Transcript BEN2014 Introduction To Cyberpreneurship

BEN2014 Introduction To
Cyberpreneurship
Mid -Trimester
Test
Highlights
Trimester 3 2001/2002 Session
Entrepreneurship
• Peter Drucker defined the entrepreneur as
one who shifts economic resources out
of an area of lower and into an area of
higher productivity and greater yield.
• Jeffrey Timmons’ definition includes
building something from nothing, the
pursuit of opportunity regardless of
the resources, a vision and
commitment to lead others in pursuit
of that vision, and a willingness to take
calculated risks.
Cyberpreneurship
• It is about how to manage the technology
in order to achieve superior value for the
customer.
• A cyberpreneur is defined as “an
entrepreneur with the skills and mindset
to deal with the knowledge economy”.
• Knowledge economy is defined as the
“generation and exploitation of
knowledge to create value in the
economy”.
Characteristics of Cyberpreneur
• You have a vision of what technology can
offer that is new to customers.
• Practices continuous learning - must always
be up-to-date.
• Practices foresight - able to solve problems
before they start.
• One man R&D company - the initiative to
learn and develop oneself.
Characteristics of Cyberpreneur
• Conceptually strong - must be good at
understand concepts.
• Can manage knowledge workers.
• Avoids stereotypes and easy solutions.
• Adds value to the customer.
Motivation of Cyberpreneurs
• Money is not usually the primary motivating
factor.
• The need for achievement and the desire for
independence are more important than money.
• Other motivating factors include the
opportunity to use skills and abilities, to
gain control over one’s life, to build
something for the family, and to live how
and where one chooses.
• Other studies have identified motivating factors
such as the need for recognition, a need for
tangible rewards, and a need to satisfy
expectations.
Traits of Cyberpreneurs
1. Need for achievement
2. Calculated risks
3. Self-confidence
4. Independent
5. Compassion
6. Creative
7. Personal growth
8. Innovative
9. Hard work
10. Responsible
The Value Chain And Innovation
• Systematic innovation - “consists in the
purposeful and organised search for
change, and in the systematic analysis of
the opportunities such changes might
offer for economic and social
innovation”… Peter Drucker
• Cyberpreneurs are people who do things
differently by shifting the economic
resources UP the value chain.
Economists vs. Entrepreneurs
• Economists - looking for
equilibrium between demand and
supply.
• Entrepreneurs - change is natural
than force.
Sources of Innovation
1. The unexpected
2. The incongruity
3. Innovation based on process need
4. Change in industry or market structure
5. Demographics
6. Changes in perceptions, mood and
meaning
7. New knowledge
•
The first 4 happen inside the firm or industry, the last 3
outside the firm or industry.
Qualifiers
• Western countries prefer
individualism - winner from among
the group of employees.
• Asian countries prefer collectivism the whole organisation wins if total
knowledge is applied to the whole
group of employees.
Content of A Business Plan
1) Cover Sheet
8) Competition
2) A Statement of Purpose 9) Management /
Personnel Plan
3) A Table of Contents
10) Operating
Procedures Plan
4) Executive Summary
11) Business Insurance
5) General Company
12) Financial Plan
Description
6) Product and / or Services Plan
7) Marketing Plan
The Marketing Plan - Pricing & Sales
Some of the pricing strategies are:
retail cost and pricing
• competitive position
• pricing below competition
• pricing above competition
• price lining
• multiple pricing
The Marketing Plan - Pricing & Sales
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Service costs and pricing (for service
businesses only)
service components
material costs
labour costs
overhead costs
Types of Companies
1. A company limited by shares
2. A company limited by guarantee
3. A company limited both by shares
and guarantee
4. An unlimited company
Companies Limited by Shares
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The liability of a member’s contribution
to the company’s assets limited to the
amount.
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If the company becomes insolvent the
members are not required to make any
further contributions to discharge its
debts.
Companies Limited by Guarantee
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The liability of members is limited to
such amount as they have undertaken to
contribute to the assets in the event of
its being wound up
Company
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Register with ROC
Share is generally transferable
No maximum number of members
(except private company)
Constitution - MAA
Required to supply certain information
to the public
Formal dissolution
Partnership
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Register under the Registration of Business
Act, 1956
A partner cannot transfer his status to
someone else without the consent of all
partners
The maximum number of members is twenty
Constitution of partnership may be formed
orally or in writing
No need to supply information to the public
Partnership may be dissolved informally
Sole-proprietorship
Sole-proprietorship
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Register under the Registration of Business Act, 1956
May transfer his business to someone else
Only one person in a sole-proprietorship
No agreement/constitution is necessary
No need to publish any information to the public
May be dissolved informally
Even though registration is limited, but all your personal
properties are at risk if your company face problems.
Private and Public Companies
A company having a share capital may be incorporated
as a private company if its Memorandum of Articles:
1. Restricts the right to transfer its shares
2. Limits the number of members to not more than 50
3. Prohibits any invitation to the public to subscribe for
any shares
4. Prohibits any invitation to the public to deposit
money with the company
Memorandum & Articles of Association
(MAA)
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MAA defines the essential components
of the structure of the company
MAA provides information to those
who do business with the company
It is a set of regulations for
management of the company
MAA is a contract under seal binding
both the members and the company
Franchises
Advantages of Franchises
1.
2.
3.
4.
5.
Management And Marketing Assistance
Personal Ownership
Nationally Recognised Name
Financial Advice And Assistance.
Lower Failure Rate.
Disadvantages of Franchises
1.
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3.
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5.
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Large Start-up Costs.
Shared Profit
Management Regulation.
Coattail Effects.
Restriction On Selling.
Fraudulent Franchisors.
Marketing Mix
Dream Business
Burke Hedges (1999) defined a dream
business as having 5 criterion:
Residual Income
 Global Market
 Sellable and willable
 Duplicable System
 Low investment and low
maintenance
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Hofstede Model in Understanding
National Culture
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Power distance (PD) - the extend to which members of a
society accept that power in an institution or organisation
is distributed unequally.
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Uncertainty avoidance (UIA) - the degree, to which
members of a society feel uncomfortable with uncertainty
and ambiguity, which leads them to support beliefs
promising certainty and maintain institutions protecting
conformity.
Risk Taking and Failing
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Tom Peters in his “Liberation Management” says
the same thing that “failure is the engine of
Capitalism. More failures produce more
information, more experiments than anything else.
Very often success is only the accidental byproduct of failure. People always find this difficult
to accept”.
Initial disaster have made Ted Tate and Heinecke
successful businessmen.
Capital
• Capital is essentially money that you need to
start the business with OR the pool of money
available to finance and run your business.
• Equity capital =The money contributed by
you and other investors. Equity represents
ownership.
• Debt Capital = The money lent to you by
financial institutions or other lenders
• Short-term liabilities enable you to run your
business now while conserving cash. E.g.:
Account payables and accruals (spontaneous
financing)
Breakeven Analysis
• Breakeven point = point at which the
business really turns profitable
• Breakeven analysis, or cost-volumeprofit analysis, is concerned with
relationship between cost, volume and
profit.
• At Breakeven = the volume of sales is
sufficient to cover all fixed and variable
costs; it is a point at which revenues
equal costs. No profit or loss.
Breakeven Analysis
Contribution margin
Sales
= CM Ratio
Break-even =
Fixed costs
point
Unit contribution margin
Fixed expenses + Target profit
Unit contribution margin
=
Units sold to earn
the target profit
Contribution Margin
Contribution margin = unit selling price (SP) less variable cost per unit
(VC)
Example:
Fixed cost
RM 20,000
Variable cost
RM 1.00 per unit
Selling price
RM 3.00 per unit
Current sales volume
40,000 units
The breakeven point can be calculated such that:
Contribution margin
= SP-VC
= RM3.00 – RM1.00
= RM 2.00
Breakeven point in units = RM 20,000/ RM 2.00
= 10,000 units
Major Sources of Short Term Capital
Short term loans – These are basically
• loans from banks for a fixed amount and for
a fixed period of time.
• the interest rates charged on the amount
borrowed are fixed and
• the loans can be extended for only a few
months to a few years.
• repayments are on instalment basis but a
lump sum payment is allowed depending
upon the banks’ agreement.
• For this kind of loan, security is often
required.
Major Sources of Short Term Capital
Bank overdraft –
• an arrangement with a bank to borrow up to
a predetermined maximum limit but not
necessarily within a specified period.
• The borrower can draw from his current
account as and when the needs arise
• an interest rates of about 2-5% above the
bank’s base lending rate will be charged
Major Sources of Short Term Capital
Bridging loans –
• extended for a specified time period at the
end of which the fund with which the
repayment will be made is available.
• extended for the purpose of selling old
premises or buying new properties.
Major Sources of Short Term Capital
Revolving credits –
• agreement by the bank to lend a certain
amount of money over a specified period
of time. Normally it is for a short period of
three months and may be renewed once
expires.
• more like a hybrid of short and medium
term loan facilities since the company is able
to borrow and repay the loan for a few
years.
Major Sources of Short Term Capital
Invoice discounting –
• similar to factoring
• the bank will advance a certain percentage
of the company’s trade debt and
• the company will in turn repay the amount
advanced together with the interest charged.
Major Sources of Short Term Capital
Debt factoring –
• the bank advances an amount of money to
a company and then takes over the
management or rather the collection of
trade debts for a commission.
• This enables the company to free up its cash
flow, which would otherwise tied down in its
receivables.
Major Sources of Short Term Capital
Trade credits –
• extended by the supplier of goods to the
business.
• an important and cheap source of financing.
• The period of credit may vary from one to
three months but may also be extended for
a longer period depending on the kind of
goods, suppliers’ financial position and the
cash discount given.
• The cash discount is given to encourage
early settlement of credits but is also a cost
to the purchaser should they decide against
settling the debts within a shorter credit
period.
The Basic Accounting Equation
Assets
=
Liabilities
+
Owner’s
Equity
Assets
 Assets are resources owned by a business.
 They are things of value used in carrying out such
activities as production and exchange.
Liabilities
 Liabilities are claims against assets.
 They are existing debts and obligations.
Owner’s Equity
 Owner’s Equity is equal to total assets minus total
liabilities.
 Owner’s Equity represents the ownership claim
on total assets.
 Subdivisions of Owner’s Equity:
1 Capital
2 Drawing
3 Revenues
4 Expenses
End
Good
Luck!