ENGINEERING ECONOMICS & ENTREPRENEURSHIP

BPK 3013

Engineering

Economics

Entrepreneurship

Financial

Statement

Introduction

Business

Plan

Analyze

Opportunities

&

Business

Strategy

Business

Entities

&

Support

Services

Creativity

&

Innovation

Introduction

Entrepreneurship

Assessment of

Capital

Investment

Principles of

Money-Time

Relationships

Economic

Equivalence

& Interest

Rates

Cost Concepts

Introduction

Engineering

Economics

Chapter 1

Introduction to Entrepreneurship

Learning Outcomes

Understand the concept of entrepreneurship and entrepreneurRealize the importance of entrepreneurshipDifferentiate the characteristics of an entrepreneur to small business owners

Definition of Entrepreneurship

It is the practice of starting new organizations, particularly with new project in response to identified opportunities (Barringer and Ireland, 2008)The process of organizing, managing, and assuming the risk of business (Kuratko and Hodgetts)Involves an opportunity, an individual, an organizational context, risk and resources (Lambing and Kuehl)

Comprehensive Definition

A field of business, seeks to understand how opportunities to create something new arise and are discovered or created by specific individual, who then use various means to exploit or develop them, thus producing a wide range of effects.

(Baron and Shane)

Types of Business

Wholesaling

Retailing

Manufacturing

Services

Manufacturing

Process of converting raw materials, components, or parts into finished goods that meet a customers expectations or specifications.Employ a man-machine set up and equipmentsNeed division of laborEg. Food industries, furniture, electrical and electronic

Wholesaling

Sale of goods or merchandise to retailers, industrial, commercial institutional and others.Wholesaler buys large quantity of goods from various producers or vendors -> warehouse them -> resell to retailers. Eg.???

Retailing

Sale of goods or commodities in small quantities directly to consumersConsumers maybe individuals or businessesThey are called shops or storesRetailers are at the end of supply chain

Services

Defined as intangible goodsEg. Insurance, government, tourism, banking, retail, educationThe output of this sector is information, service, attention, advice, experiences etc.

Difference Between Entrepreneurs and Employees

Entrepreneurs

Founder & OwnerTake calculated riskAll to gain & all to loseEntrepreneurial Accountability for final outcomeVision driven

Employees

Worker & EmployeeDont take much riskGains through salary incrementManagerialAccountability for all defined operationsTime basedProfession driven

Characteristics of Entrepreneur

Passion/commitment for the business

Drive to achieve and grow

Opportunity and goal orientation

Taking initiative and personal responsibility

Persistent problem solving

Seeking and using feedback

Internal locus of control

Calculated risk taking

Tolerance for ambiguity

Integrity and reliability

Tolerance for failure

High energy level

Creativity and innovativeness

Vision

Self confidence and optimism

Independence

Team building

Top Ten Characteristics of Successful Entrepreneur

Recognize and take advantage of opportunitiesResourcefulCreativeVisionaryIndependent ThinkerHard workerOptimisticInnovatorRisk TakerLeader

ENTREPRENEURSHIP STATISTICS Did You Know?

Malaysian Situation

211 775 companies registered in Malaysia (Until Dec 2002).76 847 companies have terminated their businesses (Year 2002). 75.7% failed the first year of start-up.8% to 22% last through the next 5 years.4 in 100 000 with a high tech business idea eventually becomes a successful company that goes public. Bankruptcies occur for 84% of the high tech companies that succeed in getting venture capital. 1:24 start-up entrepreneurs success rate.

(Source : Malaysia Statistics (MVD Agencies Sdn Bhd)

Entrepreneurs Contributions

Develop new marketsDiscover new sources of materialsMobilize capital resourcesIntroduce new technologies, new industries and new productsCreate employment

Advantages of Entrepreneurship

ExcitementSalary PotentialFlexibilityIndependence

Other Advantages

Enormous personal financial gainOffer more job satisfaction and flexibilityEmployment for othersDevelopment of more industriesIncome generation and increase economic growthHealthy competition and encourage higher quality productsMore goods and services available

Other Advantages

Promotion of the use of modern technologyEncouragement of more researchersDevelopment of entrepreneurial qualitiesFreedomThe ability to have great accomplishmentsReduction of the informal economyEmigration of talent may be stopped by a better domestic entrepreneurship climate

Disadvantages

No regular salaryWork scheduleAdministrationPersonal sacrificesBurden of responsibilityLittle margin for error

Entrepreneur vs. Small Business Owner

Small Business OwnerEntrepreneurDefinitionDoing business for the sake to support familyDevelop the business for himself and publicRiskLowerMedium and higherManagement StyleLowerLatestSourcesUsed for business continuityUsed to expand the businessOpprtunityLower Identification of possible opportunitiesAlways looking for new opportunitiesInnovation and creativityLowerPosses higher creativity and innovation

Thank you