DEPARTMENT OF WATER RESOURCES

AND IRRIGATION ENGINEERING

Entrepreneurship for Engineers (WRIE5201)

CHAPTER ONE
Introduction to Entrepreneurship

Adimasu W.
 Historical Origin of Entrepreneurship

• The word ‘entrepreneurship‘ is derived from French word ‘Entreprendre‘ which mean “undertaking”.

• During the ancient period the word entrepreneur was used to refer to a person managing large
commercial projects through the resources provided to him.

• In the 17th Century a person who has signed a contractual agreement with the government to provide
stipulated products or to perform service was considered as entrepreneur.

• In this case the contract price is fixed so any resulting profit or loss reflects the effort of the
entrepreneur.

• In the 18th Century the first theory of entrepreneur has been developed by Richard Cantillon.
• He said that an entrepreneur is a risk taker. If we consider the merchant, farmers and /or the
professionals they all operate at risk.
 Cont,,,
• In the late 19th and early 20th Century an entrepreneur was viewed from economic
perspectives.

• The entrepreneur organizes and operates an enterprise for personal gain.

• In the middle of the 20th Century the notion of an entrepreneur as an inventor as established.

• “The function of the entrepreneur is to reform or revolutionize the pattern of production by

exploiting an invention or more generally untried technological possibility for producing new
commodities or producing an old one in a new way or opening a new outlet for products by
reorganizing a new industry.”

• The concept of innovation and newness are at the heart of the above definition.
 Definitions of Entrepreneurship and Entrepreneur

• It is known that entrepreneurship is the process and entrepreneur is the person undertaking entrepreneurial
activity such as undertaking own business.

• Entrepreneurship is the process of identifying opportunities in the market place, arranging the resources
required to pursue these opportunities and investing the resources to exploit the opportunities for long term
gains.

• Entrepreneurship involves creating incremental wealth by bringing together resources in new ways to start
and operate an enterprise.

• Entrepreneurship is the processes through which individuals become aware of business ownership then
develop ideas for, and initiate a business.

• Entrepreneurship is the art of identifying viable business opportunities and mobilizing

resources to convert those opportunities into a successful enterprise through creativity,
innovation, risk taking and progressive imagination.
 Cont,,,
• Entrepreneurship is a practice and a process that results in creativity,
innovation and enterprise development and growth.

• In general, the process of entrepreneurship includes five critical elements.

• These are:
1) The ability to perceive an opportunity.
2) The ability to commercialize the perceived opportunity i.e. innovation
3) The ability to pursue it on a sustainable basis.
4) The ability to pursue it through systematic means.
5) The acceptance of risk or failure.
Cont,,,

 Fundamentally, entrepreneurship is human creative act but a concise

and universally accepted definition has not yet emerged.
 But generally in almost all of the recent definitions, there is an
agreement its a kind of behavior that includes:
 Initiative taking
The organizing and reorganizing of social/economic
mechanisms to turn resources to practical account, and
 The acceptance of risk or failure, etc.
 Cont,,,
• An entrepreneur can be defined as follows:
• An entrepreneur is any person who creates and develops a business idea and takes the risk of setting up
an enterprise to produce a product or service which satisfies customer needs.

• An entrepreneur can also be defined as a professional who discovers a business opportunity to produce
improved or new goods and services and identifies a way in which resources required can be mobilized.

• An entrepreneur is an individual who: has the ability to identify and pursue a business
opportunity; undertakes a business venture; raises the capital to finance it; gathers the
necessary physical, financial and human resources needed to operate the business venture; sets goals for
him/herself and others; initiates appropriate action to ensure success; and assumes all or a major portion
of the risk!

• An entrepreneur is a person who: create the job not a job-seeker; has a dream, has a vision; willing to
take the risk and makes something out of nothing
The definition entrepreneur includes:

a) Decision making;

b) Using available resources in novel ways;

c) Action orientedness;

d) The ability to see business opportunities, the ability to gather resources to take
advantage of them and the ability to take action; and

e) The ability to search for change, respond to it, and exploit it.
In almost all the definitions of entrepreneurship,
there is agreement that basic elements such as :

i) risk taking,
ii) initiative taking,
iii) organizing and reorganizing,
iv) vision,
v) wealth creation are involved.
 Cont’’’

• There are four key elements of entrepreneurs:

Vision (identifying emerging opportunities)

Innovation (creating new business or new ways of doing

something)

Risk bearing (taking risk and facing uncertainty)

Organizing (collection and coordination of the necessary

resources)
Cont’’’
• Relationships between entrepreneur and entrepreneurship
Entrepreneur Entrepreneurship
Person Process
Organizer Organization
Innovator Innovation
Risk-bearer Risk-bearing
Motivator Motivation
Creator Creation
Visualizes Vision
Leader Leading
Imitator Imitation
 Types of Entrepreneurs

• Entrepreneurship can take three different forms. They are:

The individual entrepreneur: An individual entrepreneur is someone who
started; acquired or franchised his/her own independent organization.

Intrapreneur: An Intrapreneur is a person who does entrepreneurial work

within large organization.

The Entrepreneurial Organization: The entrepreneurial function need not be

embodied in a physical person.
Characteristics of Entrepreneurs
• Desire for responsibility
• Preference for moderate risk
• Confidence in their ability to succeed
• Desire for immediate feedback
• High level of energy
• Future orientation – serial entrepreneurs
• Skilled at organizing
• Value achievement over money
 Role of Entrepreneurs in Economic Development

• The entrepreneurs serve as a key to the creation of new enterprises, thereby rejuvenating
economy and sustaining the process of economic development in the following ways:

Improvement in per capita Income/Wealth Generation

Generation of Employment Opportunities
Inspire others Towards Entrepreneurship
Balanced Regional Development
Enhance the Number of Enterprise
Provide Diversity in Firms
Economic Independence
Combine Economic factors
Provide Market efficiency
Accepting Risk
Maximize Investor’s Return
 Who Becomes an Entrepreneur?

• The Young Professional: Increasingly young highly educated people often

with entrepreneurial qualifications are skipping the experience of working for
an established organization and moving directly to work on establishing their
own ventures.

• The Inventor: The inventor is someone who has developed an innovation and
who has decided to make a career out of presenting that innovation to the
market.

• The Excluded: Some people turn to an entrepreneurial career because

nothing is open to them.
 Qualities of an Entrepreneur

• In order to be successful, an entrepreneur should have the following qualities:

Opportunity-seeking
Persevering
Risk Taking
Demanding for efficiency and quality
 Information-seeking
Goal Setting
Planning
Persuasion and networking
Building self-confidence
Listening to others
Demonstrating leadership
 Entrepreneurial Skills

• A skill is simply knowledge which is demonstrated by action.

• An entrepreneur is someone who has a good business idea and can turn that
idea into reality.

• The entrepreneur must also know how to inform the customer about it and
how to deliver the new offerings.

• Turning an idea into reality calls upon two sorts of skills, these are:
I. General management skills and
II. People management skills
 Cont,,,
• General Management Skills: These are skills required to organize the physical
and financial resources needed to run the venture.

• Some of the most important general management business skills are:

Strategy skills, planning skills, marketing, financial, project management and
time management skills.

• People Management Skills: A business can only be successful if the peoples

who make it up are properly directed and are committed to make an effort on
its behalf.
• Some of the more important skills we might include under this heading are:
Communication, leadership, motivation, delegation and negotiation skills.
 The Entrepreneurial Tasks

• A number of tasks have been associated with the entrepreneur. Some of the
more important are:
Owning organizations
Founding new organization
Bringing innovations to market
Identification of market opportunity
Application of expertise
Provision of leadership
The entrepreneur manager
 Wealth of the Entrepreneur

• Wealth is money and anything that money can buy. It includes money,
knowledge and assets of the entrepreneur.
• Who Benefits from the entrepreneur’s Wealth?
employees,
investor,
supplier,
customer,
the local community and
government.
 Entrepreneurship and Environment

• Business environment refers to the factors external to a business enterprise which

influence its operations and determine its effectiveness.

• A study of business environment offers the following benefits:

1) It provides information about environment which is essential for successful
operation of business firms.
2) It opens up fresh avenues for the expansion of new entrepreneurial operations.
The entrepreneurs may come forward with new ideas and with new ventures when
they find environment suitable to their enterprises.
3) Knowledge about changing environment enables businessmen to adopt a
dynamic approach and maintain harmony of business operations with the
environment.
4) By studying the environment entrepreneurs can make it hospitable to the growth
of business and thereby earn popular support.
 Phases of Business Environment

• Business environment may be classified into two broad categories; namely external; and
internal environment
A) External Environment
Economic
Legal
Political
Socio-cultural
Demographic environment
B) Internal Environment
Raw material
Production/operation
Finance
Human resource
 Environmental Factors Affecting Entrepreneurship

• Some of the environmental factors which hinder entrepreneurial growth are given
below:
Sudden changes in Government policy.
Sudden political upsurge.
Outbreak of war or regional conflicts.
Political instability or hostile Government attitude towards industry.
Excessive red-tapism and corruption among Government agencies.
Ideological and social conflicts.
Unreliable supply of power, materials, finance, labor and other inputs.
Rise in the cost of inputs.
Unfavorable market fluctuations.
Non-cooperative attitude of banks and financial institutions.
 Creativity

• Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities that may be useful in
solving problems, communicating with others, and entertaining ourselves and others.

• Creativity is the ability to come up with new idea and to identify new and different ways of looking at a problem and
opportunities.

• Creativity is a process of assembling ideas by recombining elements already known but wrongly assumed to be
unrelated to each other. This definition has several key elements that are worth considering:

 Process: creativity is a process (implying among other things, that it is more like a skill than an attitude, and that you
can get better at it with practice)

 Ideas: creativity results in ideas that have potential value.

 Recombining: the creative process is one of putting things together in unexpected ways.

• Creativity is the development of ideas about products, practices, services, or procedures that are novel and potentially
useful to the organization.
 Cont,,,
 Creativity is the ability to design, form, make or do something in a new or different way.
 The ability to come up with creative solutions to needs/problems and to market them often marks the
difference between success and failure in business.
 Real, successful entrepreneurs are creative in identifying a new product, service or business idea and
turning it into a business opportunity.
 Ways to develop creative thinking habits are increasing awareness of one’s environment, brainstorming and
changing existing ideas

Here are seven steps to expanding your creative potential:

 Examine how you perceive creativity and creative people.
 Spend time with creative people.
 Learn your own warm-up process.
 Move, dance, exercise, bicycle, walk and stretch.
 Listen to music and experiment with improvisational exercises.
 Keep a notebook of interesting or creative ideas and observations.
 Find a mentor or coach who can help you develop your creativity to a higher level.
 Steps in the Creative Process

• Opportunity or problem recognition: A person discovers that a new opportunity

exists or a problem needs resolution.

• Immersion: the individual concentrates on the problem and becomes immersed in

it.

• Incubation: the person keeps the assembled information in mind for a while.

• Insight: the problem-conquering solution flashes into the person’s mind at an

unexpected time, such as on the verge of sleep, during a shower, or while running.

• Verification and application: the individual sets out to prove that the creative
solution has merit.
 Barriers to Creativity

• Be aware that there are numerous barriers to creativity, including:

1. searching for the one ‘right’ answer
2. focusing on being logical
3. blindly following the rules
4. constantly being practical
5. viewing play as frivolous
6. becoming overly specialized
7. avoiding ambiguity
8. fearing looking foolish
9. fearing mistakes and failure
10. believing that ‘I’m not creative
 Innovation

• Innovation lies at the heart of the entrepreneurial process and is a means to the
exploitation of opportunity.

• It is the implementation of new idea at the individual, group or organizational level.

• Innovation is a process of intentional change made to rate value by meeting

opportunity and seeking advantage.

• There are four distinct types of innovation, these are as follows:

Invention - described as the creation of a new product, service or process
Extension - the expansion of a product, service or process
Duplication - defined as replication of an already existing product, service or process
Synthesis - the combination of existing concepts and factors into a new formulation
 Cont,,,
• The difference between invention and innovation is:
1. Invention - is the creation of new products, processes, and technologies not previously known to exist.
2. Innovation - is the transformation of creative ideas into useful applications by combining resources in
new or unusual ways to provide value to society for or improved products, technology, or services.

• Elements in the Innovation Process:

 Analytical planning
 Organizing resources
 Implementation
 Commercial application

 Innovation can have different:

 Focus: technology, organization, or external relationships,
 Types: incremental or radical, and
 Sources: technology transfer or development of new business models/concepts.
 The Innovation Process

• Analytical planning: carefully identifying the product or service features,

design as well as the resources that will be needed.

• Resources organization: obtaining the required resources, materials,

technology, human or capital resources

• Implementation: applying the resources in order to accomplish the plans

• Commercial application: the provision of values to customers, reward

employees and satisfy the stakeholders.
 Areas of Innovation

• The following are some of the major areas in which valuable innovation
might be made.
New production
New services
New production techniques
New way of delivering products or services to customers
New operating practices
New means of informing the customer about the product
New means of managing relationships within the organization
New means of managing relationship between organizations
 From Creativity to Entrepreneurship

• Creativity is the ability to develop new ideas and to discover new ways of
looking at problems and opportunities.
• Innovation is the ability to apply creative solution to those problems and
opportunities in order to enhance people’s lives or to enrich society.
•
Why Study Entrepreneurship?
• Scientists and engineers who want to lead companies need to know
how to back up ideas with numbers
• You will learn the complex business processes involved in
commercialization
• You learn how to make trade-offs among features, benefits, risks,
price, markets, and operations
• You learn how to adapt to uncertainty and change
• You learn techniques for managing people
Benefits of Entrepreneurship
The opportunity to:
• Create your own destiny
• Make a difference
• Reach your full potential
• Reap impressive profits
• Contribute to society and to be recognized for your efforts
• Do what you enjoy and to have fun at doing it
 Drawbacks of Entrepreneurship
• Uncertainty of income
• Risk of losing your entire investment
• Long hours and hard work
• Lower quality of life until the business gets established
• High levels of stress
• Complete responsibility
• Discouragement
 Personality Traits of Successful
Entrepreneurs
A) Need for Achievement
 Researches indicate that positive correlation
between the need for achievement and
entrepreneurial activity.
 Individuals with a low need for achievement
are those who seem to be contented with
their present status.
B) Willingness to take risk
 The risks that the entrepreneur takes in starting
and/or operating their own business are varied.
Financial risk
Careers risk
Families risk
 Psychic risk
 Often enough entrepreneurs are calculated risk
takers.
C) Self-Confidence
 Entrepreneurs believe in their own ability to
overcome challenges of launching a new
venture .
 They have a higher internal locus of control
than the population in general.
 D) Innovation and creativity
 Innovative activity is a hallmark of entrepreneurship.
 Entrepreneurs core activity is innovation and a continuous, purposeful search for new
ideas, and their practical applications
 Doing things differently is part of entrepreneur's nature.
 Innovation is the process of making improvements by introducing something new.
 The innovation is the process that translates knowledge into economic growth
and social well-being.
 Creativity is a mental process involving the generation of new ideas or concepts or new
associations between existing ideas or concepts.
 Innovation is the transformation of creative idea into useful application but creativity is a
prerequisite to innovation.
Cont’’’

• Creativity is the ability to develop new ideas and to discover

new ways of looking at problems and opportunities.

• Innovation is the ability to apply creative solutions to

problems and opportunities in order to enhance people’s
lives or to enrich society.
E) Total commitment
Hard work,
 energy
single mindedness
are essential elements in the entrepreneurial profile,
 F) Effective time management:

Entrepreneurs are well aware that time is something

that cannot be saved if every single minute is not
used worthy enough.
 They
Establishing goals,
Determining deadlines,
Allocate time for each and every important
activity
 G) An Ability of leadership
 Successful entrepreneurs are successful leaders,
 To be aware of better ways to accomplish tasks is to be
an effective leader.
 They set goals for themselves and for others, and
direct and guide others to accomplish goals.
H) An ability of decision making
Successful entrepreneurs are creative decision
makers.
Looking matters from different angles,
gathering relevant information.
Consistency are crucial in entrepreneurial decision
making.
I) Desire for Independency
 Entrepreneurs wish for autonomy.
 believe that independency of action is the only sure
way to get what they need
 Entrepreneurial motivation:

why people consider setting up their own businesses?

 Entrepreneurs are convinced that they can command their

own destiny.
 In general the factors for business formation can be divided
between "Pull" and" Push" influences.
"pull” Influence
 Some individuals are attracted towards business ownership
by positive motives:
Independence
Market opportunity
Financial incentives
Community service
"Push" influences
 Many people are pushed into founding a new enterprise by
variety of factors including;
Unemployment
Disagreement with previous employer
Challenge
Entrepreneurship Vs Intrapreneurship
Intrapreneurship:
 It’s entrepreneurship within an existing business structure.
 It bridge the gap between science and market place
 In these system there is enough financial resources, skills,
and the marketing and distribution system.
Entrepreneurship:

 Another method for bridging the gap between science and

market place
 Comparing to Intrapreneurship characterized by
frequently lack managerial skills
Marketing capability, and finances
often do not know how to interface with necessary entities
such as banks, suppliers, customers….
Thanks for Your attention!!