1. By PresenterMedia.com
Business Management 2A
24 M a r c h 2011

2. Lecturer
• Mrs C Jasson
• Department Of Business Management
• Office: D-Ring 532
• Tel: (011) 559-4432
• Consulting Hours:
• Mondays 10:00 tot 11:00
• Wednesdays 11h00 tot 13h00
• Thursdays 13:00 tot 15:00
• Or per appointment

3. •Important arrangements ONB 2A 02
Module test:
4 May or 12 May (Thursday) 16:00 – 17:00
Venue: DLab
[Chapters 1 – 6] (= 40 % of module mark)
Continuous assessment:
2 Edulink tests (= 10% of module mark)
Test 1: 11-15 April (Chapters 1 – 4)
Test 2: 26 – 30 May (Chapters 7 – 9)
Exam: Tuesday 31 Mei – 14h00 – 17h00

4. •Other important information
1 Class attendance

5. 2 Participation
•Other important information

6. Class test
0%
Edulink test
5%
Edulink test
5%
Module test
40%
Exam
50%
•Other important information
3 Tests

7. •Other important information
4 Presentation

8. •Other important information
5 Class reps

9. • Cell phones
• Punctuality
• Bladder control
• University policy
• Language & grammar
• Neat appearance
•Preparation
•Other important information
6 Minor irritations!
Test
tip!
One
each
day!

10. Lecture 1
Chapter 1
The nature & development
of entrepreneurship
Chapter 2
The entrepreneur

11. Definition of an entrepreneur

12. An entrepreneur is a person who sees an
opportunity in the market, gathers resources and
creates and grows a business venture to satisfy
these needs. He/she takes the risk of the venture
and is rewarded with profit if it succeeds.

13. Why does a country need entrepreneurs?
• Economic development can be derived from the entrepreneurial
activity in a country
• Economic growth
• Employment creation
• Wealth creation
• Skills are needed in SA;
• Young, qualified entrepreneurs;

14. Where does Entrepreneurship come from?
• Entrepreneurship developed first from the
economist
• Richard Cantillon (1680 – 1734) introduced the
term “entrepreneur”
• Derived from the French word “entreprendre”
which means “to undertake”
• Cantillon defined the entrepreneur as one who
buys at certain prices and sells at uncertain
prices, thereby undertaking a risk in exchange
for a potential profit;

15. • Jean Baptiste Say (1767 – 1832) defines an
entrepreneur as someone who uses
knowledge, judgment, management
capabilities , leadership & technical
abilities, to move existing ‘economic
resources’ from areas of low productivity
to areas of higher productivity.
Where does Entrepreneurship come from?
• In the process he associates the entrepreneur with
innovation – he views entrepreneurs as change agents
[Say = father of entrepreneurship]

16. Where does Entrepreneurship come from?
• Joseph Schumpeter (1883 –
1950) really launched the
field of entrepreneurship by
associating it with
innovation
• His main contribution to
economic studies was his
theory of business cycles

17. Schumpeter:
“The essence of entrepreneurship lies in the perception
and exploration of new opportunities in the realm of
business…it always has to do with bringing about a
different use of national resources in that they are
withdrawn from their traditional employ and subjected
to new combinations”

18. Where does Entrepreneurship come from?
• Schumpeter stated that entrepreneurs undertook five
types of innovations:
• The introduction of a new good or quality of good
• The introduction of a new method of production
• The opening of a new market
• The utilisation of new sources of supply for raw materials or
intermediate goods
• The carrying out of some new organisational form of the
industry
• The economists (1700 – 1950) were mainly interested
in understanding the role played by the entrepreneur
as the motor of the economic system (What the
entrepreneurs do)

19. Where does Entrepreneurship come from?
• The Behaviourists (psychologists, psychoanalysts,
sociologists and other specialists of human
behaviour)[1960 – 1980, goal was to define
entrepreneurs and their characteristics]
• Max Weber viewed entrepreneurs as innovators,
independent people whose role as business leaders
conveyed a source of formal authority
• David McClelland (1971) defined the entrepreneur as
someone who exercised control over production that
is not just for his personal consumption (need for
achievement)

20. Where does Entrepreneurship come from?
• Since the 1980’s the field of entrepreneurship
started to explode –
Management Sciences perspective
• Publication of the first-ever encyclopedia
• First major annual conference dedicated to this
field (Babson conference)
• [focused on what entrepreneurs do]
• From 1985’s – Social perspective – focused on
what support is needed by entrepreneurs

21. Where does Entrepreneurship come from?
• Entrepreneurial perspective – [1990 onwards] Focus
on what is entrepreneurial activities and what
competencies are required to perform them]
• Does not look at only the individual entrepreneurial
behaviour but also the more complex forces of
entrepreneurship
• Entreprenology (Fillion) = a comprehensive
multidisciplinary understanding of the entire
entrepreneurial process

22. Research trends
Period Topics Authors
What do they do?
(1700-1950)
Economic Cantillon, Say,
Schumpeter
Who are they? (60’s-
80’s)
Behaviourists Weber, McClelland,
Rotter, De Vries
What do they do? (80’s) Management
sciences
Drucker, Mintzberg
What support do they
need? (mid 80’s)
Sociologists Gartner, Welsh,
Bygrave, Reynold
Competencies Entrepreneurs Timmons, Vesper,
Brockhaus

23. Many diverse meanings over the years;
We need a comprehensive understanding of the process;
Overall we can define it as a field of study about the
entrepreneur;
Entrepreneurship is an applied research field;
However we have not yet studied the behaviour of
entrepreneurs well;
Entreprenology (Fillion)
The study of the behaviour of the entrepreneur

24. The theory behind entreprenology
Behaviourists
Flexible models;
Multi-dimensional
Multi-disciplinary
Economists
Innovation;
Drive development;

25. ENTREPRENEUR
• Starts & runs his own business;
• Object: to make a profit;
• Innovative behaviour;
• Employs time, effort, resources, &
takes risks;
• Reward required: success, financial
& personal satisfaction
• The act of being an entrepreneur;
• More than just starting a business;
• The emergence & growth of new
businesses;
• Causes changes in the economy;
• Process of identifying unmet
needs, allocate resources, and
create value for self and society.
ENTREPRENEURSHIP
Entrepreneur & Entrepreneurship

26. SMALL BUSINESS
• Limited growth potential;
• Stabilizes at some point;
• Object: personal goals/security;
• Limited innovative behaviour;
• Focus on delivery/client service;
• Certain benefits to remaining
small;
• Criteria:
• National Small Business Act 26 of
2003 (Amended)
• Main objective: growth & profit;
• Innovation;
• Venture into new territory;
• Real creators of employment;
• Greater growth potential;
• Listing on JSE or international
markets;
ENTREPRENEURAL VENTURE
Venture VS Small Business

27. An entrepreneurial orientation
Entrepreneurial Orientation
Value system Culture
Experience
Entry of entrepreneurs
Acquired abilities Inherent abilities
Results of entrepreneurship
Products/services
Cooperative
environment
External support
Supportive environment
Finance Laws
Training

28. •3 domainsEntrepreneurship
Management
Leadership
Discovery Exploitation

29. Success factors of entrepreneurs
Creativity Innovation
Perseverance
Relationships
Positive attitude
Leadership
Commitment

30. Succes factors of managers
Planning
Competitors
KnowledgeMarket
Insight
Focus
KYC

31. Opportunity
Business Plan
Resources?
Start
Manage
Entrepreneurial process

32. • Change agents;
• See opportunities others don’t;
• Create wealth;
• Their roles?
• Challenges?
• Survivalist?
• Emerging entrepreneur?
• Opportunities for
Entrepreneurship?
• Necessity of Entrepreneurship?
•Focus on Entrepreneurs

33. • Economic actors – the creators & drivers of business;
• SA problem: low growth, unemployment & poverty;
• Living standard depends on customer satisfaction
levels;
• Advances prosperity of small communities & country;
• 1/18 adults in SA are entrepreneurs – too low;
• Drive to increase the number of entrepreneurs
•A catalyst for economic activity

34. Entrepreneurs at various levels of
entrepreneurial sophistication
Basic survivalist
No economic independence; little
involvement with other entrepreneurs
(individualism)
Entrepreneurial activities: isolated
from markets; unaware of own
potential; illiterate; few income-
generating activities
Pre-entrepreneurs
Follows the groups initiatives (collectivism)
Entrepreneurial activities: welfare-orientated;
not expected to be self-sustaining; needs
training in entrepreneurial competency
Subsistence entrepreneurs
Self-employed, independent income
generation; temporary market stall or
stand
Entrepreneurial activities:
inexperienced in business management
– needs general support in technical
and management skills
Micro-entrepreneurs
0 to 9 employees; operating license from local
authority, fixed workshop
Entrepreneurial activities: difficult to get loans
from banks. Assistance projects focus on credit
rather than training and technical assistance
Small-scale entrepreneurs
10 to 49 employees
Entrepreneurial activities: qualifies for bank
loan; well educated

35. •Background of entrepreneurs
•Family
•Frequently parents were entrepreneurs, but not in SA
•Education
•The biggest barrier – overcome by tertiary education
•Personal values
•High values high success rate
•Age
•In their 20’s-30’s – usually worked beforehand
•Work experience
•Opportunities spotted during employment

36. •Characteristics of entrepreneurs
• Passion
• Locus of control
• Need for independence
• Need for achievement
• Risk taking and uncertainty
• Creativity and innovation
• Determination and persistence

37. •Role models & support systems
•Social;
•Personal;
•Extended;
•Other
•Benefits:
•Joint:
•Marketing;
•Buying of raw material;
•Tendering
•Sharing:
•Intelligence;
•Containers;
•Supplier info;
•Mentor services;

38. Push/pull factors
Independence
Achievement
Recognition
Personal development
Personal wealth
Unemployment
Job insecurity
Disagreement with boss
Bad fit with organization
Out of options
Opportunity Necessity
E

39. Why do small business fail?
Finance:
Banks don’t want the risk;
Few MFI’s
Bad business plans
Markets:
Follow others;
No marketing;
No info on consumer demands
Technology:
Competitive advantage;
NRF, SABS have SMME
development programs
People:
Manage employee attitudes;
Build team spirit;
Life-long learning;
Be a role model;
Challenges…

41. Women & emerging entrepreneurs
• >40-80< of SA workforce is in the informal
sector & most are women;
•Economic role of women has evolved;
•Adverse conditions:
•Overworked, uneducated, denied finance,
facing discrimination, tradition
•Education, skills & mindset determine
entry into formal market

42. Types of women entrepreneurs
Traditional Innovative
Domestic Radical
Attachment to traditional gender roles
Attachmenttoentrepreneurialideas

43. Barriers women entrepreneurs face
•Limited start up funds;
•No support structures & networks;
•Work-life balance;
•Socio-cultural attitudes;
•Discrimination & bias;
•Lack of/inappropriate education & training;
•Surviving male domination
•Life skills (confidence, communication etc)

44. Male VS female entrepreneurs
Characteristics Male Female
Starting Laid the foundation – women
must follow
Latecomers – uninformed & unaware
that they can conduct business
Type Manufacturing/construction. In
21st Century - diversified
Service related, eg. Coffee shops,
hairdressing, training
Relationships Short term orientated- focus on
results!
Strong relationship focus with eg.
banks, suppliers etc
Funding Barrier if too little collateral Worse barrier & source of
discrimination
Support Friends, spouse, business
partners
Spouse, associations, family, networks

45. •New “labels” for entrepreneurship
• Emerging entrepreneurship
• Previously disadvantaged groups
• Survivalist and micro enterprises (informal sector)
• Propensity to create employment or grow is limited by a lack of skills,
knowledge and resources
• Not recognised by the mainstream businesses
• Denied basic inputs needed to develop their businesses
• = the typical street vendors
• Opportunity and necessity entrepreneurship
• Youth entrepreneurship
• Umsobomvu Youth Fund

46. •Technopreneurs
Use
technological
innovations &
translate such
technology into
successful
produces or
services.
Amazon.com;
Dell Computers

47. •Social entrepreneurs
Recognizes a
social problem &
uses
entrepreneurial
principles to
organize, create &
manage a venture
to achieve social
change
Muhammad Yunus
Founder of Grameen Bank

48. •Tourism entrepreneurs

49. • A South African term
coined by Dr Blade
Nzimande used to
describe government
officials or politicians
who uses their
powers & influence
to secure
government tenders
& contracts
•Tenderpreneur

50. Homework & preparation
And Test Tip!