BMAN 121

ENTREPRENEURSHIP
Study Unit 1 (Chapter 10)
 Learning Outcomes
After completing this study unit you should be able to :

1. Define the terms entrepreneur and entrepreneurship.

2. Explain how to become an entrepreneur
3. Discuss the entrepreneurial process
4. Discuss the skills and resources required to become an
entrepreneur
5. Identify and describe the different ways of entering the
business world
6. Discuss a feasibility study and its value to the entrepreneur.
7. Describe the roles of entrepreneurs and small businesses
in the economy
 1.1. What is an Entrepreneur? LO
1
 The entrepreneur decides what, how, by whom and for
whom products and services should be produced.
 An entrepreneur is someone who starts a business with
the intention of making a profit and assumes the risk of
losing all his/her resources if the venture fails.
 The entrepreneur is one of the main production factors
that mobilizes the other 3. Namely:
- Labour: Employees who perform specific activities that assist the
entrepreneur in achieving his/her goal.
- Capital: Assets such as buildings and equipment at the entrepreneur’s
disposal.
- Natural resources: Raw materials in nature which can be processed and
turned into finished products.

197
 1.2. What is Entrepreneurship? LO
1
 Entrepreneurship is the process of creating and building something of
value from practically nothing in the midst of uncertainty and risk, and
having the determination to succeed against all odds. 197
 Entrepreneurs’ traits and characteristics:

A. Achievement motivation ~ Intense, prolonged and repeated effort to

accomplish something that is difficult. (E.g. Elon Musk)

B. Internal locus of control ~ A person’s need to be in charge of his/her

own destiny. (see also Innovation and Creativity in the comments
below)

C. Risk-taking ~ Correctly interprets the risk situation and then

determines actions that will minimize risks
205-207
 2. How to become an entrepreneur LO
2
 Opportunity entrepreneurs: Driven purely by opportunity (may also include
currently having a job bit still searching for better opportunities)

 Necessity entrepreneurs: Having no better choice for work (can also be

described as a survivalist driven motivation) (Not usually opportunistic)

Reasons for becoming an entrepreneur:

 Identified opportunity and desire for independence.

 Job termination / job dissatisfaction

 Unemployment

 Outsourcing

 Retrenchment

 Privatization of government organizations

207-209
3. The Entrepreneurial Process LO
3

Entrepreneurship can be seen as the process of identifying,

creating or seizing an opportunity by finding and combining
resources to pursue the afore mentioned opportunity until it becomes
a successful, established business.

The Entrepreneurial Process can be seen as:

 The creation of new value through the entrepreneur

 identifying new opportunities and

 using his/her leadership skills to build a business that fits the opportunity,

 and attracts and manages a configuration of resources with the focus on

exploiting the opportunity.
209-210
3. The Entrepreneurial Process LO
cont… 3
 5 phases of the entrepreneurial process:

1. Skills & characteristics required for entrepreneurship

2. Access to resources needed to start a business
3. Realistic & objective assessment of the business
opportunity
4. The feasibility of the idea or opportunity.
5. Developing a business plan.

210
4.1. Skills Required by Entrepreneurs LO
4
Skill Description
Strategy • Ability to consider the business as a whole,
• understand how it fits into the marketplace
Planning • Ability to consider future offerings,
• how it will impact the business

Marketing • Ability to evaluate business offerings and

features and determine why customers find
them attractive
Financial • Ability to manage money,
• keep track of expenditure, cash flow
Project management • Ability to organise projects & set objectives
• Ensure resources in correct quantity, quality,
place & time
Human relations • Ability to deal with employees
211
 4.2. Resources Required by LO
Entrepreneurs 4
Resource Description

Financial Any resource than can be converted to cash

Human Employees with knowledge and skills who contribute

to the success of the venture, i.e. management team

Operating Assets such as offices, equipment, raw materials

(Physical resources)

211-212
 5. Different Ways of Entering the LO
Business World 5

1. New venture ideas

► Trends (Economic, Political & Social trends)
► Life cycle (Introduction, Growth, Maturity & Decline)
► Growth industries (e.g.: Education, Healthcare, Tourism)
2. New venture opportunities [Good idea ≠ Good Opportunity]
► Fundamental requirements for a good idea and opportunity :
• Clearly defined market need for product/service
• Sustainable competitive advantage
• Growth potential
• Should be rewarding to investor/entrepreneur
• Timing of opportunity must be right

212-214
 5. Different Ways of Entering the LO
Business World cont… 5

3. Buying an existing business

► Table 10.1: Advantages and disadvantages of buying an existing business

215
 5. Different Ways of Entering the LO
Business World cont… 5

4. Franchising
► Acquisition of franchise

► Opportunity to start business that has been proven in market

► Entrepreneur becomes franchisee

► Franchisor gives franchisee the right to operate a business, using

the franchise name, products and systems

► For example: Cash Crusaders, King Pie, Mica hardware, Mugg &
Bean and Maxi’s

215-216
 5. Different Ways of Entering the LO
Business World cont… 5

5. Corporate entrepreneurship (Intrapreneurship)

► Entrepreneurship in existing business

► Person develops a new corporate business within a business

though identifying a new opportunity

► It is also a method by which a corporation introduces new and

diversified products or services

► Done through internal processes and corporation’s resources

► Enables investment and profits through establishment of business

within business
216
6. The Feasibility Study & its Value LO
to an Entrepreneur 6

A feasibility study is a collection of data that helps the

entrepreneur forecast if an idea/opportunity/venture will
survive
► Not all ideas can be converted into successful ventures

► Therefore, entrepreneurs should conduct a feasibility

study to determine if a venture/opportunity will survive

► Afterfeasibility has been established, a business plan

can be drawn up

216-217
 7. The Role of Small Businesses in LO
the Economy 6

The strategic role of small businesses revolves around 4 elements:

1. The production of products and services (Produce products and

services for the society in which they operate)

2. Innovation (small businesses are responsible for most innovations

produced worldwide)

3. The aiding of big businesses (supplies from small local businesses

allow mega corporations to compete worldwide)

4. Job creation

223-225
Remember to complete Quiz 1
available on
7/08 @ 14h00 – 22h00

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