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1. Entrepreneurship

   Lecturer: Mr. Samuel Okae-Adjei Contact: 0208173734 Email: yawsammy1964@yahoo.com
2. Unit Objectives By the end of this unit, students should be able to: Understand why they have to study entrepreneurship and its importance Define and describe the core elements of entrepreneurship Apply these entrepreneurship theories and concepts in an attempt to research the personality of the entrepreneur. Highlight the various types of entrepreneurial ventures and entrepreneurial tasks Identify the entrepreneurial process and the types of Entrepreneurs
3. Introduction There is a high rate of unemployment in Ghana Polytechnic and university graduates are finding it difficult to get jobs in established corporations Government scarcely creates jobs for the citizenry Government is creating the enabling environment for people to create their own jobs and jobs for others. Entrepreneurship is therefore studied at various levels in tertiary institutions with the view to addressing this challenge.
4. Introduction Entrepreneurship can be defined as the ability to identify business opportunities which can be transformed into successful businesses through risk taking, creative and innovative processes. Entrepreneurship has become synonymous or at least closely linked with free enterprise and capitalism. Also, it is generally recognized that entrepreneurs serve as agents of change; provide creative, innovative ideas for business enterprises; and help businesses grow and become profitable.
5. Why studyEntrepreneurship Students must be aware that career life does not have to start only from established corporations. Students must be exposed to the benefits and difficulties of starting their own ventures It is an opportunity for students to acquire entrepreneurial skills and knowledge
6. Why StudyEntrepreneurship It offers numerous opportunities for growth and self-development. There is general realization that the advanced countries built their development on the entrepreneurial spirit. The Transformation of developed economies is based on Entrepreneurship Studies. Entrepreneurs are agents of change.
7. Definition of Entrepreneurship Richard Cantillon (1725) Entrepreneurship is risk taking, observing that merchants, farmers, craftsmen and other sole proprietors buy at a certain price and sell at an uncertain price, therefore operating at a risk.
8. Joseph Schumpeter (1934) Entrepreneurship means innovation, thus bringing change through the introduction of something new by combining existing resources in any social unit be it a firm, organization, economy etc. That something new can be a product or service offered, a new source of supply of raw materials and resources used, a new market targeted and operated. To him, (Schumpeter), entrepreneurship is a process that involves innovative solutions to pertinent societal problems / needs. The five (5) major elements in Schumpeter’s definition are: Introduction of a new good Opening of a new market Introduction of a new method of production Conquest of a new source of supply of raw material Carrying out of a new organization or industries
9. Fry (1993) Entrepreneurship means the act of creating or growing a business through innovative and risk assuming management. He gave the elements of Entrepreneurship as follows: Starting a Business. Being creative and innovative in developing new products or services. Managing an existing venture in such a way that it grows rapidly and consistently. Seeking significant financing and other resources for a potentially high growth venture. Accepting risk in the development of a new or growing venture.
10. Robert Hisrich and Michael Peters (2002) – Working Definition of Entrepreneurship: 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. This definition stresses four (4) basic concepts of being an entrepreneur regardless of the field: Entrepreneurship involves the creative process; creating something new of value. The creation has to have value to the entrepreneur and value to the audience / customers of which it is developed. Entrepreneurship requires the devotion of the necessary time and effort to create something new and make it operational. Assuming the necessary risk. These risks normally centers around financial, psychological and social areas. Rewards of being an entrepreneur. The most important of these is independence, personal satisfaction and monetary rewards
11. In summary,entrepreneurship can be defined as the ability to identify business opportunities which can be transformed into successful businesses through risk taking, creative and innovative processes.
12. Multidisciplinary Definition of Entrepreneurship Economists define an entrepreneur as one who brings resources, labor, raw material and other assets into combinations that increase their value. Psychologists define an entrepreneur as a person who is typically driven by some forces, which create a desire to obtain or attain something. Sociologists define ‘entrepreneur’ as a person whose actions would determine his social status and who contributes to the development of society. Management experts define ‘entrepreneur’ as a person who has a vision and generates an action plan to achieve it.
13. Types of Entrepreneurship Activities Two major forms of entrepreneurial activities mainly discussed in literature are: 1. Intrapreneurship Extrapreneurship Intrapreneurship Intrapreneurshipdescribes innovative processes within the context of existing organizations, be it private or public. Gifford Pinchut has defined an intrapreneur as anybody who creates innovation of any kind within an organization.
14. The definition of intrapreneurship is similar to that of entrepreneurship except that intrapreneurship takes place within an organization. The major thrust of intrapreneuring, then, is to create or develop the entrepreneurial spirit within corporate boundaries, thereby allowing an atmosphere of innovation to prosper. Often the bureaucratic structure, the emphasis on short –term profits, and a highly structured organization inhibit creativity and prevent new products and businesses from being developed. Corporations recognizing these inhibiting factors and the need for creativity and innovation have attempted to establish an entrepreneurial spirit in their organizational members. The reason why this concept has become popular is that, it allows corporations to tap the innovative talents of their own workers and managers.
15. The need for intrapreneurship has arisen in response to the rapidly growing number of pressing problems organisations face, including a rapidly growing number of new and sophisticated competitors, an exodus of some of the best and brightest people who are leaving corporations to become small – business entrepreneurs, downsizing of major corporations, and an overall desire to improve efficiency and productivity. Intrapreneurs are employees who are willing to take risk, innovate, and provide open opportunities for others. It is often more difficult to be an intrapreneur within an organization than an entrepreneur who may develop his or her own small business. The intrapreneur or organizational champion is seen as not risking his / her own resources but those belonging to his company or firm.
16. The intrapreneur does not own the entrepreneurial concept. In addition, there is real limit on his personal rewards, especially financial, that can be earned by corporate entrepreneurs should the concept be successful. The established firm offers the entrepreneurial individual an abundance of resources critical for development, testing and implementation. It is to be noted that, the corporate entrepreneur does not exercise as much personal control over his / her project destiny as does the independent entrepreneur.
17. The objective of this is simple, to gain competitive advantage by encouraging innovation at all level, In the organization. It is characterized by Creation of new business units by an established firm. The development and implementation of entrepreneurial strategic thrusts. Emergence of new ideas from various levels of the organization. Extrapreneurship It is a venturing process where employees of a company spin-off from their former employing company or place of work to establish a supplementary business. The business so established is often in the same line as business from the former place of work, since that individual has already acquired some experience in this line of business from the former place of work.
18. Difference between Entrepreneurship and Intrapreneurship
19. The Entrepreneurship Tasks In general terms, the entrepreneur would need to be an effective planner, organizer, problem solver and decision maker, and be able to manage people effectively. Planning Among the various functions of managing, planning perhaps contributes the most to new business performance. Planning offers a defined activity of action for the critical first initial period of the new business. b) Organizing The organizing function would involve developing an organizational structure through job design, departmentalization, determining span of control, and delegating authority. Effectively, these tasks would provide a structure of relationships and authority that coordinates the organization’s efforts.
20. C) Controlling The controlling function would involve establishing standards, obtaining information that provides a comparison of actual with desired results, and taking actions to correct any adverse d) Managing People in the Small Business A critical requirement of effective entrepreneurship is effectively managing and motivating employees. These activities make up the leadership function. This involves encouraging employees to work to achieve the business’s goals by effectively communicating the tasks to be done, rewarding good performance, and creating an environment that supports the employees’ efforts and individual needs.
21. The Entrepreneurship Process The best way to start a business is to understand the Entrepreneurial process. This process involves: the entrepreneur finding, testing and developing an opportunity by overcoming the strong forces that might fight the creation of something new. Hisrich and Peter (2002). Explains the Entrepreneurial process as follows: Identify and evaluate the opportunity Develop a business plan Resource required Manage the Enterprise
22. Identifying and Evaluating the Opportunity Entrepreneurs use both formal and informal mechanisms for identifying business opportunity while formal mechanism are generally found within macro established companies, most entrepreneurs use informal sources for their ideas. Also being sensitive to complains and listening to comments from friends and families offer an opportunity, or what is frequently called assessment analysis, is undertaken to establish the feasibility of an opportunity. Develop a Business Plan A good plan must be develop in order to exploit the opportunity defined. A good business plan is not only important in developing the opportunity, but is also essential in determining the resources required, obtaining those resources, and successfully managing the resulting venture.
23. Resources Required The resources needed for the opportunity must be assessed. This process starts with an appraisal of the entrepreneur’s present resources. Then, any resources that are critical must be distinguished from those that are just helpful. Care must be taken not to underestimate the amount and variety of resources needed. The downside risks associated with insufficient resources should also be assessed. Manage The Enterprise After resources are acquired, the entrepreneur must employ them through implementation of the business plan. The operational problems of the growing enterprise must be dealt with. This involves implementing a management style and structure as well as determining the key variable for success. A control system must be identified so that any problem areas can be carefully monitored.
24. Assignment There is no precise and concise definition for entrepreneurship. Scholars from different backgrounds have defined entrepreneurship in different ways. Identify the main features of these definitions? Why is entrepreneurship studies important in Tertiary Institutions in Ghana?
25. END OF UNIT ONE