(MG-481)

Instructor: Shahid Hussain

 The Revolutionary Impact of Entrepreneurship

Introduction
The term entrepreneur comes from the French and translated as
between-taker or go-between.

entrepreneurship as the art of turning an idea into a business

(Fred Wilson, venture capitalist)

History
Merchant entrepreneurs, Steam engine and textile units.
Incubation centers operating in Pakistan.
 Global entrepreneur index Pakistan ranking in 2021

While still much behind India, ranked 63rd, Pakistan has improved its
ranking by 39 positions over the last two years and is now ranked
108th out of 190 countries.
17th Century
In the 17th century the entrepreneur was a person who entered into a
contract with the government to perform a service Richard Cantillon, a
noted economist of the 1700s, developed theories of the entrepreneur and
is regarded as the founder of the term. He viewed the entrepreneur as a risk
taker who buy goods at certain price and sell at an uncertain price,
therefore operating at a risk.
18th Century
In the 18th century entrepreneur was distinguished from the
capital provider. Thomas Edison were unable to finance
invention themselves he was capital users (entrepreneurs),
not capital provider (venture capitalists.) Edison raised
capital from private sources.
19th and 20th
Centuries In the late 19th and early 20th centuries, entrepreneurs were
viewed mostly from an economic perspective.
The entrepreneur "contributes his own initiative, skill and ingenuity in
planning, organizing and administering the enterprise, assuming the
chance of loss and gain. In the middle of the 20th century, the notion of
an entrepreneur as an innovator was established. Innovation, the act of
introducing something new. here some examples.
 Andrew Carnegie: build the American steel industry
 John Pierpont Morgan developed his large banking house by
reorganizing and financing the nation’s industries.
DEFINITION OF ENTREPRENEUR
The concept of entrepreneurship from a personal perspective
has been explored in this century. This exploration is
reflected in the following three definitions of an
entrepreneur.
1. Initiative taking
2. The organizing and reorganizing or social/economic
mechanisms to turn resources and situations to practical
account.
3. The acceptance of risk or failure.
 THE ENTR EPRENEURIAL DECISION PROCESS
Deciding to become an entrepreneur by leaving present activity.
Many individuals have difficulty bringing their ideas to the market and creating new venture
entrepreneurship and the actual entrepreneurial decisions have resulted in several million new
businesses being started throughout the world.
Millions of ventures are formed despite recession, inflation, high interest rates, and
lack of infrastructure, economic uncertainty and the high probability of failure. a
movement from a present life style to forming a new enterprise. To leave a present
live-style to create something new comes from a negative force--disruption. Many
companies are formed by people who have retired, moved, or been fired. Another
cause of disruption is completing an educational degree. The decision to start a new
company occurs when an individual perceives that forming a new enterprise is both
desirable and possible
Desirability of New Venture Formation
Aspects of a situation that make it desirable to start a new company.
The perception that starting a new company is desirable results from an
individual’s culture, subculture, family, teachers and peers.
American culture places a high value on being your own boss, being a success
and making money therefore, high rate to form a company. On the other hand in
some countries making money is not as valued and failure may be a disgrace.
Studies indicate that a high percentage of founders of companies had parents
who valued independence. Encouragement to form a firm is also gained from
teachers, having a strong educational base is also a requirement for
entrepreneurial activity.
Possibility of New Venture Formation

Factors making it possible to create a new venture:

Formal education and previous business experience give a potential
entrepreneur the skills needed to form and manage a new company.
The government also contributes by providing the infrastructure to help
a new venture.
The entrepreneur must have the marketing know-how. Finally, financial
resources must be readily available. Although most start-up money
comes from personal savings, credit, and friends, but there is often a
need for additional capital.
TYPES OF START-UPS
Life-Style Firms exists primarily to support the owners and usually has little growth
opportunity. ski instructors, and tour guides.
Foundation Companies A type of company formed from research and
development that usually does not go public.
High-Potential Venture A venture has high growth potential and therefore receives
great investor interest and important for the economic development.  Technology
companies, large internet technology businesses, Franchise and Retail chain.
Zameen.com ($29 million), Airlift ($14.2 million), Rozee.pk ($8.5 million) and
Bykea ($5.7 million).
ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
The role of entrepreneurship in economic development new capital created expands the
capacity for growth (supply side), and new spending utilizes the new capacity and output
(demand side.)
Entrapreneurship
Entrepreneurship refers to entrepreneurship within an existing organization or business
structure. Existing businesses have the financial resources, business skills, and marketing and
distribution system to commercialize innovation successfully. Entrepreneurship can also bridge
the gap between science and the marketplace.
Employees, perhaps engaged in a special project within a larger firm.
 ENTREPRENEURIAL CAREERS AND EDUCATION
Since 1985 there has been an increased interest in entrepreneur due to increased
media coverage of entrepreneurs and employment shifts. This approach
conceptualizes entrepreneurial careers in nine categories.

Educational environment: a common perception that entrepreneur are less

educated than the general population however studies have found entrepreneurs
overall and female entrepreneurs in particular, are far more educated than the
general population.

The individual’s personality: become their on boss

Childhood family environment: The traits most frequently researched are the need
for achievement, locus of control, risk-taking, and gender identity.

Employment history: Entrepreneurs tend to have a higher probability of success

when the venture created is in their field of experience.

Adult family/non-work history: Entrepreneurs tend to have self-employed Parents.

Current work situation: dissatisfaction with various aspects of own job.

 Skills required by entrepreneurs
Technical Business Personal
Management
Writing Planning Inner Control

Oral Communication Decision Making Risk Taking

Monitoring the Human Relations Innovative

Environment

Using Technology Marketing (Selling) Change-oriented

visionary
 ENTREPR E NEURIAL PROCESS
The entrepreneurial process involves finding, evaluating, and developing an
opportunity by overcoming the strong forces that resist the creation of something
new.

The Entrepreneurial Process has 4 distinct phases

1. Identification and evaluation of the opportunity
2. Development of the business plan
3. Determination of the required resources
4. Management of the resulting enterprise
1: Identifying and Evaluating the Opportunity
Most good business opportunities result from an entrepreneur being alert to
possibilities. Some sources are often fruitful, including consumers (bykea).
Technically-oriented individuals often identify business opportunities when
working on other projects. Each opportunity must be carefully screened and
evaluated.
Its risks and return, is it fit with the skills and goals of the entrepreneur and Its
differential advantage in its competitive environment.
window of opportunity
2: Develop a Business Plan
A good business plan must be developed in order to exploit the opportunity
defined. A good business plan is important in developing the opportunity and in
determining the resources required, obtaining those resources and successfully
managing the venture.
3: Determine the Resources Required.
Assessing the resources needed starts with an appraisal of the entrepreneur’s
present resources. 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 entrepreneur should try to maintain as large an ownership position as possible,
particularly in the start-up stage.
Alternative resource suppliers should be identified, along with their needs and
desires, in order to structure a deal with the lowest cost and loss of control.
Economic Order Quantities (EOQ)
Example of EOQ
The Las Vegas Corporation purchases a critical component from one of its key
suppliers. The operations manager wants to determine the economic order
quantity, along with when to reorder, to ensure the annual inventory cost is
minimized. The following information was obtained from historical data.
Annual requirements (R) or (D):7;200 units
Setup cost or ordering cost (S):$100 per order Unit cost (C):$20 per unit
The annual holding or carrying cost (k):20% per units of purchasing cost
Order lead time (LT):6 days Number of days per year: 360 
= √2 D S/KC = 2×7,200 units × $100/0:20× $20 =600 units

For an order lead time of six days, the reorder point (ROP) would
be: ROP = (7,200/360) × 6 = 120 units
4: Manage the Enterprise.
The entrepreneur must employ these resources through implementation of the
business plan. This involves implementing a management structure, as well as
identifying a control system.
 Potential Benefits to be entrepreneur
1. Your are in charge of your own destiny
2. No age limit and don’t retire
3. Full responsibility as source of motivation
4. Power to pivot: you have freedom to quite business to start new one in case of failure.
5. Experience personal growth: becoming inspiration for younger generation.
6. Become expert a solution provider
7. Resilience: recovery and learning process
8. Schedule flexibility and freedom: don’t want 9 to 5 job.
9. Work people you like
10. The legacy for generation next: todays NGOS in pakitsan
 Potential Drawback of Being Entrepreneur
1. Uncertain income

2. Riske of losing entire income

3. Long hour and hard work
4. Lower quality of life until the business gets established
5. high level of stress
6. you can not blame any one
7. Initial failure and discouragement
8. Multi tasking

9. Family and social risk

10. Debt burden

11. Beating on crucial deadline

12. Market has its own trend and behavior

Purpose is not discourage you but informing you to be aware about kind risk
associated.
 Entrepreneurs—Challenging the Unknown
• Entrepreneurs
• Recognize opportunities where
others see chaos or confusion
• Are aggressive catalysts for
change within the marketplace
• Challenge the unknown and
continuously create the future

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Entrepreneurs versus Small Business Owners: A Distinction

• Small Businesses Owners

Manage their businesses by expecting stable sales, profits, and
growth
• Entrepreneurs
Focus their efforts on innovation, profitability and sustainable
growth

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 The Age of Gazelles
A “Gazelle”
A business establishment with at least 20% sales growth
in each year for five years, starting with a base of at least
$100,000 in annual sales.
Gazelles as leaders in innovation:
Produce twice as many product innovations per employee
as do larger firms.
Have been responsible for 55% of the innovations in 362
different industries and 95% of all radical innovations.
Obtain more patents per sales dollar than do larger firms.
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Survival of Gazelles
How many gazelles survive. The simple answer
is “none.” Sooner or later, all companies
wither and die.
The Common Myth of Failure: 85% of all firms
fail in the first year—in actuality, about half of
all start-ups last between 5 and 7 years.
 21st Century Trends in Entrepreneurship Research

Venture
Financing
Corporate Social
Entrepreneurship Entrepreneurship

Trends in Women
Entrepreneurial
Cognition
Entrepreneurship and Minority
Research Entrepreneurs
Global
Entrepreneurial
Entrepreneurial
Family Education
Movement
Businesses
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 Key Concepts
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.
Entrepreneur
• A catalyst for economic change who uses purposeful searching,
careful planning, and sound judgment when carrying out the
entrepreneurial process.

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 Key Concepts
Entrepreneurial Management

The discipline of entrepreneurial management:

Entrepreneurship is based upon the same principles.
It matters not who or what that the entrepreneur is—an existing
large institution or an individual, for-profit business or a public-
service organization, a governmental or non-governmental
institution.
The rules are much the same: things that work and those that
don’t are much the same, and so are innovations and where to
look for them.
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