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CHAPTER ONE ENTERPRENEURSHIP AND FREE ENTERPRISE

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  Chapter one Entrepreneurship and free enterprise Debre Berhan University ,Department Of Management Page 1 CHAPTER ONE ENTERPRENEURSHIP AND FREE ENTERPRISE IInnttrroodduuccttiioonn   T  T hhee ccoonncceepptt oof f  eennttrreepprreenneeuurrsshhiipp iiss aa ccoommppllee x x pphheennoommeennoonn.. BBrrooaaddll y  y ,, iitt rreellaatteess ttoo eennttrreepprreenneeuurr,, hhiiss vviissiioonn aanndd iittss iimmpplleemmeennttaattiioonn.. EEnnttrreepprreenneeuurrsshhiipp rreef f eerrss ttoo aa pprroocceessss oof f  aaccttiioonn aann eennttrreepprreenneeuurr uunnddeerrttaakkeess ttoo eessttaabblliisshh hhiiss oorr hheerr eenntteerrpprriissee.. EEnnttrreepprreenneeuurrsshhiipp iiss aa ccoommppoossiittee sskkiillll,, tthhee rreessuullttaanntt oof f  aa mmii x x oof f  mmaann y  y  q q uuaalliittiieess aanndd ttrraaiittss.. T  T hheessee iinncclluuddee iimmaaggiinnaattiioonn,, rreeaaddiinneessss ttoo ttaakkee rriisskkss,, aabbiilliitt y  y  ttoo bbrriinngg ttooggeetthheerr aanndd ppuutt ttoo uussee ootthheerr f f aaccttoorrss oof f  pprroodduuccttiioonn,, ccaappiittaall,, llaabboorr,, aanndd llaanndd aass aallssoo iinnttaannggiibbllee f f aaccttoorrss ssuucchh aass tthhee aabbiilliitt y  y  ttoo mmoobbiilliizzee sscciieennttiif f iicc aanndd tteecchhnnoollooggiiccaall aaddvvaanncceess.. AAbboovvee aallll,, eennttrreepprreenneeuurrsshhiipp ttooddaa y  y  iiss tthhee pprroodduucctt oof f  tteeaamm wwoorrkk aanndd tthhee aabbiilliitt y  y  ttoo ccrreeaattee,, bbuuiilldd aanndd wwoorrkk aass aa tteeaamm.. T  T hhee eennttrreepprreenneeuurr iiss tthhee mmaaeessttrroo oof f  tthhee bbuussiinneessss oorrcchheessttrraa,, wwiieellddiinngg hhiiss//hheerr bbaattoonn ttoo wwhhiicchh tthhee bbaanndd iiss ppllaa y  y eedd..  1.1. Definitions and philosophy Meaning of an entrepreneur and Entrepreneurship What is an entrepreneur?    An entrepreneur is a person who creates a business or product, manages his/her resources and takes risks to gain a profit.     Jean Baptiste (1816) described the entrepreneur as the agent who unites all means of production and “who finds in the value of the products-the reestablishment of the entire capital he employs, and the value of the wages, the interest, and rent which he pays as well as profits belonging to himself.”      According to Frank Knight (1921), the entrepreneur attempts to foresee and act upon changes within markets. Knights emphasized the e ntrepreneur’s role in bearing the uncertainty of market dynamics. A more compressive and newer definition of entrepreneur is given by Vasant Desai. He describes the entrepreneur as “One who detects and evaluates a new situation in his environment and directs the making of such adjustments in the economic systems as he deems necessary. He conceives of an industrial enterprise for the purpose of, displays considerable initiative and determination in bringing his project to fruition and in this process, performs one or more of the following:  Chapter one Entrepreneurship and free enterprise Debre Berhan University ,Department Of Management Page 2 •perceives opportunities for profitable investments   • Explores the prospects of starting such a manufacturing entrepreneurs •obtains necessary industrial lic enses •Arranges initial capital •Provides personal guarantees to the financial institutions   •Promotes to meet the short falls in the capital and   •supplies technical know -how    An entrepreneur is a person who creates a business or product, manages his or her resources, and takes risks to gain a profit.    From this an entrepreneur is person who has:     The ability to see and evaluate business opportunities     The ability to gather the necessary resources, to take advantage of opportunities and     The ability to take risk and initiate appropriate action to ensure success. Peter Drucker describes an entrepreneur as “ someone who always searches for change, responds to it, and exploits it as an opportunity.”      Entrepreneurs are the instrument of change in any economy and any country. In summary, AAddaamm SSmmiitthh ((11777766)) aallssoo ssttrreesssseedd tthhaatt aann eennttrreepprreenneeuurr iiss aann iinnddiivviidduuaall wwhhoo uunnddeerrttooookk tthhee f f oorrmmaattiioonn oof f  aann oorrggaanniizzaattiioonn f f oorr ccoommmmeerrcciiaall ppuurrppoossee.. HHee aallssoo ssaaiidd tthhaatt aann eennttrreepprreenneeuurr iiss aa ppeerrssoonn wwiitthh uunnuussuuaall f f oorreessiigghhtt wwhhoo ccoouulldd rreeccooggnniizzee ppootteennttiiaall ddeemmaanndd f f oorr ggooooddss aanndd sseerrvviicceess aanndd ssoo ttrraannssf f oorrmm ddeemmaanndd iinnttoo ssuuppppll y  y .. EEnnttrreepprreenneeuurrss aarree tthhoossee wwhhoo ccrreeaattee aanndd//oorr ee x xppaanndd bbuussiinneessss tthhrroouugghh iinnnnoovvaattiivvee ccoommbbiinnaattiioonn oof f  rreessoouurrcceess.. DDiissttiinngguuiisshhiinngg f f aaccttoorrss aarree tthhaatt eennttrreepprreenneeuurrss hhaavvee vviissiioonn f f oorr ggrroowwtthh,, ccoommmmiittmmeenntt f f oo r r   ccoonnssttrruuccttiivvee cchhaannggee,, ppeerrssiisstteennccee ttoo ggaatthheerr nneecceessssaarr y  y  rreessoouurrcceess,, aanndd eenneerrgg y  y  ttoo aacchhiieevvee uunnuussuuaall rreessuullttss..     Entrepreneur is a combination of the thinker and doer. He/she generates new ideas and turns them in to business ventures. EEnnttrreepprreenneeuurriiaall CCoommppeetteenncciieess  Competencies refer to underlying characteristics of a person which results in effective or superior performance in a job. The following are major competencies that contribute towards top performance.  Chapter one Entrepreneurship and free enterprise Debre Berhan University ,Department Of Management Page 3 1.   Initiative  –   taking action beyond job requirements or the demand for the situation. Doing things before being asked or forced by the events. Acts to extend the business in to new areas, product or service. 2.   Assess and acts on opportunities  –   looks forward and take action on opportunities ( business, educational or personal growth) seizes unusual opportunities to obtain financing equipment, land, workspace or assistance. 3.   Persistence- takes repeated action to overcome obstacle. 4.   Information seeking- take action to get information to help reach objectives or clarify problems. a.   Does personal research on how to provide a product or service. b.   Consults experts for business or technical advice. c.   Seeks information or asks question to clarify what is wanted or needed. d.   Use information network to obtain useful information. 5.   Concern for high quality of work-Doing things that meet or beat existing standards of excellence. 6.   Commitment to work contract- place the highest priority on getting a job completed. 7.   Efficiency oriented- finds ways to do things faster with fewer resources or at lower sources or at a lower cost. 8.   Systematic planning- plans by breaking a large task down in to subtasks. Develops plans that anticipate obstacles. Evaluate alternatives. Take a logical and systematic approach to activities. 9.   Problem solving- generates new ideas or innovations sometimes. Switches to an alternative strategy to reach a goal. 10.   Self confidence- has a strong belief in self and own abilities. Does something that he says risky. Sticks with own ability to complete a task or meet a challenge. 11.   Assertiveness - confronts problems and issues with others directly tell others what they have to do and disciplines those failing to perform as expected. 12.   Persuasion  –   Successfully persuade others. Convince someone to buy a product or service. Convince someone to provide financing. Convinces someone to do something else that he would like that person to do. 13.   Use of influential strategies: Use of variety of strategies to affect others. Acts to develop business contacts. Uses influential peoples
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