MK 211 Module 1 Introduction To Entrepreneurship

St John’s university of Tanzania
MK 211 Module 1: Introduction to Entrepreneurship

Year 2 Semester 1
Introduction to Entrepreneurship
Learning objectives:
1. Explain entrepreneurship and discuss its importance.
2. Describe corporate entrepreneurship and its use in
established firms.
3. Discuss three main reasons people decide to become
entrepreneurs.
4. Identify four main characteristics of successful
entrepreneurs.
MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 2
5. Explain the common myths regarding
entrepreneurship.
6. Discuss the impact of entrepreneurial firms on
economies and societies.
7. Identify ways in which large firms benefit from the
presence of smaller firms.
8. Explain the entrepreneurial process.
Outline:
1. Definition of an entrepreneur
2. Reasons why people become entrepreneurs
3. Characteristics of successful entrepreneurs
4. Common myths about entrepreneurs
5. The importance of entrepreneurship
6. Potential drawbacks of entrepreneurship
Definition of an Entrepreneur
Definitionof an entrepreneur
The world entrepreneur derives from the French
words entre, meaning “between,” and prendre,
meaning “to take.”
• The word was originally used to describe people who
“take on the risk” between buyers and sellers or who
“undertake” a task such as starting a new venture.
Inventors and entrepreneurs differ from each other.
• An inventor creates something new.
• An entrepreneur assembles and then integrates all the
resources needed to transform the invention into a
viable business.
• The money, the people, the business model, the strategy,
and the risk bearing ability.
Entrepreneurship is therefore defined as the process by
which individuals pursue opportunities without regard to
resources they currently control.
• Entrepreneurship is the art of turning an idea into a business.
In essence, an entrepreneur’s behavior finds him or her
trying to identify opportunities and putting useful ideas
into practice.
The tasks called for entrepreneurship behavior can be
accomplished by either an individual or a group.
• And typically require creativity, drive, and a
willingness to take risks.
Typically, established firms with an entrepreneurial
emphasis are proactive, innovative, and risk-taking.

Established firms with an orientation to acting
entrepreneurially practice corporate
entrepreneurship.
All firms fall along a conceptual continuum that ranges
from highly conservative to highly entrepreneurial.
The position of a firm in this continuum is referred to
as its entrepreneurial intensity.
Entrepreneurial firms are typically proactive
innovators and are not averse to taking
calculated risks.
In contrast, conservative firms take a more
“wait and see” posture, are less innovative, and
are risk averse.
Why become an Entrepreneur?
Why Become an Entrepreneur?
The three primary reasons that people become
entrepreneurs and start their own firms are to:
1. Be their own boss.
2. Pursue their own ideas, and
3. Realize financial rewards
1. Be their Own Boss

Many entrepreneurs want to be their own boss
because either they have had a long-time
ambition to own their own firm.
• Or because they have become frustrated
working in traditional jobs.
Sometimes the desire to be their own boss

results from a realization that the only way they
will achieve an important personal or
professional goal is to start their own business.

2. Pursue Their Own Ideas
The second reason people start their own
business is to pursue their own ideas.
• Some people are naturally alert, and when they
recognize ideas for new products or services,
they have a desire to see those ideas realized.
Corporate entrepreneurs who innovate within

the context of an existing firm typically have a
mechanism for their ideas to become known.
• Established firms, however, often resist innovation.
When this happens, employees are left with good
ideas that go unfulfilled.
Because of their passion and commitment, some

employees choose to leave the firm employing them
in order to start their own business as the means to
develop their own ideas.

3. Pursue Financial Rewards
Finally, people start their own firms to pursue financial
rewards.
• This motivation, however, is typically secondary to the first
two and often fails to live up to its hype.
The average entrepreneur does not make more money than
someone with a similar amount of responsibility in a
traditional job.
Characteristics of Successful Entrepreneurs
Characteristics of Successful Entrepreneurs
Although many behaviors have been ascribed to
entrepreneurs, several are common to those who are
successful.
• Those in new ventures and those who are already part of an
entrepreneurial firm share these qualities.
These are shown in Figure 1.1 and described in the
following section.
Characteristics of Successful
Entrepreneurs

1.Passion for the Business
The number one characteristic shared by successful
entrepreneurs is a passion for their business.
• Whether it is in the context of a new business or an existing
business.
This passion typically stems from the entrepreneur’s belief
that the business will positively influence people’s lives.

Passion is particularly important for both for-

profit and not-for-profit entrepreneurial
organizations because, although rewarding, the
process of starting a firm or building a social
enterprise is demanding.

Entrepreneurs

2.Product/Customer Focus
A second defining characteristic of successful entrepreneurs is
product/customer focus.
The two most important elements in any business are
products and customers.
• While it is important to think about management, marketing,
finance, and the like, none of those functions make any difference
if a firm does not have good products with the capability to satisfy
customers.
A product/customer focus also involves the

diligence to spot product opportunities and to
see them through to completion.

3.Tenacity Despite Failure
Because entrepreneurs are typically starting something
new, the failure rates associated with their efforts is
naturally high.
• Developing a new business idea may require a certain degree of
experimentation before success is attained.
A litmus test for entrepreneurs is their ability to persevere
through setbacks and failures.
4.Execution Intelligence
The ability to fashion a solid idea into a viable business is
a key characteristic of successful entrepreneurs.
• Commonly, this ability is thought of as execution intelligence.
Inmany cases, execution intelligence is the factor that
determines whether a start-up is successful or fails .

The ability to effectively execute a business idea means:
• Developing a business model
• Putting together a new venture team
• Raising money
• Establishing partnerships
• Managing finances
• Leading and motivating employees, and so on.

Execution intelligence requires the ability to

translate thought, creativity, and imagination
into action and measurable results.

Common Myths About Entrepreneurs
Common Myths About Entrepreneurship
There are many misconceptions about who
entrepreneurs are and what motivates them to launch
firms and to develop ideas.
Myth 1: Entrepreneurs are born, not made
This myth is based on the mistaken belief that some
people are genetically predisposed to be entrepreneurs .
The consensus of many hundreds of studies on the
psychological and sociological make up of entrepreneurs
is that entrepreneurs are not genetically different from
other people.
• This evidence can be interpreted as meaning that no one is
“born” to be an entrepreneur and that everyone has the
potential to become one.
• Whether one does or doesn’t is a function of the
environment, life experiences, and personal choices.
However, there are personality traits and
characteristics associated with
entrepreneurs.
• These are listed in Table 1.3.

Entrepreneurs

These traits are developed over time and evolve
from an individual’s social context.
• For example, studies show that people with parents
who were self-employed are more likely to become
entrepreneurs.
 After witnessing a father’s or mother’s
independence in the workplace, an individual is
more likely to find independence appealing.
Similarly, people who personally know entrepreneurs
are more than twice as likely to be involved in
starting a new firm than those with no entrepreneur
acquaintances or role models.
The positive impact of knowing an entrepreneur is
explained by the fact that direct observation of other
entrepreneurs reduces the ambiguity and uncertainty
associated with the entrepreneurial process.
Myth 2: Entrepreneurs are gamblers

A second myth about entrepreneurs is that they
are gamblers and take big risks.
The truth is, entrepreneurs are usually
moderate risk takers, as are most people.
The idea that entrepreneurs are gamblers
originates from two sources:
1. Entrepreneurs typically have jobs that are less
structured.
 And so they face a more uncertain set of
possibilities than managers or employed
people.
2. Many entrepreneurs have a strong need to

achieve and often set challenging goals.
 A behavior that is sometimes equated with
risk taking.

Myth 3: Entrepreneurs are primarily
motivated by money
It is naïve to think that entrepreneurs don’t
seek financial rewards.
• However, money is rarely the primary reason
entrepreneurs start new firms and persevere.
Myth 4: Entrepreneurs should be young and
energetic
Entrepreneurial activity is fairly evenly spread out
over age ranges.
Although it is important to be energetic, investors
often cite the strength of the entrepreneur (or team
of entrepreneurs) as their most important criterion in
the decision to fund new ventures.
What makes an entrepreneur strong in the eyes of an
investor is:
i. Experience in the area of the proposed business
ii. Skills and abilities that will help the business
iii. A solid reputation
iv. A track record of success, and
v. A passion about the business idea
The first four of these five qualities favor older
rather than younger entrepreneurs.

Myth 5: Entrepreneurs love the spotlight
Indeed, some entrepreneurs are flamboyant.
• However, the vast majority of them do not attract
public notice.
• In fact, many entrepreneurs, because they are
working on proprietary products and services, avoid
public notice.
Entrepreneurship’s Importance
The importance of Entrepreneurship

Entrepreneurship’s importance to an economy
and the society in which it resides was first
articulated in 1934 by Joseph Schumpeter, an
Australian Economist.

Schumpeter argued that entrepreneurs develop
new products and technologies that over time
make current products and technologies
obsolete.
Schumpeter called this process creative
destruction.
Because new products and technologies are
typically better than those they replace, and the
availability of improved products and technologies
increases customer demand, creative destruction
stimulates economic activity.
• The new products and technologies may also
increase the productivity of all elements of society.
The creative destruction process is initiated

most effectively by start-up ventures that
improve on what is currently available.
Small firms that practice this art are often
called innovators or agents of change.

Entrepreneurship’s importance can be looked

through three broad categories:
1. Economic importance of entrepreneurial firms
2. Entrepreneurial firm’s impact on society
3. Entrepreneurial firm’s impact on larger firms.

1. Economic Impact of Entrepreneurial Firms
For two reasons entrepreneurial behavior has a
strong impact on an economy’s strength and
sustainability.
i. Innovation
 Innovation is the process of creating something new,
which is central to the entrepreneurial process .
ii. Job creation
 Small businesses are the creators of most new
jobs

2. Entrepreneurial Firm’s Impact on Society
The innovations of entrepreneurial firms have a
dramatic impact on a society.
• Think of all the new products and services that
make our lives easier, enhance our productivity at
work, improve our health, and entertain us.
However, innovations do create moral and
ethical issues with which societies are forced to
grapple.
• For example, bar-code scanner technology and the
internet have made it easier for companies to track
purchasing behavior of their customers, but this
raises privacy concerns.
• Similarly, bioengineering has made it easier to

extend the shelf life of many food products, but
some researchers and consumers question the long-
term health implications of bioengineered foods.

3. Entrepreneurial Firms Impact on Larger Firms
In addition to the impact that entrepreneurial firms
have on the economy and society, they also have a
positive impact on the effectiveness of larger firms.
• For example, some entrepreneurial firms are original
equipment manufacturers, producing parts that go into
products that larger firms manufacture and sell.
Thus, many exciting new products, such as
smartphones, digital cameras, and improved
prescription drugs, are not solely the result of the
efforts of larger companies with strong brand names.,
such as Samsung, Canon, and Johnson & Johnson.
• They were produced by the cutting-edge component
parts or research and development efforts provided by
entrepreneurial firms.
Potential Drawbacks of Entrepreneurship
Potential Drawbacks of Entrepreneurship
Owning a business has many benefits and
provides many opportunities.
• However, anyone planning to enter the world of
entrepreneurship should be aware of its potential
drawbacks.
The following are the potential drawbacks of

entrepreneurship:
1. Uncertain income
2. Risk of losing your entire investment
3. Long hours and hard work

4. Lower quality of life until the business gets

established
5. High levels of stress
6. Complete responsibility
7. Discouragement

1. Uncertainty of income
Opening and running a business provides no
guarantee that an entrepreneur will earn enough
money to survive.
Although the mean and median incomes for
entrepreneurs are higher than those for employees,
so is the vulnerability of entrepreneurs’ incomes.
Inother words, some entrepreneurs earn far more
through their companies than they could working for
someone else.
• But other entrepreneurs’ businesses barely earn enough to
provide them with adequate income.
In the early days of a start-up, a business often cannot
provide an attractive salary for its owner and meet all its
financial obligations.
• Meaning that the entrepreneur may have to live on

savings or a spouse’s income.
The steady income that comes with working for
someone else is absent because the owner is
always the last one to be paid.

2. Risk of losing your entire investment
Business failure can lead to financial ruin for an
entrepreneur, and the business failure rate is
relatively high.
Business failure can mean financial ruin for an
entrepreneur.
Before deciding to become entrepreneurs
people should ask themselves if they can
cope psychologically with all the
consequences of failure:
• What is the worst that could happen if I open
my business and it fails?
• How likely is the worst to happen?
oAm I truly prepared to launch my business?
• What can I do to lower the risk of my business
failing?
• If my business were to fail, what is my
contingency plan for coping?
3.Long hours and hard work
Business start-ups usually demand long hours from their
owners.
• In many start-ups, six- or –seven-day workweeks with no paid
vacations are norm.
The demands of owning a business make achieving a
balance between work and life difficult for entrepreneurs .
 Many entrepreneurs find that they must work

very hard for hours as they build their
businesses and must push their personal lives
aside until their companies are established.

4. Lower quality of life until the business gets
established
The long and hard work needed to launch a company can
take their toll on the other aspects of an entrepreneur’s
life.
• Business owners often find that their roles as husbands or
wives and fathers or mothers take a backseat to their roles as
company founders.
Because launching a business consumes so

much of an entrepreneur’s time, energy, and
focus, his or her family members often wonder
whether the business takes priority over family.

5. High levels of stress
Starting and managing a business can be an increasingly
rewarding experience, but it also can be a highly stressful
one.
Entrepreneurs may have:
• Made significant investments in their companies.
• Left behind the safety and security of a steady paycheck and
benefits, and
•Mortgaged everything they own to get into business.
Failure may mean total financial ruin, and that
creates intense levels of stress and anxiety!
Sometimes entrepreneurs unnecessarily bear the
burden of managing alone because they cannot
bring themselves to delegate authority and
responsibility to others in the company, even though
their employees are capable.
6. Complete responsibility
It’s great to be the boss, but many entrepreneurs find
that they must make decisions on issues about which
they are not really knowledgeable.
Many business owners have difficulty finding advisers.
• When there is no one else to ask, the pressure can build
quickly.
The realization that the decisions they make

are the cause of their company’s success or
failure has a devastating effect on some people.

7. Discouragement
Launching a business is a substantial undertaking that
requires a great deal of dedication, discipline, and
tenacity.
Along the way to building a successful business,
entrepreneurs will run headlong into many different
obstacles, some of which appear to be insurmountable.
Inthe face of such difficulties, discouragement
and disillusionment are common emotions.
Successful entrepreneurs know that every
business encounters rough sports along the way,
and they wade through difficult times with lots of
hard work and an abundant reserve of optimism.

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St John’s university of Tanzania

MK 211 Module 1: Introduction to Entrepreneurship

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 8

1. Be their Own Boss

Sometimes the desire to be their own boss

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 13

Corporate entrepreneurs who innovate within

Because of their passion and commitment, some

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 16

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 19

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 20

Passion is particularly important for both for-

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 21

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 22

A product/customer focus also involves the

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 24

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 26

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 27

Execution intelligence requires the ability to

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 28

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 31

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 32

Myth 2: Entrepreneurs are gamblers

2. Many entrepreneurs have a strong need to

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 37

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 41

The importance of Entrepreneurship

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 43

The creative destruction process is initiated

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 46

Entrepreneurship’s importance can be looked

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 47

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 49

• Similarly, bioengineering has made it easier to

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 52

The following are the potential drawbacks of

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 56

4. Lower quality of life until the business gets

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 57

• Meaning that the entrepreneur may have to live on

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 60

 Many entrepreneurs find that they must work

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 65

Because launching a business consumes so

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 67

The realization that the decisions they make

MK 211 Topic 1 Introduction to Entrepreneurship 12/01/2022 71

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