ENGINEERING ECONOMICS

& ENTREPRENEURSHIP

BPK 3013

Engineering
Economics

Entrepreneurship

Introduction

Financial
Statement
Introduction

Creativity
&
Innovation

Entrepreneurship

Business
Plan
Analyze
Opportunities
&
Business
Strategy

Business
Entities
&
Support
Services

Introduction

Assessment of
Capital
Investment

Cost Concepts
Engineering
Economics

Principles of
Money-Time
Relationships

Economic
Equivalence
& Interest
Rates

Chapter 1
Introduction to
Entrepreneurship

Learning Outcomes
Understand the concept of
entrepreneurship and entrepreneur
Realize the importance of
entrepreneurship
Differentiate the characteristics of an
entrepreneur to small business
owners

Definition of Entrepreneurship
It is the practice of starting new organizations,
particularly with new project in response to
identified opportunities (Barringer and Ireland,
2008)
The process of organizing, managing, and
assuming the risk of business (Kuratko and
Hodgetts)
Involves an opportunity, an individual, an
organizational context, risk and resources
(Lambing and Kuehl)

Comprehensive Definition
A field of business, seeks to understand
how opportunities to create something
new arise and are discovered or
created by specific individual, who then
use various means to exploit or develop
them, thus producing a wide range of
effects.
(Baron and Shane)

Types of Business
Manufacturi
ng

Retailing

Wholesaling

Service
s

Manufacturing
Process of converting raw materials,
components, or parts into finished
goods that meet a customers
expectations or specifications.
Employ a man-machine set up and
equipments
Need division of labor
Eg. Food industries, furniture, electrical
and electronic

Wholesaling
Sale of goods or merchandise to
retailers, industrial, commercial
institutional and others.
Wholesaler buys large quantity of goods
from various producers or vendors ->
warehouse them -> resell to retailers.
Eg.???

Retailing
Sale of goods or commodities in
small quantities directly to
consumers
Consumers maybe individuals or
businesses
They are called shops or stores
Retailers are at the end of supply
chain

Services
Defined as intangible goods
Eg. Insurance, government, tourism,
banking, retail, education
The output of this sector is
information, service, attention,
advice, experiences etc.

Entrepreneurs and
Employees
Entrepreneurs
Founder & Owner
Take calculated risk
All to gain & all to lose
Entrepreneurial
Accountability for final
outcome
Vision driven

Employees
Worker & Employee
Dont take much risk
Gains through salary
increment
Managerial
Accountability for all
defined operations
Time based
Profession driven

Characteristics of Entrepreneur
1. Passion/commitment for the business
2. Drive to achieve and grow
3. Opportunity and goal orientation
4. Taking initiative and personal responsibility
5. Persistent problem solving
6. Seeking and using feedback
7. Internal locus of control
8. Calculated risk taking
9. Tolerance for ambiguity
10.Integrity and reliability
11.Tolerance for failure
12.High energy level
13.Creativity and innovativeness
14.Vision
15.Self confidence and optimism
16.Independence
17.Team building

Top Ten Characteristics of

Successful Entrepreneur
Recognize and take advantage of opportunities
Resourceful
Creative
Visionary
Independent Thinker
Hard worker
Optimistic
Innovator
Risk Taker
Leader

ENTREPRENEURSHIP STATISTICS
Did You Know?
Malaysian Situation
211 775 companies registered in Malaysia (Until Dec 2002).
76 847 companies have terminated their businesses (Year
2002).
75.7% failed the first year of start-up.
8% to 22% last through the next 5 years.
4 in 100 000 with a high tech business idea eventually becomes
a successful company that goes public.
Bankruptcies occur for 84% of the high tech companies that
succeed in getting venture capital.
1:24 start-up entrepreneurs success rate.

(Source : Malaysia Statistics (MVD Agencies Sdn Bhd)

Entrepreneurs Contributions
Develop new markets
Discover new sources of materials
Mobilize capital resources
Introduce new technologies, new
industries and new products
Create employment

Advantages of
Entrepreneurship
Excitement
Salary Potential
Flexibility
Independence

Other Advantages
Enormous personal financial gain
Offer more job satisfaction and flexibility
Employment for others
Development of more industries
Income generation and increase economic
growth
Healthy competition and encourage higher
quality products
More goods and services available

Other Advantages
Promotion of the use of modern technology
Encouragement of more researchers
Development of entrepreneurial qualities
Freedom
The ability to have great accomplishments
Reduction of the informal economy
Emigration of talent may be stopped by a
better domestic entrepreneurship climate

Disadvantages
No regular salary
Work schedule
Administration
Personal sacrifices
Burden of responsibility
Little margin for error

Entrepreneur vs. Small Business

Owner
Small Business Owner

Entrepreneur

Definition

Doing business for the

sake to support family

Develop the business

for himself and public

Risk

Lower

Medium and higher

Manageme Lower
nt Style

Latest

Sources

Used for business

continuity

Used to expand the

business

Opprtunity

Lower Identification of
possible opportunities

Always looking for new

opportunities

Innovation
and
creativity

Lower

Posses higher creativity

and innovation

Thank you