The words you are searching are inside this book. To get more targeted content, please make full-text search by clicking here.
Discover the best professional documents and content resources in AnyFlip Document Base.
Search
Published by odllab, 2019-12-20 05:50:01

BBM210/03 Entrepreneurship Development

COURSE MODULE
Schoouorl osfeBusiness and Administration (SBA) School of Business and Administration (SBA)
ENTREPRENeURSHIP DEVELOPMENT
Course Code: BBM210/03
CouArdseapWteridtebry: :MLsa.liLtahlaitha/apaR/pamRamsaamsaymy


PROJECT ADVISOR
Professor Dr Zoraini Wati Abas
COURSE MODULE DEVELOPMENT TEAM
Content Adapter: Lalitha a/p Ramasamy
Lead Instructional and Visual Designer: Fauziyah Md Aris Instructional and Visual Designers: Norliza Mhd Rodzi and Nurain Mohd Hassan Language Editor: Meilina Puteh
Cover Page and Content Design: Fauziyah Md Aris
COURSE COORDINATOR
Lalitha a/p Ramasamy
DESIGNED AND DEVELOPED BY
Online Digital Learning Lab (ODL Lab)
PRODUCED BY
Instructional Design for Engaging Experiences (IDeX) Wawasan Open University
Acknowledgement: This course module has been adapted by the
School of Business and Administration (SBA) from the Online Course Materials for the Entrepreneurship Development (BBM201/05) developed by Wawasan Open University.
First edition, December 2019
This course material was published to support the learning of students registered with Wawasan Open University. Wawasan Open University does not grant any degree, certification or credits based solely on your completion of this course material.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without prior written permission from Wawasan Open University.
Wawasan Open University - DU013 (P)
Wholly owned by Wawasan Open University Sdn. Bhd. (700364-W)
54 Jalan Sultan Ahmad Shah, 10050 Penang, Malaysia
Tel: (604) 2180 333 Fax: (604) 226 9323 Email: [email protected] Website: www.wou.edu.my
© 2019 Wawasan Open University
Wawasan Open University is Malaysia’s first private not-for-profit tertiary institution dedicated to adult learners.


TABLE OF CONTENTS
01
02 03
04 05
Part 1 | About the Course
Part 2 | Course Overview
Course Synopsis
Course Contents
Course Learning Outcomes Study Schedule Assessment Methods
Part 3 | Study Guide
Unit 1: Fundamentals of Entrepreneurship Unit 2: Starting a Business
Unit 3: Managerial Issues in Entrepreneurship Unit 4: Ideas to Sustainable Business
Unit 5: The Business Plan
Part 4 | References
Part 5 | Feedback Form
BBM210/03 Entrepreneurship Development 3


Part 1
ABOUT THE COURSE
(Course Details & Allocation of Student Learning Time)
COURSE DETAILS
School
Course Type
Credit Hours
Learning Hours : 120 hours
: School of Business Administration (SBA) : Core Course
: 3 hours
Course Title : Entrepreneurship Development
Course Code : BBM210/03 7E170F
Course Coordinator Email
Contact No.
: Lalitha a/p Ramasamy : [email protected] : 04 - 2180 389
Core Reading Materials : Course Materials in Learning Management System (LMS)
ALLOCATION OF STUDENT LEARNING TIME
No
1
2 3
4 5
Activities
Study Learning Materials, Learning Activities & Self- Tests
Attending 5 Tutorial Classes (2 Hours per class) Participation in Online Forum Discussions
Completing the Course Assessment 1 (CA1/Individual) Completing the Course Assessment 2 (CA2/Group)
No. of Hours
40
10
10
20
40
120
BBM210/03 Entrepreneurship Development
4
Total


Part 2
COURSE OVERVIEW
(Course Synopsis, Course Content, Course Learning Outcomes, Study Schedule & Assessment Methods)
COURSE SYNOPSIS
BBM210/03N is a 3-credit course designed for students who are enrolled in degree programmes offered by WOU. It emphasises both theories and applications. It introduces you to concepts and theories that will help you understand and analyse various aspects of entrepreneurship. This course contains five study units. Unit 1 elaborates on the basic characteristics on entrepreneurs. It also gives a clear understanding on what motivates entrepreneurs and what makes them creative. Unit 2 focuses on the basic understanding in planning a new business, which also includes legal issues in business. Unit 3 explores contemporary managerial issues that entrepreneurs face as they create and establish new ventures. Unit 4 provides the information required to begin the business that gives an in-depth study on opportunity recognition, competition and financing. Unit 5 is built upon the framework by developing a business plan for your potential business idea. You will also learn the importance of marketing in a small business entity and how to present your business plan to potential investors or bankers.
BBM210/03 Entrepreneurship Development 5


COURSE CONTENTS
1. FUNDAMENTALS OF ENTREPRENEURSHIP
• Evolution of entrepreneurship
• Definition of entrepreneur and entrepreneurship • Motivation to become an entrepreneur
2. STARTING A BUSINESS
• Strategies of starting a new business
• Legal consideration in starting a new business • Types of business entities
3. MANAGERIAL ISSUES IN ENTREPRENEURSHIP
• Management
• Planning
• Organising and stuffing • Directing and controlling
4. IDEAS TO SUSTAINABLE BUSINESS
• Opportunity Recognition
• The Competition
• Financing your New Business
5. THE BUSINESS PLAN
• The Business Plan
• The Marketing Plan
• Technology and the Entrepreneurs
BBM210/03 Entrepreneurship Development 6


COURSE LEARNING OUTCOMES (CLOS)
By the end of this course, you will be able to:
1. Outline the practical and problem-solving skills of entrepreneurship in terms of creativity and innovation by producing new product or service ideas in a business context.
2. Demonstrate the entrepreneurial management skills of leadership, teamwork and communication skills involved in entrepreneurial networking.
3. Illustrate the importance of technology in entrepreneurship and to lifelong learning skills.
BBM210/03 Entrepreneurship Development 7


STUDY SCHEDULE
(Weekly topic and study activities for each unit)
Unit 1
1 2
3
3 4
Week
Topic
Focus
Evolution of entrepreneurship, Definition to entrepreneur and entrepreneurship
Motivation to become an
Learning Activities / Self-Assessment
Evolution of Entrepreneurship https://www.youtube.com/watch?v=oEXIIkSZ0kM
Tutorial questions and Quizzes
Motivation to become an entrepreneur https://www.youtube.com/watch?v=ptD0T-ZcF2M
Strategies to start a new business https://www.youtube.com/watch?v=iUrxK0HZlrE
Tutorial questions and Quizzes Tutorial questions and Quizzes
Planning and goal setting https://www.youtube.com/watch?v=29qE4FSxc1w
Tutorial questions and Quizzes
Financing a franchise business http://www.mfa.org.my
Tutorial questions and Quizzes
Financing a franchise business http://www.mfa.org.my
How to write a business plan? https://www.youtube.com/watch?v=Fqch5OrUPvA
Creating an entrepreneurial marketing plan. https://www.youtube.com/watch?v=oz4KVRSxL9s&pbjreload=10
Tutorial questions and Quizzes
Fundamentals 1,2 of
3 4,5,6 7,8
9,10 11,12
Entrepreneurship
Fundamentals of
Entrepreneurship Entrepreneurship
4
5
5
5 18
Starting
a
New Business
Managerial Issues
Starting
a
New Business
Ideas to Sustainable Business
Ideas to Sustainable Business
The Business Plan
The Business Plan
Strategies of starting a new business, Legal consideration in starting a new business, Types of business entities
Opportunity Recognition, The Competition, Financing your New Business
Management, Planning
Organising and Staffing, Directing and Controlling
Opportunity Recognition, The Competition, Financing your New Business
Business Plan
Marketing Plan
Technology and the Entrepreneurs
13 14,15 16,17
BBM210/03 Entrepreneurship Development 8


ASSESSMENT METHODS
COURSE
ASSESSMENT
1 (CA1)
COURSE
(CA2)
Group Assessment: Group Work, Presentation, Proposal, Essay, Annotated Bibliography.
Individual Assessment: Case Study Questions & Essays
ASSESSMENT 2
The student will be assessed through the following methods
TOTAL 100%
FINAL EXAM
BBM210/03 Entrepreneurship Development
9


UNIT 1
1.1 1.2 1.3 1.4
PART 3
LIST OF CONTENTS
U1: FUNDAMENTALS OF ENTREPRENEURSHIP
Evolution fo Entrepreneurship
Definition of Entrepreneur and Entrepreneurship What Motivates People to Become Entrepreneurs Characteristics of Entrepreneurs
U2: STARTING A NEW BUSINESS
2
U3: MANAGERIAL ISSUES IN ENTREPRENEURSHIP
3
3.1 3.2 3.3 3.4 3.5
Management
Planning
Organisation and Staffing Directing and Controlling Communication and Coordination
Opportunity Recognition Competition
Financing your New Business
2.1 2.2 2.3
Strategies to Start a New Business
Legal Considerations in Starting a New Business Types of Business Entities
5
5.1 5.2 5.3
The Business Plan
The Marketing Plan Technology and Entrepreneurs
4.1 4.2 4.3
U4: IDEAS TO SUSTAINABLE BUSINESS
4
U5: THE BUSINESS PLAN
BBM210/03 Entrepreneurship Development 10


U1
UNIT STRUCTURE
1.1
1.2
1.3
1.4
1.5 1.6
EVALUATION OF ENTREPRENEURSHIP
Learning Activity 1.1 Self-Check 1.1
DEFINITIONS OF ENTREPRENEUR AND ENTREPRENEURSHIP
Learning Activity 1.2 Self-Check 1.2
WHAT MOTIVATES PEOPLE TO BECOME ENTREPRENEURS
Learning Activity 1.3 Self-Check 1.3
CHARACTERISTICS OF ENTREPRENEURS
Learning Activity 1.4 Self-Check 1.4
Summary
References
BBM210/03 Entrepreneurship Development 11
FUNDAMENTALS OF ENTREPRENEURSHIP


INTRODUCTION
Please watch this video to understand more about Entrepreneurship. Title: Entrepreneurship, Apprenticeship and Lifelong Learning Duration : 35.28 minutes
U1 FUNDAMENTALS OF ENTREPRENEURSHIP
Source: https://www.youtube.com/watch?v=5USCz1OktDo
This section should spark your interest in entrepreneurship. Entrepreneurship is not a new phenome- non in any society or country. It started when humans realised the importance of societal living. The word “entrepreneur” was first used by the economist Richard Cantillon in the year 1725. Another economist who was famous for his research on entrepreneurship in the early 18th century was J.B. Say. Since then, various entrepreneurship theories and concepts have emerged and most of these theories include the perspectives of sociology, psychology and other fields. One of the main contri- butions of sociology to the field of entrepreneurship is found in the book Protestant Ethics and the Spirit of Capitalism, written by Max Weber in 1905. The field of psychology also contributed signifi- cantly to the field of entrepreneurship in the 1960’s.
Entrepreneurs recognise a viable idea for a product or service and transform the idea into reality. They will synergise resources, such as money, people, machinery, location, networking and informa- tion to undertake the business venture. Although they expose themselves to financial and social risks, the returns from their venture may make them successful people who enjoy unlimited income. Thus, entrepreneurs are individuals who have special qualities in managing their own lives and their businesses.
BBM210/03 Entrepreneurship Development 12


UNIT LEARNING OUTCOMES
By the end of this Unit 1, you should be able to:
1. Explain the evolution of entrepreneurship
2. Define the terms entrepreneur and entrepreneurship in your own words. 3. Describe the factors that motivate people to become entrepreneurs.
4. Describe the characteristics to be an entrepreneur.
1.1 EVOLUTION OF ENTREPRENEURSHIP
The word “Entrepreneurship” became widely used in Malaysia following the implementation of the New Economic Policy 1970. However, today’s entrepreneurial rules and the characteristics of entre- preneurs are different when compared to those found in the early days of entrepreneurship in Malaysia.
The earliest definition of the entrepreneur as a go-between is Marco Polo. He tried to establish trade routes to the Far East. He used to sign a contract with a venture capitalist to sell his goods. The capitalist was the risk bearer. The merchant adventurer took the role of trading. After his successful selling of goods and completing his trips, the capitalist and the merchant shared the profits.
Early Ages
The term entrepreneur referred to a person who was managing large proj- ects. He was not taking any risks but was managing the projects using the resources provided. An example is the cleric who was in charge of great architectural works such as castles, public buildings, cathedrals, etc.
Middle Ages 476 - 1453
An entrepreneur was a person who entered into a contractual arrangement with the government to perform a service or to supply some goods. The profit was taken (or loss was borne) by the entrepreneur.
17th. Century 1601 - 1700
BBM210/03 Entrepreneurship Development 13


It was Richard Cantillon (1680), a French Economist, who applied the term entrepreneur to business for the first time. Some regard him as the founder of the term. He defined an entrepreneur as a person who buys factory services at certain prices with a view to sell them at uncertain prices in the
18th. Century 1701 - 1800
Entrepreneurs were not distinguished from managers. They were viewed mostly from the economic perspective. They take risks, contribute their own initiative and skills. They plan, organise and lead their enterprise.
19th. Century 1801 - 1900
During the early 20th century, Dewing equated the entrepreneur with a busi- ness promoter and viewed the promoter as one who transformed ideas into a profitable business. Joseph Schumpeter described an entrepreneur as an innovator. According to him, an entrepreneur is an innovator who develops untried technology.
20th. Century 1901 - 2000
Research scientist De Bone pointed out that it is not always important that an individual comes up with an entirely new idea to be called an entrepreneur. However, if he is adding incremental value to the current product or service, he can rightly be called an entrepreneur.
21st. Century 2001 - 2100
BBM210/03 Entrepreneurship Development 14


Learning Activities 1.1
Please watch the following video on Evolution of Entrepreneurship. This video will help you further understand the evolution of entrepreneurship and provide an idea on entrepreneurship in the 21st century.
Title : Evolution of Entrepreneurship
Duration : 5.22 minutes
Instruction : Write a brief summary of the history of entrepreneurship.
At the end of the summary, describe what you think will be the most likely scenario for entrepreneurs in the 21st century.
Source: https://www.youtube.com/watch?v=oEXIIkSZ0kM
BBM210/03 Entrepreneurship Development 15


Self-Check 1.1
To refresh your memory, try summarising the key elements of: i. Early ages of entrepreneurship
ii. Middle ages of entrepreneurship
iii. 17th. and 18th. century entrepreneurship
iv. 19th. and 20th century entrepreneurship v. 21st. century entrepreneurship
1.2 DEFINITION OF ENTREPRENEUR AND ENTREPRENEURSHIP
Now that you have understood the evolution of entrepreneurship let us look into the definition of entrepreneur and entrepreneurship. An entrepreneur is ordinarily called a business person. He is a person who combines capital and labour for the purpose of production. He organises and manages a business unit assuming the risk for profit. He is the artist of the business world. In the words of Say (1974), “An entrepreneur is one who brings together the factors of production and combines them into a product”. He made a clear distinction between a capitalist and an entre- preneur. Capitalist is only a financier. Entrepreneur is the coordinator and organiser of a business enterprise. Schumpeter (1934) defines an entrepreneur as “one who innovates, raises money, assembles inputs and sets the organisation going with the ability to identify them and opportuni- ties, which others are not able to fulfill such economic opportunities”. He further added, “An entrepreneur is an innovator playing the role of a dynamic businessman adding material growth to economic development” Schumpeter (1934).
In the words of Stevenson and Jarillo (1990), “Entrepreneurship is the process of creating value by bringing together a unique package of resources to exploit an opportunity.” According to Cole (1942), “Entrepreneurship is the purposeful activities of an individual or a group of associat- ed individuals undertaken to initiate, maintain or organise a profit oriented business unit for the production or distribution of economic goods and services”. An entrepreneur with the quality to undertake various activities to bring a business unit into existence possesses entrepreneurship. It is the process of changing ideas into commercial opportunities and creating values. Therefore, entrepreneurship is the process of creating a business enterprise.
BBM210/03 Entrepreneurship Development 16


Nature and functions of entrepreneurship are summarised as follows: (a) It is a function of innovation.
(b) It is a function of leadership.
(c) It is an organisation building function.
(d) It is a function of high achievement.
(e) It involves creation and operation of an enterprise.
(f) It is concerned with unique combinations of resources that make existing methods or products obsolete.
(g) It is concerned with employing, managing, and developing the factors of production.
(h) It is a process of creating value for customers by exploiting untapped opportunities.
(i) It is a strong and positive orientation towards growth in sales, income, assets and employment.
Learning Activities 1.2
With relevant examples, define “entrepreneurs” and “entrepreneurship” in your own words. Read Section1.2 page 14.
Self-Check 1.2
You may give examples of enterprises and local entrepreneurs from your community.
BBM210/03 Entrepreneurship Development 17


1.3 WHAT MOTIVATE PEOPLE TO BECOME ENTREPRENEURS
Now that you have understood who are entrepreneurs and what is entrepreneurship, so now, let us focus on what motivates people to become an entrepreneur. What leads a person to strike out on his or her own and struggle to start and own a business? Perhaps that person has been retrenched one or more times. Perhaps that person is frustrated with his or her current job and does not see better career prospects on the horizon. Sometimes, that person may realise that his or her job is in jeopardy. Perhaps that person sees no opportunities in existing businesses for someone with his or her interests and skills. Some people actually do not relish the idea of working for someone else.
(i) Entrepreneurs are their own bosses. They make their own decisions. They choose whom to do business with and what work they will do. They decide what hours to work, as well as how much to pay themselves and their workers. They also have a choice on whether to take vacations.
(ii) Entrepreneurship offers a greater possibility of achieving significant financial rewards than working for someone else.
(iii) It provides the ability to be fully involved in the operation of the business, from concept to design and creation, from sales to business operations and customer response.
(iv) It offers the prestige of being the person in charge.
(v) It gives an individual the opportunity to build equity, which can be kept, sold or passed on to the next generation.
(vi) Entrepreneurship creates an opportunity for a person to contribute to society. Most entrepreneurs help the local economy. A few through their innovations contribute to society as a whole.
Most people are attracted to entrepreneurship by the advantages of starting a business. These perceived advantages include:
BBM210/03 Entrepreneurship Development 18


Every successful entrepreneur brings about benefits not only for himself or herself, but for the family, society and nation as a whole. The benefits derived from entrepreneurial activities are as follows:
01
02
03
04
05
06 07
08 09
10
11
12
13 14 15
Enormous personal financial gain.
Self-employment, offering more job satisfaction and flexibility. Employment for others, often in better jobs.
Development of more industries, especially in rural areas or regions disadvantaged by economic changes, for example, due to the effects of globalisation.
Encouragement of the processing of local materials into finished goods for domestic consumption as well as for export.
Healthy competition, which encourages higher quality goods and services. More goods and services made available.
Development of new markets.
Encouragement of the processing of local materials into finished goods for domestic consumption as well as for export.
Promotion of the use of modern technology in small-scale manufacturing to enhance higher productivity.
Encouragement of more research/studies, and the development of modern machines and equipment for domestic use.
Development of entrepreneurial qualities and attitudes among potential entrepre- neurs to bring about significant changes in the rural areas.
Freedom from the dependency on jobs offered by others.
The ability to have great accomplishments.
Emigration of talent is reduced by better domestic entrepreneurship climate.
BBM210/03 Entrepreneurship Development 19


Learning Activities 1.3
Please watch the following video on Steve Jobs’ motivation journey of entrepreneurship. This video will help you hear from the business icon himself on his personal journey of becoming a successful entrepreneur. This video will inspire you to become an entrepreneur.
Title : Steve Jobs Motivational Speech | Inspirational Video | Entrepreneur Motivation | Startup Stories
Duration : 2.51 minutes
Instruction : Discuss the motivation shared by Steve Jobs and how does it influence
you to become an entrepreneur. Find the differences between your motivations and those of your friends.
Source: https://www.youtube.com/watch?v=ptD0T-ZcF2M
Self-Check 1.3
To refresh your memory, refer to page 16 -17 on the motivations shared by Steve Jobs to influence you to become an entrepreneur.
BBM210/03 Entrepreneurship Development 20


1.4 WHAT MOTIVATE PEOPLE TO BECOME ENTREPRENEURS
Personality is the nature of an entrepreneur that will influence his or her interaction with the environ- ment. It involves the behaviour patterns, manner of thinking and emotional maturity shown by the entrepreneur. The characteristics of entrepreneurs are:
1. Self-confidence
An entrepreneur who is confident about his or her own capacity and self-potential in implementing entrepreneurship activities has the following strengths:
(i) Experience acts as a guide to venturing into future business activities.
(ii) Benefits from the experiences of others.
(iii) Willingness to develop skills, capability and knowledge with full confidence, along with being able to accept mistakes as part of the learning process.
However, overconfidence in entrepreneurship activities may lead to hasty decisions made and the refusal to face reality. This may lead to an entrepreneur taking an extremely high level of risk.
2. Willingness to take risk
An entrepreneur is willing to face a high level of risk and to make quick decisions using very little information when needed.
3. Type ‘A’ and ‘B’ personalities
Two types of personalities have been identified in entrepreneurs; namely, type ‘A’ and type ‘B’.
PERSONALITY TYPE
DESCRIPTIONS
Type Á’
Entrepreneurs with type ‘A’ personality love competition, are greedy and hardworking, have a quick temper, and are quick to act, but do not necessarily produce results. They are impa- tient and often take on two or more tasks simultaneously, as they are not prepared to waste time.
Type ‘B’
Entrepreneurs with type ‘B’ personality are more relaxed, “easy-going” and are not competitive. For them business is pleasure. They prefer to have good relationships with vari- ous people and organisations. This is because they are more patient and tolerant, and tend to avoid conflicts.
BBM210/03 Entrepreneurship Development 21


4. Proactive
Entrepreneurs are more responsive and try to shape or influence the environment. They are always in search of business opportunities. Entrepreneurs will:
(i) Be ready to present proposals without the fear of being ridiculed by others.
(ii) Make the effort to identify and find opportunities.
(iii) Be ready to take action even though they have to face risks.
(iv) Be ready to make changes because they have the confidence that the changes will determine the direction of the business venture.
5. Locus of control
An entrepreneur’s locus of control is the extent to which they believe that it is being controlled by internal or external powers. There are two types of locus of control:
LOCUS OF CONTROL
DESCRIPTIONS
Internal Control
Internal confidence enables such an entrepreneur to control his or her own future. Such entrepreneurs are confident that the commitment they give to their business will determine the total profit obtained.
External Control
Such entrepreneurs see that the success of a business depends on the support of others. Therefore, it is difficult to predict future success and they depend on luck. They believe that their destiny is controlled by people who are more powerful than they are.
6. Machiavellianism
According to Niccolo Machiavelli, an individual who has a “High-Mach” personality is pragmatic, maintains an emotional distance and is confident that the ends justify the means. This confidence allows them to make use of others and to use various methods to attain personal goals. This will result in entrepreneurs acting in the following ways:
(a) Ignoring moral and ethical behaviour.
(b) Manipulating situations to achieve success in running a business.
(c) Acting aggressive and rude.
BBM210/03 Entrepreneurship Development 22


SUMMARY
In this unit, you have looked at the history of entrepreneurship. You have learnt the evolution of the concept from the early ages up to the present time, and hence you are now able to think and assess future entrepreneurship scenarios. This should give you an advantage over non-entrepreneurs in the extremely competitive business world. Entrepreneurs are the people who will organise, manage and assume the risks of a business.
Entrepreneurship is the process of discovering new ways of combining resources. Entrepreneurship arises when enterprising individuals identify an unsolved problem, or an unmet need or want, which they then proceed to solve or satisfy in order to gain financial and social advantages. Entrepreneurs will bring about change and new opportunities, both for themselves and for the betterment of the community.
The next unit will provide you details on how to start a new business. As an entrepreneur, one has to know the process and procedures on a new venture and Unit 2 will expose you to it. See you in Unit 2. Now that you have completed Unit 1, you should be able to:
1. Explain the evolution of entrepreneurship.
2. Define the terms entrepreneur and entrepreneurship in your own words. 3. Describe the factors that motivate people to become entrepreneurs.
4. Describe the characteristics of an entrepreneur.
BBM210/03 Entrepreneurship Development 23


REFERENCES
Abrams, R (2004) Six -Week Start Up, A Step-by-step Program for Starting Your Business, Making Money and Achieving Your Goals, Palo Alto California: The Planning Shop.
Cole, A. (1942). Entrepreneurship as an Area of Research. The Journal of Economic History, 2(S1), 118-126. doi:10.1017/S0022050700083467
Crouch, A and Shepherd, D A (p.3) On The Concept of New Venture.
Gorman, G (1989) Work Out Business Studies, GCSE, Macmillan Education LTD, London.
Jaquiery, M (n.d) Learning About Small Business, Canada: Commonwealth of Learning.
Kuratko, D.F., & Hodgetts, M.R. (2020). Entrepreneurship: Theory, Process and Practices (11th Edition) Boston: South-Western College Publishing.
Lake, L. (n.d.) Marketing vs. Sales: What is the Difference? http://marketing.about. com/cs/advertising/a/mrktingvssales.htm (Accessed 25 October 2019)
Lowrey, Y (2009) Start Business Characteristics and Dynamics: A Data Analysis of Kauffman Firm Survey, Working Paper, SBA Office of Advocacy. www.sba.gov/advo
(Accessed 24 October 2019)
Mariotti, S (2006) Entrepreneurship, How to Start and Operate a Small Business, New York, NY. NFTE
Nieman, G, Hough, J. and Nieuwenhuizen, C (2003) (eds) Entrepreneurship, A South African Perspective, USA:Van Schaik Publishers.
Oviatt, B M and McDougall P, P (2015) Toward a Theory of International New Ventures, http://www.aib.msu.edu/awards (Accessed 25 October 2019)
Say, J. B. (1816). Catechism of political economy, or, Familiar conversations on the manner in which wealth is produced, distributed, and consumed in society. London: Printed for Sherwood, Neely, and Jones.
Schumpeter, J. A., & Opie, R. (1934). The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle. Cambridge, Mass: Harvard University Press.
Stevenson, H. H. and J. C. Jarillo (1990). "A Paradigm of Entrepreneurship: Entrepreneurial Management." Strategic Management Journal 11: 17‐27.
Stutley, R (2002) The Definitive Business Plan, 2nd edn, London, UK: Prentice Hall Education.
BBM210/03 Entrepreneurship Development 24


Learning Activities 1.4
Please watch the following video on the characteristics and abilities of Tony Fernandez as a success- ful entrepreneur. This video gauges the characteristics of a true business leader of Air Asia. This video will encourage one to possess the characteristics of an entrepreneur.
Title : AirAsia CEO Tony Fernandes: Driving ASEAN entrepreneurship Duration : 2.32 minutes
Instruction : What are the characteristics of Tony Fernandez that led him to be a
successful entrepreneur?
Source: https://www.youtube.com/watch?v=5ZurQ_M9z08
Self-Check 1.4
To refresh your memory, try identifying the characteristics of Tony Fernandez that led him to become a successful entrepreneur. Think of another successful entrepreneur with similar characteristics.
BBM210/03 Entrepreneurship Development 25


COURSE MODULE
School of Business and Administration (SBA)
UNIT 2
STARTING A NEW BUSINESS
ENTREPRENeURSHIP DEVELOPMENT
Course Code: BBM210/03
Adapted by: Lalitha a/p Ramasamy


PROJECT ADVISOR
Professor Dr Zoraini Wati Abas
COURSE MODULE DEVELOPMENT TEAM
Content Adapter: Lalitha a/p Ramasamy
Lead Instructional and Visual Designer: Fauziyah Md Aris Instructional and Visual Designers: Norliza Mhd Rodzi and Nurain Mohd Hassan Language Editor: Meilina Puteh
Cover Page and Content Design: Fauziyah Md Aris
COURSE COORDINATOR
Lalitha a/p Ramasamy
DESIGNED AND DEVELOPED BY
Online Digital Learning Lab (ODL Lab)
PRODUCED BY
Instructional Design for Engaging Experiences (IDeX) Wawasan Open University
Acknowledgement: This course module has been adapted by the
School of Business and Administration (SBA) from the Online Course Materials for the Entrepreneurship Development (BBM201/05) developed by Wawasan Open University.
First edition, December 2019
This course material was published to support the learning of students registered with Wawasan Open University. Wawasan Open University does not grant any degree, certification or credits based solely on your completion of this course material.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without prior written permission from Wawasan Open University.
Wawasan Open University - DU013 (P)
Wholly owned by Wawasan Open University Sdn. Bhd. (700364-W)
54 Jalan Sultan Ahmad Shah, 10050 Penang, Malaysia
Tel: (604) 2180 333 Fax: (604) 226 9323 Email: [email protected] Website: www.wou.edu.my
© 2019 Wawasan Open University
Wawasan Open University is Malaysia’s first private not-for-profit tertiary institution dedicated to adult learners.


U2
UNIT STRUCTURE
2.1
2.2
2.3
2.4
2.5
STRATEGIES TO START A NEW BUSINESS
Learning Activity 2.1 Self-Check 2.1
LEGAL CONSIDERATIONS IN STARTING A NEW BUSINESS
Learning Activity 2.2 Self-Check 2.2
TYPES OF BUSINESS ENTITIES
Learning Activity 2.3 Self-Check 2.3
Summary
References
BBM210/03 Entrepreneurship Development 28
STARTING A NEW BUSINESS


U2 STARTING A NEW BUSINESS INTRODUCTION
Before venturing into the world of entrepreneurship, you have to make orderly physical and mental preparations besides choosing the product or service to offer, the location of the business, the nature of the business, employees, marketing strategy and strategy to handle competition. All these aspects need careful consideration so that you can select them appropriately based on your experience, knowledge and capability. An entrepreneur needs to be cautious in making decisions on these aspects because trial and error methods are not encouraged in the field of entrepreneurship. There- fore, every action taken should be analysed based on the costs involved and the potential resulting benefits, Other relevant matters need to be considered before a decision is made to venture into the world of entrepreneurship.
UNIT LEARNING OUTCOMES
By the end of this Unit 2, you should be able to:
1. Describe the strategies to start a new business.
2. Explain the essence of compliance with the legal business regulations. 3. Describe the business entities available to a new business.
2.1 STRATEGIES TO START A NEW BUSINESS
Before starting a business, entrepreneurs should make orderly preparations so that they are able to select an appropriate entrepreneurship activity based on their strengths. The preparations should include the following:
1. Entrepreneurship activity planning
Entrepreneurs must make plans before venturing into the field of entrepreneurship. They must know the proper time to venture into a particular business. They should plan to start a business where they can gain profits from day one. They should also attempt to find out whether it is possible for them to survive in the field. To do this, they must gather facts relating to their target markets such as market size, competitors’ strengths and the restrictions that they may face. They should also assess whether incoming competitors may offer something new and interesting that will disrupt their plans.
BBM210/03 Entrepreneurship Development 29


2. Identifying the market
Entrepreneurs must research their target market’s size and determine the percentage of the market that they want to capture. They should be able to identify the target market in terms of the age, gender, location, education level and the buying power of their future customers. Successful entre- preneurs have said that the only way to see opportunities is to know customers and their problems. This knowledge provides entrepreneurs with opportunities to create new products. The assessment of the market should help entrepreneurs identify where the potential business lies.
3. Price setting strategy
The price of a product will influence customers’ acceptance of the product. Price will also determine the amount of profit that entrepreneurs gain. Entrepreneurs can set prices based on those of their competitors, or act bravely and implement a price differentiation strategy. When setting prices, entrepreneurs should take into consideration that customers also consider other factors when making a purchase. These factors include:
a. The time involved in selecting a product to purchase.
b. The physical effort involved in selecting a product to purchase.
c. Sensory and psychological costs.
4. Marketing strategy
After deciding the price of the product or service and considering all the costs involved, an entre- preneur must create a strategy to ensure that the product or service is made known to everyone, especially the target groups. The strategy must first create an interest among potential customers to purchase the product, assure them that the product is the best that they can find, and inspire in them the confidence to buy the product continuously. A marketing strategy includes specifications of how the product is presented through packaging, usage and storage. The second part of the strategy concerns the identification of suitable marketing locations (urban or rural) and the place of manufacture. The third part of the strategy focuses on the selection of distribution channels; that is, whether the product will be distributed through sales agents or by the company itself.
5. Developing skilled manpower
Possessing skilled manpower with enthusiasm and commitment is an essential factor for the success of a company. Therefore, it is the responsibility of an entrepreneur to select suitable employees, provide a competitive salary, upgrade workers’ skills by providing them with training and prepare an effective performance evaluation system. Efforts to avoid a high absenteeism rate have to be made, retrenchment, creating conflicts with employees and taking measures that might cause dissatisfaction and depression among employees.
BBM210/03 Entrepreneurship Development 30


6. Total project cost
Entrepreneurs must look at the assets that they own, which can be used to fund the business they are about to venture into. They must consider total fixed property in hand that can be mortgaged and cash that can be used as capital. They must look into their financial resources, whether from their own savings or loans from their family and financial institutions. If entrepreneurs obtain a loan from a financial institution, they must look at the terms and conditions of the loan, the payment methods and the payment period.
1. Entrepreneurship activity planning
6. Total project cost
5. Developing skilled manpower
2. Identifying the market
3. Price setting strategy
BBM210/03 Entrepreneurship Development
31
4. Marketing strategy


Learning Activities 2.1
Please watch the following video on the strategies to help you start your business by Dan Martell. This video will indicate the strategies to help a new entrepreneur to start a business. This video will give you the inside strategies to have a successful start-up.
Title : 5 Strategies To Help You Start Your Business | Dan Martell
Duration : 6.06 minutes
Instruction : If you would like to start a new business, what are the strategies mentioned
in the video that you would consider taking. Explain any three (3) strategies.
Source: https://www.youtube.com/watch?v=iUrxK0HZlrE
Self-Check 2.1
To refresh your memory, try summarising the strategies of your business start-up by focusing on: i.Planning
ii.Market identification
iii.Price setting and etc.
BBM210/03 Entrepreneurship Development 32


2.2 LEGAL CONSIDERATIONS IN STARTING A NEW BUSINESS
In the previous unit, we discussed the regulatory framework that your business needs to work in. This means choosing to register your business as a sole proprietor, partnership, limited company or public limited liability company. However, this is just the first decision that you must make. You must also learn to operate your company within the legal and ethical framework within your country or region.
As part of your business planning process, you must be familiar with the laws and regulations in your country or community that guides the start-up and operations of a small business. These may include:
• Requirements for registering a business, including procedures for naming your business.
• Local laws that govern business operations.
• Guidelines that govern the health and care of employees and customers. • The tax code for small business operations.
• Codes of conduct relevant to specific industries, sectors or professions.
Governments may offer certain facilities or incentives to entrepreneurs starting a new business. These may take the form of:
• Grants to set up a small business.
• Micro-financing opportunities.
• Tax relief.
• Recognition in the community, etc. • Legal aid.
Naming a business
The easiest way to name your business without any legal or regulatory hassle is to use your own name (e.g., Smith and Associates, or Smith Manufacturing). If you intend to use a name other than your own (e.g., Golden Globe Productions) then you must complete a legal name search to ensure that no other business entity is legally registered under the proposed name. Your country or regional business naming registrar must approve the name before you can use that name on your business cards, building signs, etc.
Your name can only include the terms “Incorporated’ or “Limited” if you are registered as a limited company or corporation. Remember when selecting a name for your company, you must live with the selected name for a long time. The name reflects who you are and what you do.
BBM210/03 Entrepreneurship Development 33


Naming a business: Make sure your company name
01
02
03
04
Can potentially be em- ployed as a registered trademark in the future.
As part of the process of starting a company you need to complete a name search before you register your company or produce any marketing materials. In most countries, a name search is built into the registration process, but it may take time for you to get approval. You may want to think of two or three names just in case the name you have chosen is already in use. Once you have the approval to use the name of your choice, you can move on to register your business.
Government regulations and your business
As the owner of a small business/enterprise, you will have to deal with local and national government regulations and laws. Taking the time to research the applicable regulations before you start your busi- ness is as important as knowing your market. It is important for you to be familiar with the laws that will govern your business so that you can plan ahead to ensure that your operations will be law abiding. The Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia (SSM)) is a statutory body formed under an Act of Parliament that regulates corporate and business affairs in Malaysia. The SSM was formed in 2002 under the Companies Commission of Malaysia Act 2001, assuming the functions of the
Registrar of Companies and Registry of Business.
BBM210/03 Entrepreneurship Development 34
Reflects the products and services you provide to clients.
Can be easily under- stood by potential clients.
Has
marketing value.


The main purpose of SSM is to serve as an agency to incorporate companies and register businesses as well as to provide company and business information to the public. The commission has launched SSM e-Info Services to allow information on companies and businesses obtainable via its website.
As the leading authority for the improvement of corporate governance in Malaysia, the commission also handles monitoring and enforcement activities to ensure compliance with business registration and corporate legislation.
In 2003, the SSM began a review of the Companies Act 1965, with the aim of simplifying the process of incorporation in Malaysia and reducing businesses’ costs of compliance with Malaysian corporate law.
Licenses and registration
Depending on the type of business you wish to start, you may need to apply for the different types of business operating licenses. However, not all may be applicable to your type of business. Here are some examples of different licenses you may need to get once you register your business:
Examples of Different Types of Business Operating Licenses
Trader’s License
Descriptions
• Trader’s license gives individuals the permission to operate businesses in specific areas and permit trading in specific types of business.
Vehicle Operating License
• Vehicle Operating License to operate special equipment, buses, tractor trailers, etc.
Certificate of Occupancy / Permission
Liquor License
Tour Guiding License
• Certificate of Occupancy/Permission from the Planning Division in your country/area of operation must be sought if you intend to put up a build- ing/stall or if you intend to change the use of an existing building or stall.
• Liquor license must be obtained if your business involves the sale of alcoholic beverages.
• Tour Guiding License that allows individuals to organise and conduct tours in the region.
BBM210/03 Entrepreneurship Development 35


You will also be required by law to register your business for tax purposes. Some common forms of tax are:
• GST (Goods & Services Tax), which is also known as VAT or the value added tax in many countries is a multi-stage consumption tax on goods and services.
• Business/Corporate tax requirements, in many countries, small business enterprises sole proprietor and partnerships are exempted from direct taxes. However, the business owners become liable. Most companies/corporations are required to pay corporate taxes. In some countries, the company corpo- ration may be tax-exempted for a specified period or if their sales value does not reach a certain amount per year.
• Malaysia’s new Sales and Service Tax (SST) replaced the former Goods and Services Tax (GST). SST has only one phase to pay taxes, compared with every phase of GST. All SST registration applications will be approved the Malaysian Royal Customs Department.
Learning Activities 2.2
Explain the importance of applying for a business license and give examples of some of the license that an entrepreneur may need to run his/her business legally.
* Read Section 2.2 page 25.
Self-Check 2.2
You may browse the internet on Suruhanjaya Syarikat Malaysia (SSM) on the procedures and processes to register a new business.
BBM210/03 Entrepreneurship Development 36


2.3 TYPES OF BUSINESS ENTITIES
A business entity is a voluntary association formed and organised to carry on a business in the legal name of the association. In Malaysia, the most common types of businesses are sole proprietorships, partnerships and private limited companies. In this section, we will discuss the types of business entity that an entrepreneur can start.
Sole proprietorship
Sole proprietorships have only one business owner and only Malaysian citizens or permanent resi- dents can register this type of business in this country. Personal names or trade names can be used as business names. Some names, such as those associated with government agencies or royalty or the name of another person who is not the owner of the business, cannot be registered. The Appli- cation of Business Name form must be registered by the sole proprietorship.
1. Easy to manage because the owner or proprietor can make decisions by himself.
2. The owner enjoys a certain degree of flexibility since as a sole owner he can react quickly and positively regarding necessary changes.
3. Easy to form and dissolve with minimum formalities. 4. All profits will go to the owner.
5. Not subjected much to government rules and regulations. For instance, the yearly financial statement that a sole proprietorship needs to submit to the Inland Revenue Board does not require validation by a qualified auditor.
6. The owner pays income tax based on his total individual income.
ADVANTAGES OF SOLE PROPRIETORSHIP:
BBM210/03 Entrepreneurship Development 37


DISADVANTAGES OF SOLE PROPRIETORSHIP:
1. A sole proprietorship usually has a limited source of capital that could limit its business activities.
2. The liability of a sole proprietorship is unlimited. If the business incurs debts for which the business assets are not sufficient to cover, the owner must be prepared to settle the debts with his or her personal assets.
3. The future development of the business is limited and depends on the management capability and health of the owner.
4. The owner is solely responsible for carrying out all tasks; therefore, a lot of time and effort needs to be put aside to manage the business.
5. The lifespan of the business not only depends on the age of the owner but it also depends on how efficiently he or she manages the business. The business will be dissolved if the owner passes away. If someone wishes to continue the business, it will have to be re-regis- tered.
6. As a sole proprietorship becomes bigger, it may want to raise more capital, diversify its functions and share risks.
BBM210/03 Entrepreneurship Development 38


Partnership
Partnerships consist of two or more business partners combining their resources in a business. Only Malaysian citizens or permanent residents can register partnerships.
A partnership agreement is usually drawn up by legal counsel and it outlines the responsibilities of each partner, the conditions by which the partnership can be terminated and the means of resolving intra-partner disputes. Personal names or trade names can be used as the business name. The Application of Business Name form must be completed before such a business can be registered. Some names, such as those associated with government agencies or royalty or the name of a person who is not the owner, cannot be registered.
ADVANTAGES OF PARTNERSHIP:
1. Easy to set up with few formalities.
2. It is easier for a partnership to secure financial assistance from financial institutions compared to a sole proprietorship.
3. Equity can be increased by enlisting additional partners.
4. Business risks can be reduced and distributed among partners. In cases of losses, each partner will share the burden.
5. The responsibilities of managing and handling the business can be divided equally among the partners.
6. A lot of ideas, talents and skills can be pooled for better management.
7. As in a sole proprietorship, income tax is not imposed on the partner- ship itself but on the owners as individuals.
BBM210/03 Entrepreneurship Development 39


DISADVANTAGES OF PARTNERSHIP:
1. Business liabilities are unlimited and may involve the personal assets of all partners of the company.
2. The lifespan of the partnership depends on the lifespan of each part- ner. If any of the partners passes, away or declared bankrupt the busi- ness automatically dissolved, unless there is an agreement otherwise.
3. If there is no agreement made, unethical behaviour or misconduct may happen.
4. There are risks of personality clashes among the partners.
Private limited company
A private limited company is a registered legal entity formed by several persons. Private limited companies can own property, enter into contracts and employ people. The most common type of company in Malaysia is a company limited by shares (public limited and private limited companies). Private limited companies cannot sell shares to the public and are distinguished by the appellation “Sendirian Berhad”, shortened to “Sdn Bhd” or “S/B”.
Public limited companies source their capital by selling shares to the public and are distinguished by the appellation “Berhad”, shortened to “Bhd”. Companies in Malaysia are governed by the Compa- nies Act 1965, which protects the rights and interests of shareholders and investors, and provides regulations for the incorporation of companies, the formulation of company constitutions, manage- ment and closures. A company must have a minimum of two members, but a private limited compa- ny is limited to 50 members (public limited companies have no member limit). A minimum paid-up capital of only RM2 is needed to start a private limited company, while public limited companies need a paid-up capital of not less than RM60mil (if it seeks to be listed on the Kuala Lumpur Stock Exchange Main Board) or not less than RM40mil (if it seeks to be listed on the KLSE Second Board).
BBM210/03 Entrepreneurship Development 40


ADVANTAGES OF PRIVATE LIMITED COMPANY:
1. Funds are easy to acquire through the exchange of share ownership or loans from a financial institution.
2. All shareholders are legally protected by law.
3. Shareholders are not burdened with the management of the business because the responsibility to manage and run the business is held by the Board of Directors, which is appointed by the company’s sharehold- ers.
4. The liabilities of the company’s members are limited to the amount of capital that they contribute to the company. Shareholders’ personal assets are not affected.
5. The lifespan of the business is not dependent upon the age or resig- nation of its members.
6. It has a greater potential for expansion.
7. Legally, the company is a business entity by itself.
BBM210/03 Entrepreneurship Development 41


DISADVANTAGES OF PRIVATE LIMITED COMPANY:
1. A private limited company is subjected to more rules and regulations compared to the types of businesses described earlier. It must always abide by the rules and fulfil the terms set by the Companies Commission of Malaysia.
2. The company’s shares cannot be transacted in the share market. 3. The company must pay corporate tax.
4. Qualified auditors must audit the company’s yearly financial statement and the statement must be complete and regularly updated.
5. The financial affairs of the company must be made transparent to the general public.
6. The cost of setting up the company is high. The costs include the payment charged according to the authorized capital, professional fees, filing charges, and the printing of the company’s Memorandum of Asso- ciation, Articles of Association, share certificates and the company’s seal.
Learning Activities 2.3
Explain the types of business which are ideal for online operations.
* Read Section 2.3 page 29.
Self-Check 2.3
You may browse the internet reading on starting a business. They can be browsed through addresses below:
(a) http://www.ssm.com.my
(b) http://www.smecorp.gov.my
(c) http://www.mavcap.com (d) http://www.mfa.org.my
BBM210/03 Entrepreneurship Development 42


SUMMARY
In this section, we discussed the various types of business entities, namely the sole proprietorship, partnership and private limited company. We also looked at where you can locate a business; that is, whether you want to establish a brick and mortar business, an online business or a hybrid business. In addition, we briefly examined the impact of the Internet on entrepreneurship and described how a website may be used to an entrepreneur’s advantage. We will be looking into the managerial aspects of entrepreneurship. Entrepreneurs require a variety of skills in order to manage an enter- prise successfully. Therefore, Unit 3 will give you a clear understanding on management issues revolving an entrepreneur. See you in Unit 3.
Now that you have completed Unit 2 you should be able to:
1. Describe the strategies to start a new business.
2. Explain the essence of compliance with the legal business regulations. 3. Describe the business entities available to a new business.
BBM210/03 Entrepreneurship Development 43


REFERENCES
Abrams, R (2004) Six-Week Start Up, A Step-by-step Program for Starting Your Business, Making Money and Achieving Your Goals, Palo Alto California: The Planning Shop.
Crouch, A and Shepherd, D A (p.3) On The Concept of New Venture.
Gorman, G (1989) Work Out Business Studies, GCSE, Macmillan Education LTD, London.
Jaquiery, M (n.d) Learning About Small Business, Canada: Commonwealth of Learning.
Kuratko, D.F., & Hodgetts, M.R. (2020). Entrepreneurship: Theory, Process and Practices (11th Edition) Boston: South-Western College Publishing.
Lake, L. (n.d.) Marketing vs. Sales: What is the Difference? http://marketing.about. com/cs/advertising/a/mrktingvssales.htm (Accessed 25 October 2019)
Lowrey, Y (2009) Start Business Characteristics and Dynamics: A Data Analysis of Kauffman Firm Survey, Working Paper, SBA Office of Advocacy. www.sba.gov/advo
(Accessed 24 October 2019)
Mariotti, S (2006) Entrepreneurship, How to Start and Operate a Small Business, New York, NY. NFTE
Nieman, G, Hough, J. and Nieuwenhuizen, C (2003) (eds) Entrepreneurship, A South African Perspective, USA:Van Schaik Publishers.
Oviatt, B M and McDougall P, P (2015) Toward a Theory of International New Ventures, http://www.aib.msu.edu/awards (Accessed 25 October 2019)
Stutley, R (2002) The Definitive Business Plan, 2nd edn, London, UK: Prentice Hall Education.
BBM210/03 Entrepreneurship Development 44


COURSE MODULE
School of Business and Administration (SBA)
UNIT 3
MANAGERIAL ISSUES IN ENTREPRENEURSHIP
ENTREPRENeURSHIP DEVELOPMENT
Course Code: BBM210/03
Adapted by: Lalitha a/p Ramasamy


PROJECT ADVISOR
Professor Dr Zoraini Wati Abas
COURSE MODULE DEVELOPMENT TEAM
Content Adapter: Lalitha a/p Ramasamy
Lead Instructional and Visual Designer: Fauziyah Md Aris Instructional and Visual Designers: Norliza Mhd Rodzi and Nurain Mohd Hassan Language Editor: Meilina Puteh
Cover Page and Content Design: Fauziyah Md Aris
COURSE COORDINATOR
Lalitha a/p Ramasamy
DESIGNED AND DEVELOPED BY
Online Digital Learning Lab (ODL Lab)
PRODUCED BY
Instructional Design for Engaging Experiences (IDeX) Wawasan Open University
Acknowledgement: This course module has been adapted by the
School of Business and Administration (SBA) from the Online Course Materials for the Entrepreneurship Development (BBM201/05) developed by Wawasan Open University.
First edition, December 2019
This course material was published to support the learning of students registered with Wawasan Open University. Wawasan Open University does not grant any degree, certification or credits based solely on your completion of this course material.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without prior written permission from Wawasan Open University.
Wawasan Open University - DU013 (P)
Wholly owned by Wawasan Open University Sdn. Bhd. (700364-W)
54 Jalan Sultan Ahmad Shah, 10050 Penang, Malaysia
Tel: (604) 2180 333 Fax: (604) 226 9323 Email: [email protected] Website: www.wou.edu.my
© 2019 Wawasan Open University
Wawasan Open University is Malaysia’s first private not-for-profit tertiary institution dedicated to adult learners.


U3
UNIT STRUCTURE
3.1
3.2
3.3
3.4
3.5
3.6
WHAT IS MANAGEMENT?
Learning Activity 3.1 Self-Check 3.1
PLANNING
Learning Activity 3.2 Self-Check 3.2
ORGANISATION AND STAFFING
Learning Activity 3.3 Self-Check 3.3
DIRECTING AND CONTROLLING
Learning Activity 3.4 Self-Check 3.4
References
Summary
BBM210/03 Entrepreneurship Development 47
MANAGERIAL ISSUES IN ENTREPRENEURSHIP


U3 MANAGERIAL ISSUES IN ENTREPRENEURSHIP INTRODUCTION
Unit 3 explores the contemporary managerial issues that entrepreneurs face as they create and establish new ventures. This unit discusses in detail elements of planning, staffing, communication, leadership, coordination and managerial control in entrepreneurship development.
UNIT LEARNING OUTCOMES
By the end of this Unit 3, you should be able to:
1. Define management in the context of entrepreneurship.
2. Communicate effectively as an entrepreneur or an intrapreneur (corporate entrepreneur). 3. Describe the leadership styles and types that can drive a business to success.
4. Analyse the functional areas of planning and staffing related to entrepreneurship.
3.1 WHAT IS MANAGEMENT
Giving a precise definition of management is not so simple because the term “management” has been used in a variety of ways. Being a discipline by itself, management, it has drawn concepts and principles from a number of disciplines such as sociology, economics, psychology, statistics, anthro- pology, etc. The contributors from each of these groups have viewed management differently. For example, economists have treated management as ‘a factor of production’ and sociologists treated it as ‘a group of persons’. Hence, with all these views, it has become difficult to define management in a comprehensive way and there has been no universally accepted definition of management.
BBM210/03 Entrepreneurship Development 48


What is management?
Various contributors on management gave many definitions; Mary Parker Follet (1933) gives one popular definition. According to Follet, management is ‘the art of getting things done through people’. This definition clearly distinguishes between the manager and other personnel of the organisation. A manager is a person who contributes to the organisation’s goal indirectly by direct- ing the efforts of others, not by performing the task by him/her. A person who is not a manager makes his/her contribution to the organisation’s goal directly by performing the tasks given by the manager. Sometimes a person may play both roles simultaneously.
A better definition is given by George R. Terry (1978) who defines management as “a process con- sisting of planning, organising, actuating and controlling performed to determine and accomplish the objectives by the use of people and resources”. According to him, management is a process "a systematic way of doing things using four managerial functions namely: planning, organising, actuat- ing and controlling”. ‘Planning’ means thinking of the manager’s action in advance. The actions of the managers are based on logic, plan or some method rather than a hunch. Managers use people, materials and other resources to accomplish the organisation’s objectives. The objectives may vary according to different organisations. For example, the objective of a technical or management institute may be to provide quality education according to the needs of the industry. The objective of a hospital may be to provide medical care to the community at a reasonable price. Whatever the objectives of the organisation may be, management is a process by which the objectives are achieved.
BBM210/03 Entrepreneurship Development 49


Management functions or the process of management
A function is a group of similar activities. There are different views on “what functions are undertak- en by managers in organisations?” Some management experts classify these functions into four types and others classify into five types while some others classify them as seven items.
The list of management functions is too long. However it can be shortened by combining some functions into one. For example, leading, motivating, communicating and commanding may be combined into a single function, namely directing. For our purpose, we shall designate the following five as the main functions of a manager. In addition, we briefly refer to “innovation” and “represen- tation” as two additional managerial functions considered important by Earnest Dale (1973).
1. Planning: Planning is the primary function of management. It means looking ahead and preparing for the future. It determines in advance what should be done. It is conscious determination of a future course of action. This involves determining “Why to take action?”, “What action?”, “How to take action?” and “When to take action?” Planning involves determination of specific objectives, programmes, setting policies, strategies, rules and procedures and preparing budgets. Planning is a function that is performed by managers at all levels: top, middle and supervisory. Plans made by top management for the organisation as a whole may cover periods as long as five to ten years, whereas plans made by low level managers cover much shorter periods.
2. Organising: Organising is the distribution of work in groups or section wise for effective perfor- mance. Once managers have established objectives and developed plans to achieve them, they must design and develop human organisation that will be able to carry out those plans successfully. Organising involves dividing work into convenient tasks or duties, grouping duties in the form of positions and subsequently grouping various positions into departments and sections. It also involves assigning duties to individual positions and delegating authority to each position so that the work is carried out as planned.
3. Staffing: Staffing involves managing various positions in the organisational structure. It involves selecting and placing the right person in the right position. Staffing includes identifying the gap between manpower required and available, identifying the sources from where people will be selected, selecting people, training them, fixing the financial compensation and appraising them periodically. The success of the organisation depends on the successful performance of the staffing function.
BBM210/03 Entrepreneurship Development 50


Click to View FlipBook Version