CHAPTER 6

ENTREPRENEURIAL NETWORKING

LEARNING OUTCOMES
1. Describe three advantages of having good networking 2. Explain two types of networking 3. Discuss six importance of networking 4. Explain seven techniques in establishing and building confidence in networking 5. Identify five barriers in network building

NETWORKING
Networking is a business tool that plays a very significant role for the entrepreneurs success Networking with both internal and external customers Good networking relationships will enable a good support and cooperation from networking circles

 Networking skills will act as a catalyst to achieve business goals and objectives
Networking is both an outcome of past relationship strategy and a resource for future strategy

Advantages Of Having A Good Networking

Accessibility Expectations

Reputation

a) Accessibility Networking is very important for the entrepreneur to gain either tangible or intangible resources directly or indirectly Tangible: financial support, transfer of technology, accessibility in gaining information Intangible: moral support, guidance

b) Reputation It refers to the ability of the entrepreneurs to exercise leadership or to influence the decision making of other network members based on the expertise that they have Attracting members in networking circles to give priority towards their product or services offered by other member

c) Expectations it can both facilitate and restrict the freedom of the companys actions For example, network members could have the expectation that a particular company will effectively set prices for a number of other companies Eg; price of flour, price of egg, price of rice set by the association

Type Of Networking
1. Formal networking Is the existing relationships between various people who have a symbiotic relationship with the entrepreneur

 Those who have networking correlation are better prepared to take the initiative for creating business opportunities and solving the problems they face in the networking chain Eg; association of petrol station of malaysia, pan malaysia bus owner operator,

2. Informal networking Is established through relationships with childhood friends, members of ones family and people sharing common interests or hobbies

 Provides opportunities for the entrepreneur to gain new information or exchange of information Enables an entrepreneur to discuss his business informally without making appointment

The Importance
Build confidence Reduce bureaucracy Increase information Develop trust Create an interdependent situation Source of creativity

ENTREPRENEURS AND NETWORKING:

To be a successful entrepreneur, entrepreneur must have the strength to work together with others using these suggested strategies;
Ready to listen

Ready to compromise
Skills in giving confidence

Very much in peace

Failure To Build Networking

1. Increase cost 2. Waste time 3. Waste the resources of the company; knowledge and energy 4. Damage the entrepreneurs reputation 5. Damage the companys reputation 6. Create dilemmas whether to quit, give commitment, be a non active member

Techniques for Developing Confidence Among Entrepreneurs

As an entrepreneur we must have the trust of many people. People will have the confidence in us if we show that we successfully do the work given These are the strategies that could help us to be confident;

1. Communicate effectively and with full confidence by preparing accurate information and data 2. Prove our abilities to others by managing changes and guiding others to cope with the changes 3. Show concern for other people by helping the person who needs help

4. Always be fair in mentoring, giving helps, benefits and attention 5. Always be ready to admit our own mistakes sincerely 6. Show teamwork spirit so we are able to work together to solve problems and make any changes 7. Be confident of others

Barriers in Building Strategic Networks

There are 5 main barriers which must be avoided Emotional Physical Pyschological Behavioural Negative expressions

1. Emotional which caused by Overly aggressive, fearful, carelessness in actions Never being punctual, unwilling to admits ones mistake

2. Physical Physical barriers might arise from our personal lack of confidence in ourselves or from our inattention to other important matter with respect to manners and attire. Example; improper attire, lack of self management, nervous behaviour, speaking in unnecessary high tone or pitch, overly expressive body language, avoiding eye contact when speaking to others

3. Psychological Psychological barriers affect an entrepreneurs interactions with other people. Some psychological barriers are; Nervousness, indecision, loneliness, frustration, failure to achieve goals, shyness, inability to discuss problems, strong need for approval and acceptance

4. Behavioral The way we behave will determine whether we are closed or distant from others. Some of the bad behaviour are; Slandering other people, carelessness in making decisions, always wanting to be the leader, teasing other people, making other people appear foolish, pretending to know everything, reluctance to accept other peoples opinion and contributions

5. Negative expressions The way we express ourselves is important. When we are careless about the way we express ourselves, we might easily offend others. Examples are expressions that indicating dominance, expression indicating ridicule or mockery, expressions indicating an inferiority complex, expressions indicating an egoistic nature

Examples;
Expressions indicating dominance you must finish the work given you must manage to get the tender.. why do you never finish the work given..

Expressions indicating ridicule or mockery such easy work, but you cannot do it in two days! he doesnt know anything but he acts as if he knows everything in front of the leader

Expressions indicating an inferiority complex as a careless and poor person I dont think I can do this business who would help somebody like me in this business? who am I to be in love with you saya sedar diri saya siapa, lulus sekadar PMR je

Expressions indicating an egoistic nature Im very sure that I can do this this work since I have ten years of experience I can do that, its too kacang for me I will complete the task by this noon, Im very efficient compare Toy

CHAPTER 7
EVALUATION OF ENTREPRENEURIAL OPPORTUNITIES

Evaluation of Entrepreneurial Opportunities

The stage of transition from an idea to a potential venture can be the most critical for understanding new venture development Entrepreneur need to have a very deep knowledge and understanding on the common pitfalls in selecting new ventures There are six common pitfalls that an entrepreneur may encounter in the process of selecting a new venture;

No Real Insight Into The Market

Inadequate Understanding Of Technical Requirement

Lack Of Objective Evaluation

SIX PITFALLS

Poor Financial Understanding

Ignorance Of Legal Issues

Lack Of Venture Uniqueness

Pitfalls in Selecting New Ventures

1. Lack of objective evaluation Many entrepreneurs lack objectivity and do not investigate, evaluate and study in details Eg; Giant in Bercham, Tesco in Sri Iskandar

2. No real insight into the market Product life cycle & timing Eg, importing date and mandarin orange out of the festive season

3. Inadequate understanding of technical requirements Should conduct a thorough study of the project as it will increase the cost Eg; car service centre, vehicle spraying centre 4. Poor financial understanding Must conduct proper cost planning for good estimation Eg; sales projection, costs/expenses

5. Lack of venture uniqueness Concept and design must be attractive and differentiate from competitors Eg; latest proton model (preve), latest honda (insight) and toyota hybrid car (prius)
6. Ignorance of legal issues Legal requirements such safe environment, quality control, benefits, salary, copyrights, and patents must not be overlooked Eg, Mc Kandar vs Mc Donald case

Critical Factors for New Venture Development

Another thing we must consider in new venture development is the critical factors which covers eight areas such 1. Buyer decision in the venture How much customer want to buy? 2. Marketing of the goods and services Advertising expenses and person in charge

3. Production of the goods and services Manufacture or buy? Supplier of raw materials? 4. Staffing decision in the venture Qualification/competencies of staff 5. Control of the venture When and type of approach/record to use?

6. 7. 8.

Financing the venture How much needed and who will provide it? Basic feasibility of the venture Can the product/service works? Legality? Competitive advantages of the venture Specific offers compare to competitors and what their respond?

Why New Ventures Fail

Many newly establish business vanish/close/ shutdown within a year or two and only small portion are successful.
1. MANAGERIAL PROBLEMS 2. PRODUCT/MARKET PROBLEMS

3. FINANCIAL DIFFICULTIES

 There are 3 major causes; 1. Managerial problems HR problems (recruitment, firing, nonverbal agreements etc) Team approach (weak, promotion based on nepotism not qualification/performance, poor relationship with parent companies etc)

2. Product/market problems Poor timing, design problems, inappropriate distribution, unclear business definition, focus only one customer etc 3. Financial difficulties capital, allocation of fund, sources of fund

CHAPTER 8
STRATEGIC PLANNING FOR EMERGING VENTURES

The Nature of Planning in Emerging Ventures

According to Naffziger and Kuratko (1991) most entrepreneurs do some form of planning for their ventures but it often tends to be informal and unsystematic The actual need for systematic planning will vary with the nature, size and structure of the business

3 Reasons Why Planning Must Be In A Formal And Systematic

1. The degree of uncertainty/risks that entrepreneur will face 2. The strength of competition/competitors 3. The amount and type of experience the entrepreneur has. Lack of experience will lead to misunderstanding.

Strategic Planning
It is the formulation of long range plans for the effective management of environmental opportunities and threats in light of a ventures strengths and weaknesses There are 5 basic steps in strategic planning

Examine The Environments

Formulation Of Strategies

Implement The Strategic Plan

Evaluation The Performance Of The Strategy

Follow Up Action

Strategic Planning Process

1. Examine the internal and external environments of the venture 2. Formulate the ventures long range and short range strategies 3. Implement the strategic plan 4. Evaluate the performance of the strategy 5. Take follow up action through continuous feedback

The Lack of Strategic Planning

The reasons that lead to the lack of strategic planning are; 1. Time scarcity 2. Lack of knowledge 3. Lack of expertise/skills 4. Lack of trust and openness 5. Perception of high cost

Benefits of Implementing a Strategic Plan

1. Company Benefits Lead to greater interaction and relationship among employees Each department will try to fits into overall system and know what the corporate objectives are Manager can understand where cooperation is required Manager able to rank the various proposals in term of importance

2. Individual Benefits Manager better understand the direction and objectives of company Proposals submitted will be consistent with and relevant to their thinking, enhancing prestige and career prospect Able to apply the planning process used on their individual