Development of
Entrepreneurship

Early Periods and the 16th Century

• In the16th century, the term entrepreneur was used to

describe both an actor and a person who managed large

production projects.

• In such large production projects, the individual did not take

any risks but merely managed the project using the resources
provided, usually by the government of the country.

• Entrepreneur in the 16th century was the cleric the person in

charge of great architectural works such as castles and

public building.
 Cont’d …
17th Century
• Around 17th century this term was used for architects and
contractors for public works.

• Later it was applied to the function of engaging labor and buying

materials and selling the resultant products at contracted prices.

• The re-emergent connection of risk with entrepreneurship

developed in 17th century

• During the 17th century, an entrepreneur was a person who

entered into a contractual arrangement with the government to
perform a service or to supply specified products

• Since the contract price was fixed; any resulting profit or losses
were the entrepreneur.
 Cont’d …
18th Century
• In the 18th century the person with capital was
differentiated from the one who needed capital.
• At this time entrepreneurs were distinguished
from the capital provider.
• One reason for this was the industrialization
occurring through-out the world.
 Cont’d …
19th and 20th Century
• In the late 19th and early 20th centuries, entrepreneurs were
frequently not distinguished from managers.
• The key factor that distinguish a manager from an
entrepreneur was the bearing of risk.
• The entrepreneur during this time:

– Organize and operate an enterprise for personal gain

– Use own initiatives and skill in planning, organizing and
administrating the enterprise.
– Also assume the chance of loss and gain because of
unforeseen and uncontrollable circumstances.
 Cont’d …
• In the middle of 20th century, the notion of
entrepreneur as innovator was established.
• The function of entrepreneur is to reform or
revolutionize the pattern of production by
• Exploiting an invention or new technological
method of producing the new or
• Producing an old one in a new way,

• Opening a new source of supply of material or a

new outlet for product by organizing a new
industry
 Entrepreneurship in the 21st
Century
• The new economy is characterized by:
– Knowledge workers
– Globalization
– Innovation
– Dynamism
– Technological Change
– Competitiveness
 Cont’d …
• Today’s challenges –
– unemployment,
– exclusion,
– inequality,
– economic shocks,
– poverty and
– global warming - oblige us to rethink the way we
do business

• Therefore, in order to survive and compete in

the 21st century, entrepreneurs and
entrepreneurship are critical
 Process of
Entrepreneurship
 Characteristics of
Entrepreneurs
• Commitment and • Calculated Risk Taking
Persistence • Integrity and Reliability
• Drive to Achieve • Tolerance for Failure
• Opportunity Orientation • High Energy Level
• Initiative and • Creativity and
Responsibility Innovativeness
• Persistent Problem • Self-confidence and
Solving Optimism
• Seeking Feedback • Independence
• Internal Locus of Control
 Personal Traits and Common
Characteristics Entrepreneurs
Entrepreneurial Skills
 The types of skills required by Entrepreneur

Technical skills Business Personal

management entrepreneurial skills
skills
Writing Finance Inner control
Oral communication Marketing Risk taker
Monitoring Decision making Innovative
environment
Technology Human relation Change control
Interpersonal Accounting Persistent
Listening Management Visionary leader
control
Networking Negotiation Ability to manage
change
Management style Venture launch
Coaching Managing growth
Qualities of Successful
Entrepreneurs
Stages of Effective Entrepreneurial
Development
 Stages of Effective Entrepreneurial
Development
Stages of In this stage, the Entrepreneur
Development
Examines who he/she is, clarifies his values,
personality, motivations, capabilities and
Awareness
personal resources. He/she becomes
consciously aware of who he/she is
Identifies, recognizes and accepts his/her
Acceptance
strengths and weaknesses

Vision building Sets long-term goals for himself/herself and

business
Business planning Develops a business plan and action plan to
achieve his/her vision

Learn from direct Implements the plan, reflects on the results to

 Benefits of Entrepreneurship
The opportunity to:
• Create your own destiny

• Make a difference

• Reach your full potential

• Reap impressive profits

• Contribute to society and to be recognized for

your efforts
• Do what you enjoy and to have fun at doing it
 Importance of Entrepreneurship to the
Economy
Capital formation
• Entrepreneurs promote capital formation by
mobilizing the idle savings and investments of
public/people.
• They employ their own as well as borrowed resources
for setting up their enterprises.
• Such types of entrepreneurial activities lead to value
addition and creation of wealth, which is very
essential for the industrial and economic development
of the country.
 Importance to the Economy –
cont’d
Creates large-scale employment opportunities
• Entrepreneurs provide immediate large-scale employment to the

unemployed which is a chronic problem of underdeveloped nations.

Promotes balanced regional development

• Entrepreneurs help to remove regional disparities through setting

up of industries in less developed and backward areas.

• The growth of industries and business in these areas lead to a large

number of public benefits like road transport, health, education,

entertainment, etc.

• Setting up of more industries lead to more development of backward

regions and thereby promotes balanced regional development.

 Importance (Cont’d) …
Raising living standards
– The entrepreneur, as well as his/her management and workers,
will receive income generated from the economic activities
and thus will be able to enjoy more goods and services.

Provision of goods and services:

– The entrepreneur will produce different goods and services
for customers

Contribution to savings for further investment:

– The economic activities will create higher incomes and

hence the entrepreneur will save some money and the
 Importance (Cont’d) …
Reduces Concentration of Economic Power

• Economic power is the natural outcome of industrial and

business activity.

• Industrial developments normally lead to concentration of

economic power in the hands of a few individuals which

results in the growth of monopolies.

• In order to redress this problem a large number of

entrepreneurs need to be developed, which will help

reduce the concentration of economic power amongst the

 Importance (Cont’d) …
Wealth Creation and Distribution
• It stimulates equitable redistribution of wealth
and income in the interest of the country to
more people and geographic areas, thus
giving benefit to larger sections of the society.
• Entrepreneurial activities also generate more
activities and give a multiplier effect in the
economy.
 Importance (Cont’d) …
Increasing Gross National Product and Per Capita Income

• Entrepreneurs are always on the look out for opportunities.

• They explore and exploit opportunities, encourage

effective resource mobilization of capital and skill, bring in

new products and services and develops markets for

growth of the economy.

• In this way, they help increasing gross national product as

well as per capita income of the people in a country, which

is , is a sign of economic growth.

 Reflection

• What are the limitations/drawbacks

of Entrepreneurship ?
• What are the challenges of
Entrepreneurship ?
 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
 Barriers to Entrepreneurship
– Lack of viable concept
– Lack of market knowledge
– Lack of seed capital
– Lack of technical skill
– Lack of business know how
– Lack of motivation
– Social stigma/ humiliation
– Legal constraints
– Monopoly /protection
Barriers to Entrepreneurship
 Challenges Faced by
Entrepreneurs
• Suitable manpower: If the size of business is large, the

entrepreneur has to find suitable competent persons for

various functional areas.

• Machines and equipments: This depends on various

factors like availability of funds, size of production, and the

nature of production process. The emphasis should be

placed on productivity.

• Size of the unit (Small Vs. Big): Size of the business is

influenced by several factors like technical, financial and

 Cont’d …
• Location: this depends upon many factors like availability of
raw material, availability of transport, power, water, nearness
to market etc

• Financing: finance/capital is needed to buy fixed assets like

land and building, machinery and equipment etc. Further,
finance is needed to meet day-to-day expenses of the business.

• Selection of business: has to study the market to know

whether the idea of products or services could be accepted by
the market. The entrepreneur has to determine the market
demands of the intended products/services
 Brainstorm

• What is the difference between

Intrapreneur and Entrepreneurs?
• What is the difference between
Entrepreneurs and Mangers?
Entrepreneurship Vs.
Manager
 Entrepreneurship Vs. Manager
(Cont’d …)
Entrepreneur The Manager
• Is innovators • Is administers
• Is an original person • Is a copier person
• Focuses on people • Focuses on systems
• Inspires trust • Relies on control
• long range viewer • Short range viewer
• originates rules and • Imitates rules and
working principles principles
• Entrepreneurs • Mangers operate within
create the culture the culture
 Myths of Entrepreneurship

(a) Entrepreneurs are born, not made

• According to this myth, the characteristics of
entrepreneurs cannot be taught or learned,
they are innate traits with which a person must
be born.
– Do you agree with this myth?
– Discuss about the present philosophy of
entrepreneur.
 Myths of Entrepreneurship

(b) Entrepreneurs are academic and social misfits

• The belief that entrepreneurs are academically and
socially ineffective is born of some business owners
having started successful enterprises after dropping
out of school or quitting a job.
– What is your view toward present
entrepreneurs; socially, economically and
academically?
– Is entrepreneur a professional?
Barriers to Entrepreneurship
 Intrapreneur vs.
Entrepreneurs
Meaning of Intrapreneur:
• “Is a person within a large corporation who takes direct
responsibility for turning an idea into a profitable
finished product through assertive risk-taking and
innovation”.
• Is a manager within a company who promotes innovative
product development and marketing.
• An intrapreneur is an employee who is tasked with
developing an innovative idea or project within a
company.
• The intrapreneur may not face the outsized risks or reap
 Intrapreneur vs.
Entrepreneurs
– Entrepreneurs are found anywhere their vision takes them.

Intrapreneur work within the confines of an organization.

– Entrepreneurs face many hurdles, and are sometimes ridiculed

and riddled with setbacks. Intrapreneurs may sometimes have

to deal with conflict within the organization.

– Entrepreneurs may find it difficult to get resources.

Intrapreneurs have their resources readily available to them.

– Entrepreneurs may lose everything when they fail.

Intrapreneurs still have a paycheck to look forward to (at least

for now) if they fail.

 Intrapreneur vs. Entrepreneurs
Entrepreneur:

•takes substantial risk

•the owner and operator of a business

•with expectations of financial profit and other rewards that the

business may generate

Intrapreneur:

•is an individual employed by an organization for remuneration

•share the same traits as entrepreneurs such as conviction, (belief) zeal

(passion) and insight.

•it will reveal the gap between the philosophy of the organization and

the employee.
 Intrapreneur vs. Entrepreneurs

• In general, the central difference between

entrepreneurs and Intrapreneurs is the setting
in which they work.
• “An intrapreneur is an inside entrepreneur, or
an entrepreneur within a large firm, who uses
entrepreneurial skills without incurring the
risks associated with those activities,”
 Social Entrepreneurship

What is Social Entrepreneurship ?

• It is a process by which citizens build or transform institutions
to advance solutions to social problems, such as poverty,
illness, illiteracy, environmental destruction, human rights
abuses and corruption, in order to make life better for many.

• Social entrepreneurship is an approach by start-up

companies and entrepreneurs in which they develop, fund
and implement solutions to social, cultural, or environmental
issues.

• This concept may be applied to a wide range of

organizations, which vary in size, aims, and beliefs.
 Cont’d …
• Social entrepreneurs, are either non-profit or
they blend for-profit goals with generating a
positive "return to society".
• Social entrepreneurship is all about recognizing
the social problems and achieving a social change
by employing entrepreneurial principles,
processes and operations.
• Social entrepreneurship typically attempts to
further broad social, cultural, and
 Cont’d …
• Social entrepreneurship typically refers to the
phenomenon of applying business expertise
and market-based skills in the nonprofit
sector such as when nonprofit organizations
develop innovative approaches to earn
income
• The underlying drive for social entrepreneurship
is to create social value, rather than
personal and shareholder wealth and that the
 Cont’d …
• A social entrepreneur is a person who pursues novel

applications that have the potential to solve community-

based problems.

• These individuals are willing to take on the risk and effort to

create positive changes in society through their initiatives.

• Examples of Social Entrepreneurship:

• Microfinance institutions,

• Educational programs,

• Providing banking services in underserved areas

• Helping children orphaned by epidemic disease, etc…

 Three characteristics of Social
Entrepreneurs

• Social entrepreneurship meets needs unmet by

commercial markets and (usually) the government

• Social entrepreneurship is motivated by social

benefit

• Successful social entrepreneurship usually works

with, not against, markets

 Entrepreneurial Intention

• This represents the individual and/or of a group of

people's intentions to create a new business/idea.
• Such an intention is a conscious mental state that
precedes the action and directs attention towards
the goal of establishing a new business.
• Entrepreneurial intentions may be defined as a
position to owning a business or becoming self-
employed.
 Entrepreneurial Intention

• Entrepreneurial intentions are also considered as

personal orientations which might lead to venture
creations.
• Thinking about entrepreneurial activities and
especially whether people have a positive attitude or
a strong intention to become entrepreneurs.
• Entrepreneurial intention indicates the effort that
the person will make to carry out that
entrepreneurial behavior
 Entrepreneurial Intention

• Entrepreneurial intention (EI) is defined as

“the conscious state of mind that precedes
action and directs attention toward
entrepreneurial behaviors such as starting a
new business and becoming an
entrepreneur” (Moriano, Gorgievski, Laguna,
Stephan, & Zarafshani, 2012, p. 165).