INTRODUCTION TO BUSINESS MANAGEMENT
CHAPTER 2: ENTREPRENEURSHIP
The entrepreneur decides what, how, by whom and for whom products or services should be produced.
It is someone who starts a business with the intention of making a profit and assumes the risk of loosing all
his resources if the venture fails.
Entrepreneurship is the factor that mobilises the other 3 resources and harnesses them in different
combinations to meet the needs and wants of the society.
It is the process of creating and building something of value from nothing during uncertainty and risk.
4 Main factors of production:
• Natural resources (land)
• Human resources (labour)
• Financial resources (capital)
• Entrepreneurship
Different concepts of what an entrepreneur is:
• Scientist views of what an entrepreneur is:
o Economist: entrepreneurs combine different resources in specific combinations to generate
products/services to make a profit. Entrepreneurs are primarily driven by the profit motive.
o Behaviouralist (psychologists/sociologists): view entrepreneurs from the behavioural
perspective. Phycologists describe entrepreneurs according to their characteristics.
o Marxists regard entrepreneurs as exploiters.
o Corporate managers see entrepreneurs as small operators who lack the potential to manage a
large enterprise.
o Proponents of a market economy see entrepreneurs as the economic force responsible for the
prosperity of a country.
• In the field of management and entrepreneurship alone, writers give differing definitions of what an
entrepreneur is:
o Creative: can produce new and original ideas in order to solve a problem.
o Innovative: use new ideas to develop a better product / service / process / technique.
o Identify opportunities: created by the unlimited needs of people and trends that appear in the
environment.
o Find resources: natural resources, human resources, financial resources to pursue these
opportunities.
o Take financial risk: run the risk of potential loss or failure
o Bring about change, growth and wealth in the economy: winning nations have
entrepreneurship-driven economies.
o Re-energize economies and create jobs.
o Start, manage and grow sustainable small businesses: the owner of a business starts and
manages the business and re-allocates the business resources in such a way that the business
makes a profit and grows.
, The role of entrepreneurs and small-business owners in society:
• Entrepreneurial activity is the essential source of economic growth and social development, and the
key role played by this factor of production was underestimated by this factor for many decades.
• Entrepreneurship is the spark that brings the other factors of production in motion.
• Entrepreneurship is in turn mobilised by the self-efficacy, creativity, skills and expectations of the
individuals.
• If the entrepreneurial spirit is absent, then the production machine does not go into action.
• People with entrepreneurial talents and skills and an entrepreneurial orientation can achieve more
than other:
o Mobilising productive resources by starting enterprises that will grow.
o Rare and valuable.
o Constitute a resource that greatly contributes to, if not causes, the production of products and
services.
o Set in motion the creation of employment opportunities.
• SMME’s often exist as a way of earning income that is an alternative to working as an employee.
• They satisfy their owner’s need for independence or lifestyle needs.
• True entrepreneurs differ from small-business owners who are satisfied with some autonomy and
earning a reasonable income for themselves and perhaps a few employees, but who have no intention
of growing and developing their business entrepreneurially.
• Therefore, not all small businesses are entrepreneurial.
Why do entrepreneurs do what they do?
• Decisions are influenced by many variables.
• 3 Broad categories: Skills, industry experience, opportunities arising owing to international trends
towards outsourcing.
ENTREPRENEURS TRADES AND CHARACTERSTICS:
1. Achievement motivation:
• Need to be personally responsible for solving problems.
• Need to set one’s own goals and reach these goals through one’s own effort.
• Need to have feedback on the degree of success with which tasks are accomplished.
• Need to have personal accomplishments.
• Need to have control over one’s own time, and to use time and money creatively.
2. Internal locus of control:
• Internal locus of control indicates of a person’s need to oversee his own destiny.
• Personal ability and hard work.
• The outcome of an event is determined by their own actions.
• They have control over their own behaviour.
• Successful in persuading and motivating other people.
• Actively seeking relevant information and knowledge.
• Well informed about their careers.
3. Innovation and creativity:
• Innovation helps with existing businesses to improve the way their products/services are made and
delivered (Or to introduce entirely new ones to the market).
• They identify opportunities in the marketplace and visualise creative new ways to take advantage
of them.
• Creativity refers to the creation of something new.
• Involves new ideas, and any application of these ideas is based innovation.
• Also involve the adjustment of refinement of existing procedures or products.
CHAPTER 2: ENTREPRENEURSHIP
The entrepreneur decides what, how, by whom and for whom products or services should be produced.
It is someone who starts a business with the intention of making a profit and assumes the risk of loosing all
his resources if the venture fails.
Entrepreneurship is the factor that mobilises the other 3 resources and harnesses them in different
combinations to meet the needs and wants of the society.
It is the process of creating and building something of value from nothing during uncertainty and risk.
4 Main factors of production:
• Natural resources (land)
• Human resources (labour)
• Financial resources (capital)
• Entrepreneurship
Different concepts of what an entrepreneur is:
• Scientist views of what an entrepreneur is:
o Economist: entrepreneurs combine different resources in specific combinations to generate
products/services to make a profit. Entrepreneurs are primarily driven by the profit motive.
o Behaviouralist (psychologists/sociologists): view entrepreneurs from the behavioural
perspective. Phycologists describe entrepreneurs according to their characteristics.
o Marxists regard entrepreneurs as exploiters.
o Corporate managers see entrepreneurs as small operators who lack the potential to manage a
large enterprise.
o Proponents of a market economy see entrepreneurs as the economic force responsible for the
prosperity of a country.
• In the field of management and entrepreneurship alone, writers give differing definitions of what an
entrepreneur is:
o Creative: can produce new and original ideas in order to solve a problem.
o Innovative: use new ideas to develop a better product / service / process / technique.
o Identify opportunities: created by the unlimited needs of people and trends that appear in the
environment.
o Find resources: natural resources, human resources, financial resources to pursue these
opportunities.
o Take financial risk: run the risk of potential loss or failure
o Bring about change, growth and wealth in the economy: winning nations have
entrepreneurship-driven economies.
o Re-energize economies and create jobs.
o Start, manage and grow sustainable small businesses: the owner of a business starts and
manages the business and re-allocates the business resources in such a way that the business
makes a profit and grows.
, The role of entrepreneurs and small-business owners in society:
• Entrepreneurial activity is the essential source of economic growth and social development, and the
key role played by this factor of production was underestimated by this factor for many decades.
• Entrepreneurship is the spark that brings the other factors of production in motion.
• Entrepreneurship is in turn mobilised by the self-efficacy, creativity, skills and expectations of the
individuals.
• If the entrepreneurial spirit is absent, then the production machine does not go into action.
• People with entrepreneurial talents and skills and an entrepreneurial orientation can achieve more
than other:
o Mobilising productive resources by starting enterprises that will grow.
o Rare and valuable.
o Constitute a resource that greatly contributes to, if not causes, the production of products and
services.
o Set in motion the creation of employment opportunities.
• SMME’s often exist as a way of earning income that is an alternative to working as an employee.
• They satisfy their owner’s need for independence or lifestyle needs.
• True entrepreneurs differ from small-business owners who are satisfied with some autonomy and
earning a reasonable income for themselves and perhaps a few employees, but who have no intention
of growing and developing their business entrepreneurially.
• Therefore, not all small businesses are entrepreneurial.
Why do entrepreneurs do what they do?
• Decisions are influenced by many variables.
• 3 Broad categories: Skills, industry experience, opportunities arising owing to international trends
towards outsourcing.
ENTREPRENEURS TRADES AND CHARACTERSTICS:
1. Achievement motivation:
• Need to be personally responsible for solving problems.
• Need to set one’s own goals and reach these goals through one’s own effort.
• Need to have feedback on the degree of success with which tasks are accomplished.
• Need to have personal accomplishments.
• Need to have control over one’s own time, and to use time and money creatively.
2. Internal locus of control:
• Internal locus of control indicates of a person’s need to oversee his own destiny.
• Personal ability and hard work.
• The outcome of an event is determined by their own actions.
• They have control over their own behaviour.
• Successful in persuading and motivating other people.
• Actively seeking relevant information and knowledge.
• Well informed about their careers.
3. Innovation and creativity:
• Innovation helps with existing businesses to improve the way their products/services are made and
delivered (Or to introduce entirely new ones to the market).
• They identify opportunities in the marketplace and visualise creative new ways to take advantage
of them.
• Creativity refers to the creation of something new.
• Involves new ideas, and any application of these ideas is based innovation.
• Also involve the adjustment of refinement of existing procedures or products.
