03/21/22 TOPIC 1 OVERVIEW OF ENTREPRENEURSHIP
Dec 24, 2015
04/19/23
Learning Outcomes
• At the end of this chapter, students are given the following competencies:
• Understand how the economic environment influence the selection of new business ventures.
• Use of relevance information to help screening potential new business venture.
• Able to use basic SWOT Analysis technique to review options of new business venture.
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Contents
Environmental Screening Analysis of Business Opportunities Selection of Business Opportunities Development of new Business
Concept Initial Plan for New Business Ventures
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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.
Definition
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WHO ARE THE ENTREPRENEURS?
Paradigm shifters, innovators and opportunists Key change catalysts and agents Wealth and employment creators Economic engine drivers Key actors of the Malaysian Economy Entrepreneurs are made and not born You can be the entrepreneur - if you have what it
takes People who like to be their own boss People who has experienced a “social disruption”?
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WHY BECOME ENTREPRENEURS? Definition of an entrepreneur – French word
“entreprende” meaning ‘go between’ or ‘enter to undertake’. A person who undertakes to organize, manage and assume risks of business
How people become entrepreneur ? – by design and default.
Entrepreneurs are created in good and bad economic times - Creative Destruction.
Challenges and rewards for an entrepreneur.
Many begins but few make it big.
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Screening the environment
Country Economic Scenario (Malaysia)
Historical ( 5 years trend) Current economic scenario
GDP growth Industrial Growth –
Manufacturing / Services
Economic Policy Five Years Plan – RMK -9 Promoted Industry
Biotechnology ICT Food – Halal Food SMEs
Promoting Human Capital
Knowledge based Industry
Agriculture as a viable business
Other Policy / Priority Improve delivery
services Improve maintenance of
Assets R&D and innovation
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MALAYSIA: A MOST ENTERPRISING CULTURE AND NATION
1960’sLabourDriven
Export of rubber, tin, palm oil & timber
1970’s
LabourDriven
Manufacture of import substitution goods
1980’s
InvestmentDriven
Export textile & electronic goods
1990’s
ProductivityDriven
Export high value added electrical & electronic goods
2000’s
Knowledge Driven
Knowledge-based goods & services
Agriculture Era
Industrial Era
Technology Era
Knowledge Era
Agriculture-based
led by Government
Knowledge-based led by Private Enterprises
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Screening Environment
Government Policy / Initiatives
Regional Economic/ Business trend
Global Economic/ Business trend Private Sectors
Initiatives
Other Issues ( Education, Health, Social, Political, Culture)
OPPORTUNITIES
Strength Weakness
ENTREPRENEUR
THREATS
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Steps to select new ventures
Step1 – Identify Customers needs and wants
Step 2 – Screening environment, evaluating self, community & society, value and
culture of the potential target group.
Step 3 – Analyze specific opportunities which are
feasible to venture.
Step 4 – Select one which is suitable to the
entrepreneur and develop business concept.
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Step 1 : Identifying customer needs & wants
Needs & Wants
Products Services
Something physical which can satisfied customer needs and wants.
Non-physical but able to fulfill customer
needs and wants
Needs : something basic which people must have. Example: clothing, house, food, health, basic education, protection etcs.
Wants: desire to have more than basic needs. Wants will be fulfill after the basic needs were being fulfilled. Examples: cars, bigger house, traveling, golf club, latest fashions, jewelry etcs.
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Step 2 : Screening environment, evaluating self, community & society, value and culture of the potential target group.
Analyze
Environment Self Community
•Population structure, Income, taste, preferences
•Country export & imports
•Local resources and new technology
•Industry linkages
•Government and Private development projects
•Global and Regional development
•Currents issues, social, rules & regulations.
•Experience
•Knowledge & skills
•Financial standing
•Interest
•Networking
•Norm
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Step 3: Analyzing the feasibility of Opportunities
Legal perspective
Market Competition level
Funding
Technology availability
Raw material supply
Logistic
Expertise & manpower
Sustainability
Risks Level
Analyze
?Feasibility
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Step 4: Select New Ventures
Market Competition level / Marketing Plan
Funding ( working
capital, fixed assets)
Operational Plan ( Technology, Supply Chain)
Organizational & Admin. Plan ( Expertise & manpower )
Profitability ( ROI, ROE, Pay back, Cash Flow, Risks Level
Analyze
?Viability
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Step 4 ( cont: )
New venture selected.
Prepare Details Business Plan.
Execute Plan
Monitor and Improvement.
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Example business opportunities
Forestry Poultry
AGRICULTURE
Fishery Plantation
Veneer PlywoodLoggingFurnitureSawn timber
Fishing EquipmentDeep-sea fishingFish ProcessingWholesales/ distributions
Clearing plantationPlantingProcessingWholesale/ distributionNursery
Poultry farmingProcessingWholesales/ Supplies
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Industrial Linkages
Explorations engineeringSteel Fabrications
Oil Rigs constructionEngineering Servicing
Equipment components
Petroleum RefineryPetroleum TradingEngine Oil products
Hydrocarbon raw materialPlastic / resin products
BACKWARD FORWARD
OIL INDUSTRY
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Business Opportunities
High Risks
Business Risk Financial Risk
•Risk could be transfer – insurance (fire, loss etc)
•Controlled risk but not 100% - market forecast quality products,
•Uncontrolled risk : economy recession, currency value, disaster
•Liquidity level
•Loan
•Credit
•Currency exchange
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Business and Level of Risks
Alternatives Entry Level of Risk
Expectedreturns
Examples
A Easy Low LowFood StallTailorGen. Trading
B Medium Medium MediumMini MarketAuto Services
C Difficult High HighPublic TransportConstructionsHeavy Industry
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Conclusion
SWOT ANALYSIS. S = Strength W = Weakness O = Opportunity T = Threat
SWOT is use to evaluate new business opportunities.
Entrepreneur will choose one which is fit to his /her objective / vision.