TOPIC 1

INTRODUCTION TO
ENTREPRENEURSHIP
 LEARNING OBJECTIVES

At the end of this chapter, students should be able to:

explain the concept of entrepreneurship

discuss the importance of entrepreneurship
discuss the characteristics of successful
entrepreneurs
The social and ethical perspectives of
entrepreneurship
discuss the development of entrepreneurship in
Malaysia
 What do you understand by
“entrepreneurship”?

The word entrepreneur is derived from the

French word entreprendre, which means “to
undertake”.
- The entrepreneur is one who
undertakes to organize, manage,
and assume the risks of a business.
- Although no single definition of entrepreneur
exists and no one profile can represent today’s
entrepreneur, research is providing n
increasingly sharper focus on the subject.
ENTREPRENEURSHIP
Robert C. Ronstadt description
of Entrepreneurship
ENTREPRENEURSHIP
 The practice of starting new organizations
particularly, and new businesses generally in
response to identified opportunities.
 introduction of innovative, new, or unique
products or services.
 activities are substantially different depending
on the type of organization that is being started.
 Innovative entrepreneurs ~ the bridge between
entrepreneurship and economic growth.
 ENTREPRENEURSHIP

 According to Schumpeter (1934), entrepreneurs

of new products and technologies make existing
products and technologies obsolete. He named
this activity as ‘creative destruction’.
 Small firms that practice this are called
‘innovators’.
 Entrepreneurial culture plays an important role in
the development of the individual, community,
company, and country.
 CHARACTERISTICS OF
SUCCESSFUL ENTREPRENEURS
INDEPENDENT They want to make their own decisions and do something they
enjoy.
SELF-CONFIDENT Entrepreneurs make all the decisions. They must have the
confidence to make choices alone and bounce back from a poorly
made decision.
DETERMINATION & They persist through hard times until goals are met.
PERSEVERANCE
GOAL-ORIENTED They know what they want, and they are able to focus on achieving
it.
SET HIGH STANDARDS They are motivated by setting and achieving challenging goals.
CREATIVE They think of new ways to market their businesses and are always
looking for new solutions to problems.
ACT QUICKLY They are not afraid to make quick decisions when necessary, which
helps them beat their competitors.
TECHNOLOGY In order to run their business effectively and efficiently, they should
FOLLOWER always be on the lookout for new technology for business.
 WHO IS THE REAL
ENTREPRENEUR? (TIMMONS 1999)
HIGH

Creativity
&
Innovation

LOW HIGH
General management skills, business know-how & networks
PROBLEM SOLVING FOR
ENTREPRENEURS

Problem – Solving Model

 STEP 1
DEFINE THE PROBLEM
 Need to diagnose it.
 Write down what the problem is and why it is a
problem.
 Example; you may be trying to decide whether
to start your own business or accept a job offer
from another company.
 Accept job offer (income RM35, 000) a year.
Reject the offer (lose the income).
 Start a business (flexible time, earn money &
income > RM35, 000).
 STEP 2
GATHER INFORMATION

 Once the problem has been defined, gather

information that could help solve it.
 Relevant sources (company records, industry
data, trade magazines, interview people in the
industry).
 Do a self-assessment to determine your
strength and weaknesses, his/her skills,
experiences & interest.
 STEP 3
IDENTIFY VARIOUS SOLUTIONS

 Most problems can be solved in various ways.

 Identify all possibilities before you settle on a
particular solution.
 STEP 4
EVALUATE ALTERNATIVES & AND
SELECT THE BEST OPTION

 Then, need to evaluate alternatives to

determine the best solution.
 It may be possible to quantify the costs and
benefits of each alternative by rank each
alternative.
 STEP 5
TAKE ACTION

 Once you have selected the best solution to

the problem, you need to take action to
implement it
 STEP 6
EVALUATE THE ACTION

 The problem solving process is not complete

until you evaluate your action.
 Example, after being in business for 6 months,
he/she evaluates whether he/she is achieving
his financial and non-financial goals.
 To see whether he/she made the right
decision.
PROBLEM – SOLVING SKILLS

 The more often you use the problem-solving

model, the better skilled at decision making
you will become.
 There are a few other things you can do to
improve your problem-solving skills.

Learn from
Communicate Brainstorm
Mistakes
COMMUNICATE

 When trying to resolve problems and make

decisions, you most likely will have to interact
with others.
 Examples; ask question, request information,
express your ideas and opinions and be a
good listener.
 Listening to others’ input can help you make
informed decisions.
BRAINSTORM

 Brainstorming is a creative problem-solving

technique that involves generating a large
number of fresh ideas.
 Think about the problem you are trying to
solve. Brainstorm by writing down as many
possible solutions to the problem as you can
think of.
LEARN FROM MISTAKES

 If you want to become an entrepreneur, you

cannot be afraid to make mistakes.
 You should view your mistakes as a learning
experience.
 Mistakes can help you learn what to do or
what not to do, which proves to be valuable in
the problem solving process.
MALAYSIAN ENTREPRENEURS
TRENDS IN
ENTREPRENEURSHIP
THE MYTHS OF
ENTREPRENEURSHIP
Myth 1 Entrepreneurs are doers, not
thinkers
Myth 2 Entrepreneurs are born, not made

Myth 3 Entrepreneurs are always inventors

Myth 4 Entrepreneurs are academic and
social misfits
Myth 5 Entrepreneurs must fit the “Profile”
THE MYTHS OF
ENTREPRENEURSHIP
Myth 6 All entrepreneurs need is money
Myth 7 All entrepreneurs need is luck
Myth 8 Ignorance is bliss for entrepreneurs
Myth 9 Entrepreneurs seek success but
experience high failure rates
Myth 10 Entrepreneurs are extreme risk
taker (gamblers)
BUSINESSMAN VS.
ENTREPRENEUR
Businessman Entrepreneur
Engages in activities Starts the venture,
for the purpose of profit assumes leadership and
to support for his living expands the venture to fill
and his family personal goals and attain
self-accomplishment
Low risk taker Moderate risk taker
Follow others and Takes calculated risks.
invests only in tested
and proven markets.
ASSES THE ADVANTAGES AND
DISADVANTAGES OF
ENTREPRENEURSHIP
ADVANTAGES DISADVANTAGES

1. Entrepreneurs are their 1. Entrepreneurship is

own bosses. risky.
2. Entrepreneurs can 2. Entrepreneurs face
choose a business that uncertain and irregular
interests them. incomes.
3. Entrepreneurs can be 3. Entrepreneurs work
creative. long hours.
4. Entrepreneurs can make 4. Entrepreneurs must
large sums of money. make all decisions by
themselves.
 ETHICS AND
ENTREPRENEURSHIP
Educational Institutions have established ethics
codes for their students, including the U.S. Air
Force Academy:

"We Will Not Lie, Steal Or Cheat,

Nor Tolerate Among Us Anyone Who
Does"
Q: Which do you think is harder - Line 1 or
Line 2? Why?
In a recent Wall Street Journal
article, Psychology professor Steven Davis
says that cheating by high school students
has increased from about 20 percent in the
1940’s to 75 percent today.
“Students say cheating in high school is
for grades, cheating in college is for a
career.”
DEFINING ETHICS

Ethics provides the basic rules or

parameters for conducting any
activity in an “acceptable”
manner.

Ethics represents a set of principles

prescribing a behavioral code that
explains what is good and right or
bad or wrong.
 WHAT, THEN, ARE ETHICS?
 A set of principles outlining a behavioral code
that lays out what is good and right or bad and
wrong
 May outline obligations and appropriate moral
actions for both the individual and the
organization
 Ethics does not just apply to business
 It may be difficult for individuals or groups in
society to agree upon what is right and wrong
WHAT DOES IT MEAN TO
BE ETHICAL?
It is important for an entrepreneur
ethics guidelines for
to have clear ethics policies
human behavior; the moral
governing ethical behavior,
because not everyone has the code by which people live
same standards. and conduct business

ethical behavior
conduct that adheres to the
moral code by which
people live and conduct
business
LEGAL VS. ETHICAL

 The law provides boundaries for defining what activities are

illegal
 The law, however, does not necessarily outline what is
“ethical.”
WHAT ARE BUSINESS
ETHICS?
A business owner without good business ethics the
business ethics can not expect
study of behavior and
his or her employees to act
ethically. morals in a business
situation
ETHICS WITHIN BUSINESSES

 Many businesses develop their own codes of ethics or

conduct
 These codes outline what employees are to do in order to
carry out what the company sees as the “right thing to do”
in various circumstances
 THE “ETHICS CHECK”
1. Is it legal
2. Is it balanced/fair/win-win
3. How will it make you feel about yourself?
- will it make you feel proud?
- would you feel good if your decision was published in the
local newspaper?
- would you feel good if your family knew about it?
Define ethics and ethical behavior.

Ethics are guidelines for human behavior.

They are the moral code by which people live
and conduct business. Ethical behavior is
conduct that adheres to a moral code.
 How to develop a code of ethics

(1) Brainstorm ethical dilemmas.

(2) Discuss potential solutions.
(3) Write a set of general guidelines, that offer a range of acceptable ways to deal
with different situations.
(4) Improve the code. When a new situation or solution occurs, add it to the
guidelines.
IMPORTANT ELEMENTS
FOR A CODE OF ETHICS
Over all, a code of ethics should be a formal statement of a
business’s values concerning ethics and social issues. It
commonly speaks to acceptable norms of behavior, guided by
six areas of concern:

1. Honesty: to be truthful in all your endeavors; to be honest

and forthright with one another and with customers,
communities, suppliers, and other stakeholders.
2. Integrity: to say what you mean, to deliver what you
promise, and to stand up for what is right.
3. Respect: to treat others with dignity and fairness,
appreciating the diversity of the people you deal with and their
uniqueness.
 IMPORTANT ELEMENTS
FOR A CODE OF ETHICS
4. Trust: to build confidence through teamwork
and open, candid communication.

5. Responsibility: to speak up — without fear of

retribution — and report concerns in the workplace
and elsewhere, including violations of laws,
regulations, and company policies.

6. Citizenship: to obey all laws of the countries

where you do business and to improve the
communities where you live and work.
 DEVELOPING A CODE
OF ETHICS
Many entrepreneurs develop an code of ethics ethical
explicit code of ethics that spells behavior guidelines that
out appropriate business conduct. govern the day-to-day
activities of a
profession or
organization
ENTREPRENEURS AND
SOCIAL RESPONSIBILITY
Being a responsible entrepreneur philanthropy the act of
involves more than philanthropy.
making charitable
donations to improve the
welfare of society
ENTREPRENEURS AND
SOCIAL RESPONSIBILITY
social responsibility
For a business to survive, it must the principle that
exhibit social responsibility.
companies should
contribute to the welfare
of society and not be
solely devoted to
maximizing profits
Entrepreneurs and Social Responsibility

45
 BEING SOCIALLY
RESPONSIBLE
 It is not enough to be ethical, or do the right
thing anymore (thankfully)
 Businesses are now expected to act in a socially
responsible manner – they need to be good
citizens as well as give back to the societies
(including global) in which they exist.
 Can you think of a company that is socially
responsible? One that is not?
 There are financial benefits to being a “socially
responsible” company or organization. What
might some be?
 HMMM…
 Q: who do you think American consumers voted to be the most
“socially conscious/responsible company?
 A: Wal-Mart
The retail giant trounced second-place McDonald's (yes, McDonald's).
In fact, 28 percent of consumers picked Wal-Mart Stores as the most
responsible company, compared with 17 percent for McDonald's and
16 percent for third-place Microsoft.
 The relationship between entrepreneurs and social
responsibility.

Beyond the philanthropic side of social

responsibility, entrepreneurs have a duty to
create safe products, treat customers and
employees fairly, and run honest businesses.

Section 24.1 Social Responsibility

 MOVIE – THE PURSUIT OF
HAPPINESS
This film is based on a true
story As you watch the film,
make notes of how
business man Chris
Gardner chooses to reach
success based on his ethics
and hard work, rather
than cutting corners and
unethical actions.
COMPLEXITY OF BUSINESS
DECISIONS

1. Extended Consequences.
2. Multiple Alternatives of Ethical
Questions.
3. Mixed Outcomes.
4. Uncertain Ethical Consequences.
5. Personal Implications
1. EXTENDED CONSEQUENCES.

 They often have a ripple effect in that

the consequences are felt by others
outside the venture.
 For example the decision to use
inexpensive but unsafe products in
operations will affect both workers and
consumers of the final goods.
 2. MULTIPLE ALTERNATIVES OF
ETHICAL QUESTIONS.

 Business decisions that involve ethical questions

have multiple alternatives – the choices are not
always “do” or “don’t do”.
 Many decisions have a wide range of alternatives
that may involve several less important decisions.
 With regard to the first example about the use of
unsafe products, the entrepreneur may have the
alternative of using still less expensive but
nevertheless safe products.
3. MIXED OUTCOMES.

Ethical business decisions often have

mixed outcomes.
Social benefits as well as costs are
involved with every major business
decision, as are financial revenues and
expenses.
4. UNCERTAIN ETHICAL
CONSEQUENCES
Most business decisions have uncertain
ethical consequences.
 It is never absolutely certain what actual
consequence(s) a decision will have, even
when it appears logical (a decision is never
without ethical risk).
 5. PERSONAL IMPLICATIONS

Most ethical business decisions have personal

implications.
It is difficult for an entrepreneur to divorce
him/herself from a decision and its potential outcome.
Venture success, financial opportunity, and new –
product development are all areas that may be affected
by decisions with ethical consequences.
The entrepreneur often will find it impossible to
make a purely impersonal decision.
ARE EVERYONE’S ETHICS
THE SAME?
People do not share the same ethical values.

Because not everyone has high ethical standards,

entrepreneurs need to create clear ethics policies.
 Entrepreneurship
Development in Malaysia
 ENTREPRENEURSHIP
DEVELOPMENT IN MALAYSIA
 Entrepreneurship has existed in Malaysia (Malaya)
since the interaction of Malacca with foreign traders.
 However, when the British colonized the Malay
Peninsular, they changed the structure of the society
and practiced the “divide and rule” system:
 Malays (administration & agriculture)
 Chinese (mining & business)
 Indians (rubber plantations)
 As a result of this system, the Chinese society was
far ahead in business compared to the Malays and
Indians.
 ENTREPRENEURSHIP
DEVELOPMENT IN MALAYSIA
 After independence, the Malaysian Government
realized the importance of entrepreneurship to
individuals, society and the country, and how it
contributes to the nation’s prosperity.
 Since then, the government has been focusing on the
field of entrepreneurship until today.
 The New Economic Policy (1971-1990),
 National Development Policy (1990-2000)
 Vision 2020,
all encourage and support entrepreneurship
development in Malaysia.
 ENTREPRENEURSHIP
DEVELOPMENT IN MALAYSIA
 The government encourages entrepreneurship
development and gives recognition to
entrepreneurs because they can contribute to
the development of the country.

 In 1995, the government incorporated the

Ministry of Entrepreneur Development as a
specific body to manage and promote the
growth of entrepreneurship in Malaysia.
 ENTREPRENEURSHIP
DEVELOPMENT IN MALAYSIA
 SME Corporation Malaysia (SME Corp.) was set
up in Oct 2009. It is the central point of reference
for info and advisory services for all SMEs in
Malaysia.
 SME Corp. development programs focusing on 3
main strategic thrust. They aim to:
- Strengthen the enabling infrastructure
- Build the capacity and capability of domestic
SMEs
- Enhance access to financing by SMEs
ENTREPRENEURSHIP
DEVELOPMENT IN MALAYSIA
THANK
YOU….