chapter 2

Chapter 2: BPME1013

KNOWING ENTREPRENEURS’CHARACTERISTICS

OBJECTIVES:• To identify the myths of entrepreneurship• To identify factors that pushed individuals’ participation into

entrepreneurship• To identify the characteristics of successful entrepreneurs• To differentiate the characteristics between small

businessman & entrepreneur; manager & corporate entrepreneur

• To compare profile of present days successful entrepreneurs with the entrepreneur’s characteristics that you have learned in this class.

INTRODUCTIONdriver and catalyst for the economy.Backbone and prime mover of an economyStudents need to be convinced that the people

who have the most entrepreneurs are the best people.

They need to be convinced that the cultural values and entrepreneurial characteristics possessed would lead them to become more confident and better prepared to seize the opportunities and challenges.

MYTHS OF ENTREPRENEURSHIP

• What the general public say about entrepreneurs? Most of what people say about entrepreneurs is not true!

• Myth of Entrepreneurship? Stereotyping entrepreneurs by publics or “general opinions of public towards entrepreneurs”

• Myths exist because of the lack of in-depth research or knowledge in the field of entrepreneurship by the general public.

• Kuratko & Hodgets (2004) put forward 10 myths associated with entrepreneurs.

THE 10 MYTHS OF ENTREPRENEURSHIP

Myth 1: Entrepreneurs are doers, not thinkers– Reality: Although entrepreneurs are action oriented, they

are also thinkers.– They make their moves carefully. They think deeply when

making plan or strategy.– Entrepreneur always has alternative plans & actions

towards if his/her original plan fails.– In the era of globalization & hyper-competition,

entrepreneurs need to be good thinkers.


Myth 2: Entrepreneurs are born, not made

• This myth says that the characteristics of entrepreneurs cannot be taught or learned. This myth says that entrepreneurs are born with special traits or characteristics.(Traits such as aggressiveness, self-initiative, self-drive, willingness to take risks, analytical ability & skill in human relations)

• Reality: Like all disciplines, entrepreneurship has models, processes, and case studies that allow the traits to be acquired through learning. Research has proven that entrepreneurs can be produced, can be taught, and it is not limited to certain family, race, group or individuals.


Myth 3: Entrepreneurs are always inventors

• Reality: Not all inventors are entrepreneurs. Many successful entrepreneurs are not inventors, but they use creative ideas in doing something. They will modify & innovate ideas to suit the market demand. Ray Kroc did not invent hamburgers, but his innovative ideas made McDonald’s the largest fast-food franchise in the world!


Myth 4: Entrepreneurs are academic & social misfits

• This myth results from people who have started successful enterprises after dropping out of school or quitting a job

• Reality: The entrepreneurs are now viewed as heroes, they excel socially, economically & academically.They have excellent communication skills & strives in economic development of the community & the country.


Myth 5: Entrepreneurs must fit the "profile"

• Many books & articles have presented checklists of good characteristics of successful entrepreneurs.

• Reality: It is not necessary for individuals to have ALL the characteristics, to become a successful entrepreneur (only some will do such as willing to learn, work hard & self-disciplined).


Myth 6: All Entrepreneurs Need Is Money

• Every biz. venture needs capital to survive. Large number of business failures occur because of lack of financing

• Reality: Money alone does not guarantee success! Entrepreneurs have to deal with other problems such as Managerial incompetence;Lack of financial understanding; Poor investments; Poor planning; So for entrepreneurs, money is only a resource, not the ultimate objective.


Myth 7: All Entrepreneurs Need Is Luck

• Being in the right place at the right time is always an advantage. But “luck" happens when preparation meets opportunity

• What appears to be lucky could really be several other factors– Preparation & hard works– Determination– Strong interest & Desire for success– Knowledge– Innovativeness & Creativity

10 Myths of Entrepreneurship

Myth 8: Ignorance is bliss for an entrepreneur

• Too much planning & evaluation will give rise to problems. People will end up not starting up a biz.

• Reality: In the competitive world of biz. which demanded detailed planning & preparation, entrepreneur should be equipped with solid knowledge & strategies, which would be key to success.

10 Myths ofEntrepreneurship

Myth 9: Entrepreneurs seek success but experience high failure rates.

• It is not true that many entrepreneurs suffer failures before they are successful. Studies have shown that only 18% failed in their first attempts, the other 82% succeeded.

• But failure can teach many lessons to those who are willing to learn & failure often leads to future success.

FACTORS THAT PUSHED INDIVIDUAL TOWARDS ENTREPRENEURSHIP

• Knowing the importance of entrepreneurship, governments all over the world try hard to encourage e/ship.

• Massive support systems were provided (loans & financial helps, cheap rent of premises, e/ship & mgt courses, advisory & consultation, subsidized machine & equipment etc.)

• Despite all these, not many wanted to be involve in e/ship. Studies have shown that only those who have certain values/character are more incline to be entrepreneurs.


• Interest/desire & self-satisfaction: Strong interest will push individuals to take up e.ship.

• Besides that, most of them want to gain self-satisfaction.

• Feel satisfied with their achievement in biz that is based on own ability & commitment.

• Those with strong interest will always struggle hard & have a strong sense of self-satisfaction when their biz succeeded.


• Goals achievement: • Those who possess high “need of

achievement” are very focused to fulfill their objectives.

• They want to achieve goals on their own (own idea, own capability). This type of people usually have strong inclination to be entrepreneurs.


• Safety & Security: • Some do not like to be controlled by others. • They want to be safe & secure from other people’s

domination, want to be their own boss! (If they are employed or work for other people, they are not safe/secure from being fired or directed to to job certain jobs that they don’t like).

THE FACTORS THAT PUSHED THE INDIVIDUAL TOWARDS ENTREPRENEURSHIP

• Status: • Some people have strong need towards status

& self respect. • Status & self respect are important elements

that influence individuals to aspire to be successful entrepreneurs.

THE FACTORS THAT PUSHED THE INDIVIDUAL TOWARDS ENTREPRENEURSHIP

• Power: • Some individuals like the power to exploit other people &

the resources towards achieving their goals. • They try not to be influenced by others. But they like to

control others, to influence other people’s behavior (eg. power to give directive to their employees, ability to influence customers to buy, bankers to give loans, government officers to open-up biz opportunities, etc).

• Entrepreneurs have unique profile & characteristics (character, behavior, trait & personality)

• They have the “entrepreneurship competency” i.e. the ability & skills needed to implement e/ship functions in an effective way.

• Among the famous studies on trait & personality of successful entrepreneurs are done by: McClelland(1961,1965,1985), Brockhaus(1982),Rotter(1966)&Bird(1989).

Characteristics & profile of successful entrepreneurs

Entrepreneurs’ CharacteristicsStudy done in Malawi & Ecuador. Mc Clelland (1985)

• Initiative; (self initiated individuals)• Search, Identify & grab/seize opportunities• Perseverance (strong determination, patience)• Always searching for Information• Emphasize on high standard of work• Commitment to agreement/contract• Orientation towards perseverance (patience) • Systematic Planning, Creative problem solving• Self-confident• Firm, Convincing• Use Influencing strategy (able to influent other people)

Kao (1991) entrepreneurs’ characteristics

• Commitment, determination & perseverance• Drive to achieve success, strive for growth & expansion• Opportunity & goal orientations• Take initiative and personal responsibility• Persistent problem solving• Realistic; Seek & use feedback• Internal locus of control• Calculated risk takers; Need for status & power• Integrity & reliability

Entrepreneurs’ characteristics• Drive to achieve -Eg: Lim Goh Tong can be considered as high

achievers or possess the drive to achieve success when he started Genting Highland project (turning a mountainous forest into a world class resort.

• Calculated risk taker –The higher the profit , the higher the risk. Entrepreneurs take into consideration the factor of risk (they only take calculated risk). Eg: Syed Mokhtar Al Bukhary in his acquisition of Bank Muamalat Malaysia Berhad. He had calculated the risk before deciding to make the acquisition.

Entrepreneurs’ characteristics• Commitment, Determination & Perseverance –

Characteristics important at every stage of biz life cycle. Useful at the beginning of the venture (start-up stage), when entrepreneur face early challenges, barriers, failures & problems. At survival stage, to gain competitive advantage, while at the expansion stage, to continuously expand internationally (not only domestically).

• Initiative & Responsible – Entrepreneurs are viewed as those who are willing to start something, not being left behind & willing to put themselves in situations where they are personally held responsible for the success or failure of the business/work.

Entrepreneurs’ characteristics• Internal locus of control –Believe in themselves. Do not

believe that external factors determine their success or failure. Believe that success are within their control & influence.

• Self-confidence – Self-confidence on his/her ability & capability. Brave & confident with the action taken.

• Truthful & honest – Honest to customers, suppliers, employees, bankers, etc.

• Concern on quality of work - Focus on standard & high quality of work to gain competitive advantage, to convince customers. Quality enhances & increases the image & reputation their businesses.

Entrepreneurs’ characteristics

• High energy level – Require high internal and external energy especially at the start-up and pre-start up. A lot of works to be done to achieve the goals & vision.

• Goal & vision oriented- Entrepreneurs will try their best to achieve its business goals and vision to enable him to make well-known in the eyes of the public business

• Ability in making decision -Bring big implication to business. Must take into consideration many factors & stakeholders.

Entrepreneurs’ characteristics

• Using influential strategy – to get the trust & to develop good relationship with other people (enlarge networking), to influence, to plead, to urge and to convince other people. (useful when applying for loans or looking for tenders/contracts/business opportunities. Most useful during sales & marketing)

Features and Profiles Successful Entrepreneur in the 21st Century

To see and take advantage Not only can view and take a chance, but must also know how to analyze, formulate and take action.Examples of Malaysian businessman T. Ananda Krishnan is to capitalize on opportunities in the telecommunications industry and broadcasting Maxis ASTRO

InformationalTo obtain the latest, accurate and clear, entrepreneurs must have the intelligence network of internal and external networks for business intelligence.

Creative and innovativesomeone who can generate new ideas and concepts and to translate them into products that can be commercialized.For example, Michael Dell of Dell Corporation is the first entrepreneur to introduce an online computer purchases


visionaryEntrepreneurs who have the vision to make the best decisions and to consider the challenges, threats and opportunities to be exposed.For example, Tan Sri Mustapha Kamal who has a vision in advancing the real estate industry in this country.

The independent-mindedIndependent-minded person can see, to seize and analyze the opportunities that exist by itself.

CompetitiveCompetitive person will always be a 'world leader'Entrepreneurs will find a viable new ideas and to integrate these ideas into a rational and creative solutions.


OptimisticRepresents the characteristics of entrepreneurs who are always thinking forward and always think positively towards action will be taken.Tan Sri Lim Goh Tong - Genting Highlands project at a time when the project was described as hopeless and a waste of time.

Acting as an innovatorinspire the spirit of creating new concepts and ideasFor example, in the telecommunications industry, Nokia is always a surprise and became the first innovator.

Taking calculated risksentrepreneurs must think and consider the risks faced in order to avoid possible losses in the future.

LeadershipCharismatic leadership, the leadership of 'transactional', transformational leadership and leaders 'visionary'.

Differentiation Between Entrepreneurs & Small Biz Owners

Aspects Small business owner

Entrepreneur

General definition

Running biz to gain profit for the sake of personal needs & family needs only

Initiate, running & expanding the biz to gain profit & perhaps the important things is to contribute back to the society & country

Risk taking Low risk taker Calculated or moderate risk taker

Management & leadership

Static management & low level of leadership

Up-to-date management method & high level of leadership

• Aspects S/Business Entrepreneurs Owner

Utilisation of resources

Utilization of resources for the continuity or survival of the biz

Manage to utilize resources effectively & creatively for the development & expansion of the biz

Formation of business

Start a new biz; small scale operation, do not manage to do new things & not creative

Start a new biz. Small at the beginning but manage to seek greater opportunity to expand the biz

Expanding based on opportunities/Orientation towards opportunity

Difficult to expand the biz because of inability to identify new opportunity

Opportunity seeker, always observe & quickly seize/grab the opportunity for biz expansion.

Differentiation between Entrepreneur & Traditional Manager

Aspects Traditional Manager Entrepreneur General definition

Individual who works & manages the resources on behalf of the organization (govt or private)

Individual who initiate, develop and run his/her own business and try to expand the business, indirectly benefit the society & country.

Motive Obey instructions, try to benefit & expand the organization & at the same time demanded being promoted, want rewards and power to carry out the job.

Fulfill self-achievement through freedom, opportunities and invention of new products/services for the society; and generate profit.

Time orientation

Responds to short-term plans (weekly or monthly target or budget)

Long-term objective (5 – 10 years) is to expand the business. Prefers quick actions & decisions.


Aspects Traditional Manager

Entrepreneur

Tendency to act

Supervises & delegates the job to other people (subordinates/workers)

Prefers to be involved with every aspect of activities & operations in his business.

Skills Has professional qualification especially in mgt skill.

Has proper academic qualification, biz & mgt skills. Has also technical skill if the biz involves technical aspects in its operation.

Values Has lower level of entrepreneurs’ characteristics. Wants promotion & rewards. Sees other managers as his competitors.

Has entrepreneurs’ characteristics (confidence, creative, innovative, high internal locus of control etc)


Aspect Traditional Manager

Entrepreneur

Main Focus

Main focus is to achieve the plans & objectives set by his superior & top management

Focus on achieving his own plans & objectives, give full attention to market demand & changes in technology.

Orientation towards Risk

Very careful with risk, usually does not like to take risk for fear of being blamed or fired.

Likes to take calculated/moderate risk in order to get good profit or bigger return on his investment.

Corporate Entrepreneurs?• “ an individual who works in other people’s

company/organization, but having the characteristics of an entrepreneur, he/she is able to give creative & innovative ideas to be implemented for the benefit & profitability of the company/organization”

• Corporate entrepreneur is said to be the individual behind the success of the company/organization he/she works in.

• Corporate entrepreneurs are usually called the Chief Executive Officer/ Chief Operating Officer/ Chief Analyst/ Senior Manager etc.)

Differentiation between Entrepreneur & Corporate Entrepreneur

Aspects Entrepreneur Corporate Entrepreneur

General definition

Individual who initiate, develop & run his own business, tries to expand the business, indirectly benefit the society & the country.

Individual who give creative & innovative ideas, implement these ideas for the benefit of the company/organization he works in.

Motive To fulfill self-achievement through freedom, opportunities & invention of new products/services for the society; and generate profit.

To fulfill self-achievement through freedom & opportunities within his organization. Achievement oriented & motivated by power & reward given by the organization.

Time orientation

Long-term objective is to expand the business (5 – 10 years). Prefers quick action.

Long-term objective (3 – 15 years). His action is based on the plan & schedule of his organization.

Differentiation between entrepreneur & corporate entrepreneur

Aspects Entrepreneur Corporate Entrepreneur

Tendency to act

Prefers to be involved with every aspect of activities & operations in his business.

involves with every aspect of activities & operations in the organization, delegates the job to his subordinates and demands quick results.

Skills Has business & management skills. Has also technical skill if the business involves technical aspects in its operation.

Specialized skill required by his field or area of work. His qualification is recognized & respected in the organization he works in.

Values Has entrepreneurs’ characteristics (confidence, creative, innovative, high internal locus of control etc)

Has entrepreneurs’ characteristics, but has to tolerate with rules & system of the organization.

Differentiation between Entrepreneur & Corporate Entrepreneur

Aspect Entrepreneur Corporate Entrepreneur

Main Focus

Focus on achieving his own plans & objectives, give full attention to market demand & changes in technology.

Focus on internal & external condition of the organization based on the plans set by the management of the organization. Corporate entrepreneur also gives great attention to customers & market demand.

Orientation towards Risk

able to take calculated/moderate risk in order to get good profit or bigger return on his investment.

able to take calculated/moderate risk in order to get good returns for their organization. Although personally has lower degree of risk taking than an entrepreneur, but he does not afraid of being fired by his employer.

Profile of successful entrepreneurs

• Tan Sri Mustapha Kamal (Property Developer, owner of MK Land Holdings)

• Datuk Dr. Zahrah Abd. Kadir (Nuclear Scientist to Entrepreneur)

• Sam Walton (Wal-Mart biggest retailer in the world) ; Steve Jobs (Apple Computer); Bill Gates (Microsoft)

Discussion

Next: William Gates IIINet Worth: $53.5 bilFortune: Self MadeSource: telecomAge: 70Country Of Citizenship: MexicoResidence: Mexico CityEducation: Universidad Nacional

Autonoma de Mexico, Bachelor of Arts / Science

Marital Status: Widowed, 6 children

http://billionaires.forbes.com/topic/Carlos_Slim_Helu

Discussion

Net Worth: $53.0 bilFortune: Self MadeSource: MicrosoftAge: 54Country Of Citizenship: United StatesResidence: Medina, WashingtonEducation: Harvard U, Drop OutMarital Status: Married, 3 children

AP Photo

http://billionaires.forbes.com/topic/Bill_Gates

Perbincangan

Net Worth: $47.0 bilFortune: Self MadeSource: Berkshire HathawayAge: 79Country Of Citizenship: United StatesResidence: Omaha, NebraskaEducation: Columbia U, Master of Science;

U of Nebraska Lincoln, Bachelor of Arts / Science

Marital Status: Widowed, 3 children

http://billionaires.forbes.com/topic/Warren_Buffett

Discussion

Search following entrepreneurs profile

Think......

chapter 2

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