Management International Program

SESSION 2
FUNDAMENTALS OF
ENTREPRENEURSHIP

Andriyastuti Suratman, SE., MM

Course : Sharia Entrepreneurship
 ENTREPRENEUR NOWDAYS

ENTREPRENEURSHIP & WEALTH CREATION KEY TO DEVELOPMENT

ECONOMIC DEVELOPMENT

OPPORTUNITY RESOURCES
IDENTIFICATION ORGANIZATION

ENTREPRENEUR VALUE
SHIP CREATION

RESOURCES WEALTH CREATION

Ever-changing Concept of Value

Creation in the Mind of Customers SUSTAINABLE DEVELOPMENT
PAST PRESENT FUTURE

Source: Arya Kumar, Entrepreneurship, 2012 Source: Arya Kumar, Entrepreneurship, 2012

Session 2 - Fundamentals of Entrepreneurship

 ENTREPRENEUR NOWDAYS
ENTREPRENEURSHIP & ECONOMIC DEVELOPMENT TYPES OF INNOVATIONS

Development

Growth

Expansion Breakthrough Discontinuous

Dynamically
Technological Continuous
Entrepreneurshi
p Leading to Ordinary Continuous
Economic
Development

INNOVATIONS INNOVATIONS

SCIENTIFIC TECHNOLOGICAL
TEMPER INNOVATION DEVELOPMENT

Source: Arya Kumar, Entrepreneurship, 2012 Source: Arya Kumar, Entrepreneurship, 2012

Session 2 - Fundamentals of Entrepreneurship

 WHAT IS ENTREPRENEURSHIP
EVOLVING CONCEPT OF ENTREPRENEURSHIP CONCEPT OF ENTREPRENEURSHIP

Source: Arya Kumar, Entrepreneurship, 2012 Source: Arya Kumar, Entrepreneurship, 2012

Session 2 - Fundamentals of Entrepreneurship

 WHAT IS ENTREPRENEURSHIP
• Entrepreneurship according to Harvard Business School’s (HBS’s) unique definition is
3
The pursuit of opportunity without regard to resources currently controlled’. This means that
entrepreneurship is seen as a particular type of managerial behaviour that is available to virtually all managers
in organisations of all kinds and sizes.

• The Babson definition of entrepreneurship is

A mindset that is opportunity obsessed, holistic in approach, and leadership balanced’. Babson’s
definition focuses on cultivating the mindset that prepares students with broad-based entrepreneurial skills
relevant to any organisation
6
• According to Lester Center for Entrepreneurship and Innovation, University of California, Berkeley,
Hass School of Business,
Entrepreneurship is defined as the pursuit of opportunity beyond the resources one currently
controls. This has become part and parcel of a subject with varied interest across a wide variety of interrelated
fields and topics such as new venture creation, venture capital, social ventures, business model innovation,
open software, Internet, corporate entrepreneurship, global business and biotechnology.

Session 2 - Fundamentals of Entrepreneurship

 WHAT IS ENTREPRENEURSHIP

ENTREPRENEURSHIP - DEFINED WHAT IS ENTREPRENEURSHIP

Lester Center for
Entrepreneurship and
6
Innovation, University of
California, Berkeley, Hass
School of Business

OPPORTUNITY
IDENTIFICATION

ENTREPRENEURSHIP
VALUE CREATION RESOURCES
ORGANIZATION

HBS’s

The Babson’s Source: Arya Kumar, Entrepreneurship, 2012 Source: Arya Kumar, Entrepreneurship, 2012

Session 2 - Fundamentals of Entrepreneurship

 RESOURCES ORG & VALUE CREATION

SUCCESS THROUGH VALUE CREATION

Value-driven strategy for the success of a venture

involves three basic rules:

1 To attract customers away from competitors, the

company must provide sufficient customer value
compared to rival firms.

2 To attract key suppliers away from competitors, the

company must offer sufficient supplier value.

3 To attract investment capital in competition with

other market investment opportunities, the
company must increase the value of the firm for its
Source: Arya Kumar, Entrepreneurship, 2012 investors.

Session 2 - Fundamentals of Entrepreneurship

 RESOURCES ORG & VALUE CREATION
1 VALUEABLE
WHAT IS A RESOURCES? Resources are valuable when they enable a firm to
conceive of or implement strategies that improve its
efficiency and effectiveness

2 RARE
Implies scarcity of resources and therefore their supplies
are limited as against demand for resources by the
producers.

3 NOT EASILY REPLICABLE

The value of the resource depends much upon the degree
of difficulty involved in duplicating it or copying it.

4 NON-AVAILABILITY OF SUBTITUTES
Resources used by an entrepreneur for production of
goods and services, if they do not have substitutes, would
provide a great advantage.
Source: Arya Kumar, Entrepreneurship, 2012

Session 2 - Fundamentals of Entrepreneurship

 RESOURCES ORG & VALUE CREATION
TYPES RESOURCES 1 These are tangible in nature, such as machines and
building that are used in production of goods and
services.
1
2 These are derived mainly from the public perception of
your venture that gets recognised by things such as brand,
2 person behind business and values of an entrepreneur.

3 This relates to an entrepreneur’s approach towards

3 planning, organizing, controlling and directing business
affairs.

4
4 This refers to the abilities of a business to generate
internal funds and external capital.
5 It is human ability and ingenuity that transforms raw materials
5 into valuable resources and, therefore, a valuable resource.
The knowledge, experience, exposure, trust and talents
available within a firm are vital resources for creation of value
6 and competitive advantage.
6 These are processes and systems to physically transform
Source: Arya Kumar, Entrepreneurship, 2012 resources into products and services.

Session 2 - Fundamentals of Entrepreneurship

 ENTREPRENEURSHIP TRAITS
3 KEYS TRAITS OF ENTREPRENEUR
2 Locus of Control
The perceived control over the events of one’s life (Rotter
1966).
There are two types of people, namely, internals and
externals.
• Individuals with an internal locus of control believe and
have a faith that they are able to control life events and
the future depends upon their own efforts.
• Individuals with an external locus of control believe that
happenings in their life are the outcome of external
factors, such as chance, people, luck or fate.

3 Risk Taking
The perceived probability of receiving rewards associated
Source: Arya Kumar, Entrepreneurship, 2012 with the success of a situation that is required by the
individual before they will subject themselves to the
Need for Achievement consequences associated with failure, the alternative
1 situation providing less reward as well as less severe
Entrepreneurs are individuals having an intense desire for
and focus on significant accomplishment and mastering of consequences than the proposed situation’ (Brockhaus
skills, and do not compromise on maintaining high 1980).
standards.

Session 2 - Fundamentals of Entrepreneurship

 ENTREPRENEURSHIP TRAITS
5 MAJORITY TRAITS OF ENTREPRENEUR Innovative - Being Interested in Something New
It is not only new ideas that attract the entrepreneur, but also old
5 problems that can be handled in a much simpler, better and efficient
manner by identifying new workable solutions.

Dynamic Leadership
6 Entrepreneurs have to be necessarily a good leader first as well as a good
manager. Not all entrepreneurs are suited to lead, and some may even
feel uncomfortable to lead an organisation.

Resourcefulness
7 Entrepreneurs, in general, are highly resourceful to get hold of what they
need with their creative and imaginative potential. This trait enables them
in dealing effectively with the problems and difficulties that they are
confronted with.

Source: Arya Kumar, Entrepreneurship, 2012 8 Excellent Networker

Doing a business successfully requires right networking skills. Networking
helps in the growth of the business through helping and seeking help
from others.

4 Visionary and Dreamer

The ability to see through things in advance and dream big.

Session 2 - Fundamentals of Entrepreneurship

 ENTREPRENEURSHIP TRAITS

Session 2 - Fundamentals of Entrepreneurship

 INVENTORS VS ENTREPRENEUR

INVENTORS VS ENTREPRENEUR

1.An inventor is defined as ‘someone who is the first to 1. An entrepreneur is one who starts a business or other
think of or make something venture that promises economic gain. They organise
(wordnetweb.princeton.edu/perl/webwn). An inventor is and manage any enterprise, particularly a business that
a person who invents, particularly one who devises involves considerable initiative and risk.
some new process, appliance, machine or article; one
2. It is an entrepreneur’s ingenuity, experience,
who makes inventions.
organisation - building ability and the ability to build a
2.Inventors are creative, highly motivated, resourceful, winning team that can help in translating an inventor’s
hard-working and problem-solving. work into a viable business venture.

3.They are passionate about inventing rather than 3. Love of an entrepreneur for the venture and its
making money. They measure their achievements commercial success. They will do anything and
through the number of inventions made and patents everything for the growth and survival of the
granted. They do not value monetary gains as a organisation,
measure of their success. 4. Entrepreneurs love and enjoy translating them into
4.Inventors love and enjoy inventions. reality by superior skills in execution.

Session 2 - Fundamentals of Entrepreneurship

 ROLE MODELS & SOCIAL SUPPORTS
INSPIRATION FROM ROLE MODELS
The journey of an entrepreneur is most influenced by 3 Off-the-farm entrepreneurs
the choice of the ‘role model’ they have in mind. Individuals who have a fundamental dislike for, or
disagreement with, their upbringing or some aspect of it.
Collins et al. (1964) have highlighted the following This engenders a strong desire to break away from the
mould and be different.
categories of entrepreneurs, mainly arising as a role of
society in nurturing entrepreneurship: Opportunistic entrepreneurs
4
Entrepreneurs who seize opportunities as and when they
1 ‘Craftsman’ entrepreneurs arise. The opportunities need not necessarily fit any
Individuals who follow in the footsteps of family relations or predetermined strategy and can be diverse and
role models who gave them early exposure to the craft they disconnected in nature. The parallel with the conglomerate
decide to follow as an entrepreneur. management model is possibly a useful one here.

Like father like son’ entrepreneurs Trained entrepreneurs

2 Closely aligned with craftsman entrepreneurs, this type of
5
Individuals who have undergone training in the component
entrepreneurs enter a business with father or mother as role skills of enterprise such as those offered in some MBA
model. programmes.

Session 2 - Fundamentals of Entrepreneurship

 ROLE MODELS & SOCIAL SUPPORTS

ENTREPRENEURSHIP SUPPORT SYSTEMS

1 SOCIAL & PSYCHOLOGICAL SUPPORT

It has been found that children are nurtured differently in different societies.
In Western countries, children are encouraged to take risks and become
independent as early as possible. In certain societies like India, children are
protected, and they usually do things after getting firm consent from their
parents.
MORAL SUPPORT
2 It is very important for an entrepreneur to develop a moral support system of
family, friends, colleagues and other well-wishers. This helps in getting right
advice and also provides support during difficult, trying and lonely moments
that every entrepreneur goes through in their entrepreneurial journey.

3 PROFESSIONAL SUPPORT SYSTEM

New entrepreneurs, in particular, and entrepreneurs, in general, need to have a
network of mentors, business associates, trade associates and professionals in
the organisation to recourse to professional support system in their
entrepreneurial journey.

Source: Arya Kumar, Entrepreneurship, 2012

Session 2 - Fundamentals of Entrepreneurship

 BUSINESS MODEL

Source: Arya Kumar, Entrepreneurship, 2012

• Business model describes the steps and the ways a particular business proposes to make money. It plays a critical role
in ensuring flow of revenue stream coupled with good profit margins to derive a sustainable impact of an innovation. It
fundamentally describes the process of making money by the company.
• A business model can be simple or very complex. Simplicity or complexity of a business model depends upon the nature
of business and the associated revenue model.

Session 2 - Fundamentals of Entrepreneurship

 ENTREPRENEURSHIP MINDSET
ENTREPRENEURSHIP MINDSET CULTIVATING THE MINDSET

Make an affirmation
Write down all the
to yourself ‘What you
statements you heard
have heard about this
about whatever you
particular thing is not
are trying to change.
true and you choose
to adopt new ways of
thinking.

Write down how you

believe these have
Decide whether you affected your life so
want to continue with far.
these thoughts or
beliefs or change
them now.

Source: Arya Kumar, Entrepreneurship, 2012

Session 2 - Fundamentals of Entrepreneurship

 BIG COMPANIES VS START-UPS

BIG COMPANIES VS START-UPS

1.Have smooth operations with well-defined product and 1. Start- ups have a great passion to pursue their goals
service characteristics, with a hunger to grow.
2. They have limited resources and their cost is low
2.Catering to a well-defined market. compared to similar products or services delivered by
3.These companies usually have well-tested business well-established companies.
models, which deliver under varied conditions. 3. The decision-making is quick as command lies usually
with one man and there is a lack of hierarchy in the
4.The job roles are professionally handled by different organisation.
functional teams. 4. They have a lot of flexibility to get adjusted to
changing environments and also to changing needs of
5.Above all, the challenge of getting the first customer or
customers.
expand clientele is not very crucial for them, because
5. Above all, start-ups are eligible for various funding
they have a loyal set of customers who help a lot in
schemes floated by the government and other
promoting the product or service through word of
organisations working for the cause of promotion of
mouth.
entrepreneurship, which well-established companies
may not be able to do.

Session 2 - Fundamentals of Entrepreneurship

 ABOUT ENTREPRENEURSHIP
10 MISCONCEPTIONS AND MYTHS

1 ENTREPRENEURS ARE RISK-TAKERS 6 IGNORANCE IS BLISS FOR

ENTREPRENEURS
ENTREPRENEURS IS ALL ABOUT MONEY
2 AND GETTING RICH QUICKLY 7 ENTREPRENEURS REQUIRE EXPERTISE
AND EXPERIENCE IN THEIR LINE OF
BUSINESS
STARTING A BUSINESS REQUIRES A LOT
3 OF MONEY
8 VENTURE CAPITAL FUNDING IS A MUST
4 ENTREPRENEURS ARE BORN
9 BANK DO NOT LEND MONEY TO START-
ENTREPRENEURS REQUIRES HIGH-TECH UPS
5 INVENTION
10 STARTING A BUSINESS IS EASY

Session 2 - Fundamentals of Entrepreneurship

 STARTING BUSINESS IS EASY
10 COMMON WORRIES & HOW TO OVERCOME
6. I will fail: Maybe you will, but equally you will not make
1. I am not bright enough: Well, sometimes you can be too
your first million if you do not try.
bright to succeed. Innocence and naivety can actually protect
you from fear. It is possible to think too much! 7. Rivals will eat me alive: In fact, the opposite is usually the
case. Young, small business can duck and weave beneath
2. I am not pushy enough: Do you like doing business with
the fists of those nasty big competitors.
pushy people or do you prefer nice reasonable people? Pushy
people are often less successful than you might think. 8. I am naturally pessimistic: So, you will not make false
assumptions and step into the dark without a torch, will
3. I am not rich enough: One of the best ways to watch your
you? A glance at the downside puts the upside in
costs is to have no money to waste. Wealthy people can be
perspective—just be sure to see both.
careless with money—you probably cannot afford to be.
9. I do not take risks: Running a business is like crossing the
4. I am not good at sums: Relax, spreadsheets and accounting
road. You can jaywalk, wear dark clothing and risk getting
software make the numbers easy to work out. Remember that
squashed—or push the button and follow the green man
success is as much about instinct as arithmetic.
when the traffic stops. There is almost always a choice.
5. I cannot spell: Literacy is great if you want to write books but
10. I know my failings: We all know what we are bad at and
less important if your business communicates with customers
we all underestimate the value of our strengths. No one is
verbally. Use document templates—there are some at the
perfect nor is any business. That is why there is room for
back of this book.
you too. Focus on what you do well.

Session 2 - Fundamentals of Entrepreneurship

 Good Luck and Enjoy The Process
CONTACT ME!

andri_suratman@uii.ac.id

@andriyastuti suratman

081227798299
Andriyastuti Suratman