Assignment 1
Made by: Ricardo Wijaya
Table of content:
Introduction to Entrepreneurship and Small Business in Indonesia
Examine different types of ventures
- Private
- Public
- Voluntary or Social
Different sized of Ventures
- Micro
- Small
- Medium
Varieties of entrepreneurship
- The Visionary Entrepreneurship
- Imitative Entrepreneurship
- Fabian Entrepreneurship
- Drone Entrepreneurship
Types of entrepreneur
- Founder
- Second stage
- Franchisee
- Entrepreneurial team
Typology of Entrepreneurship
- Corporate
- Technical
- Social
How Different types of entrepreneurs relate to typology
Similarities and difference of different types of ventures
How Micro and Small Business Impact the economy?
Importance of Small Business to the Growth of the Social Economy
Conclusion
Reference
Preface
This report will focus on 2 parts first part is about the range of venture types and different types of entrepreneurs. The second part will be about the impact of micro to small business on the economy of Indonesia. Micro to small business in Indonesia have a great impact to indonesia and with combination of new entrepreneur that want to open micro to small business in Indonesia. There are many opportunities to open business in Indonesia that only depend on the individual can use the opportunities or not.
Introduction to Entrepreneurship and Small Business in Indonesia
Entrepreneurship is a process to analyze the market and find opportunity to open business that will bring profit for the owner. There are many markets in Indonesia and each market always has opportunity. There are causes of opportunity such as: Disruptive technology, Industrial change and Trends. All depends on the individual to analyze and understand the market properly. An Individual that starts or opens a new business call as entrepreneur the business might invent market needs or Create changes or innovative ideas for the market (Carter,2006). However, not all entrepreneurs possess entrepreneurship because in today’s time an owner of a small restaurant also called entrepreneur and an individual that possess entrepreneurship characteristics always want to become the best, always vision for the future and never give up to any obstacles and always learn from the failures.
According to Daniel Bellefleur, Entrepreneurs and small to medium business play an important role to Indonesian economic because 57% of Indonesian Gross Domestic Product (GDP) is from small to medium business. In Indonesia there are approximately 102 million total workers and small to medium business employing over 99 million people or 97% of total workers in Indonesia.
Examine different types of entrepreneurial ventures:
Private
Private sector is a sector where an organization offers services or products to customer to gain profit for the company shareholder (nutt,2005). Unlike public sector that mostly controlled by the governments, Private sector controlled by individuals to gain profit (Margaret, 2017). Examples of private sector organizations such as sole proprietorship: art designer and it consultant, partnership: Tax and legal, small and medium business: restaurant and outlet, large multinational: Coca-Cola and Microsoft, trade association: International Air Transport Association, and Trade union: World Federation of Trade Unions and International Workers Association. The advantage of private organization is they are not as open as public organizations, which make the new ideas easily hide and wait the call for analysis (nuts,2005).
Public
According to The Institute of Internal Auditors, Public sector is a sector that mostly consists of governments that distribute programs, services and goods for citizen (Sikhungo,2011). Public sector does not aim for the profit and get their funding from citizen that pays tax annually. The governments will use the money to help citizen by building infrastructure, public school and healthcare. Example of public sector business in Indonesia is Terpadu Hospital this hospital controlled by the government of Jakarta by following the procedure and requirement data the patient will have free treatment (sulaiman,2015). One of the advantages of public sector companies is large capital to fulfill the project. Another advantage is the company do noble task for welfare of the citizen.
Voluntary or Social
Voluntary organization is an organization that runs by individual to help society. Voluntary organization uses volunteer to help other people that needs for help. This type of organization does not distribute profit, that’s why most people referred voluntary organization as non-profit or the third sector (mistry,2007). Example of voluntary organization is red-cross organization. The advantage of voluntary organization is there is no employer cost because the employees volunteer by themselves to work for free.
Different sized ventures:
Micro
Micro enterprise are mostly self-employment and working in traditional industry, and have net assets less than 50 million rupiah and have annual revenue up to 300 million rupiah. The land or buildings are not included in net assets (Bellefleur,2010).
Small
Small enterprises are controlled privately with few employees, and have net assets over 50 million rupiah but less than 500 million rupiah and have total revenue over 300 million rupiah to 2.5 billion rupiah. The land or buildings are not included in net assets (Bellefleur,2010)
Medium
Medium enterprises are mostly managed by corporate entity and have net asset between 500 million rupiah to 10 billion rupiah and have total revenue between 2.5 billion rupiah to 50 billion rupiah (Bellefleur,2010).
Varieties of Entrepreneurship:
The Visionary Entrepreneur
An individual that can be called visionary type are individuals that have brilliant imagination to change the world and have the capability to make it reality. To become visionary entrepreneurs an individual need to have specific strength such as Imaginative, attracting smart people to work with him/her and the capability to see in the big picture (Investor,2011). Steve jobs is the example of visionary entrepreneurs because in the past 30-50 years people will said that it is ridiculous when Steve jobs sharing his ideas to change the world but he has the capability and prove to those people. Now his vision and imagination has become reality, from imagination transform to what people’s know now days IPhone and ITunes.
Imitative Entrepreneur
Imitative Entrepreneur is the type of entrepreneur that copies something from visionary entrepreneurship. Imitative entrepreneur will try to copy the newest or trending technology or products. Example of Imitative entrepreneur is Factory outlet because they only sell products that are trending. Factory outlet will produce exactly the same style and they will always continue to wait for new clothes and they just copy and sell in their outlet (Badi,2010).
Fabian Entrepreneur
Fabian entrepreneurs are usually entrepreneurs that continue the family business. This type of entrepreneur do not know the hard work that his/her family to grow and developed the business because when they controlled the business everything are set and ready. The nature these entrepreneurs are apathetic and apprehensive (Badi,2010). This type of entrepreneurs afraid to make changes and explore his imagination, they just hide under the shadow and follow his/her predecessors. The business will not grow and developed because to grow a business there are many obstacles and a good entrepreneur know when to take risks and know when to back off when needed.
Drone Entrepreneur
Drone entrepreneurs are entrepreneurs that only stick to one production and do not bother to copy and find opportunities that come on their way (Badi,2010). Nokia is the example of Drone Entrepreneur because when Samsung and Apple create smartphone to replace original phone, Nokia still make original phone and do not recognize the threats on their way. When smartphone been introduced around the world, costumer start to change their gadgets and Nokia was too late to create a new smartphone and finally get knocked out of the market.
Types of Entrepreneurship:
Founder
Founder entrepreneur is an entrepreneur that start a new business. There are some characteristics of founder entrepreneur such as always have new ideas of creativity and innovation, Determination, not afraid to take risk in difficult situation and never give up. Founder entrepreneur start from zero and try to climb to the top with his/her own effort (Forbes,2013). Example of founder entrepreneur is Bill Gates because he is the one created Microsoft Company from nothing until now one of the biggest company in the world.
Second Stage
Second stage entrepreneur bring new and fresh ideas to help the company go to the top through find the perfect organizational structure, find the right culture, Helping and mentoring sales team, and make the name of the company well-known (Weinfuther,2013).
Franchisee
Franchisee entrepreneur are entrepreneurs that purchase the business trademark from franchisor. Franchisor will lend their brand name and other proprietary knowledge for franchisee entrepreneur to open a branch (Beshel,2001).
Entrepreneurial Team
Entrepreneurial team is when more than two entrepreneur work together. According to research the concept of Entrepreneurial Team has not been adequately (Birley and Stockley, 2000). However, from all concept of Entrepreneurial Team there is one in common Statement that is more than two entrepreneur shared the same interest and commitment to developed the firm.
Typology of entrepreneurship:
Corporate
According to Ryan May, Corporate entrepreneurship is a process to contribute by giving new ideas and opportunities within established business. Executing the ideas and opportunities correctly and that will lead to a better organizational profitability and improvement of competitive position (May,2011). In first year of starting new business the entrepreneur will work hard, efficient and effective. After the business developed the entrepreneur can re-check and make some improvement or modification to make the business bigger because the business already grow from micro size into small size and different size of organization has different management (Amir,2010).
Technical
Technical entrepreneurship is style of entrepreneurship that analyzing high-potential and find opportunities. In technology industry become the first and controlling the market is crucial to see the customer and products needed in the society. This type of entrepreneur use their intellectual and vision to make the firm different from competitors and find new talent and other resources to make the right decision (Bailetti,2012). Most people will think that technical entrepreneurship only relate with technology such as gadget, computer and other new developed technology. However, Technical entrepreneurship also related with agriculture and many industry. Irrigation is an example that been used in agriculture.
Social
Social entrepreneurship is a process to find opportunities in business and interest for social mission. Social Entrepreneur create a business that make profit and helping other people by identifying the problems in the society and make the business to solve that problems (Nicholles,2006). For example Muhammad Yunus founder of Grameen Bank in Bangladesh, He lend money to villagers in many small village in Bangladesh without guarantee for capital to work and have income to provide for the family.
How Different types of entrepreneurs relate to typology:
There are 4 types of entrepreneurs that has been discussed above and 3 types of entrepreneurship typology. A founder will be relate with technical typology because technical typology mostly creating new ideas and new technology. Bill Gates is the example of founder that relate with technical typology because Bill Gates is the founder of microsoft. Second stage entrepreneur relate with corporate because Second stage entrepreneur will continue the family company and try to make it even bigger. Franchise entrepreneur is related with corporate entrepreneur because franchise entrepreneur buy the trademark and try to make it more successful. Entrepreneurial Team will relate with technical or corporate typology depends what the entrepreneurial team working. If entrepreneurial team create something new products they will relate with technical typology. On the other hand, If entrepreneurial team only work to make the business developed and grow they will relate with corporate typology.
Similarities and difference of different types of ventures
Figure 1a, Four types of Entrepreneurial Ventures (Morris, 2016).
According to figure 1a, there are 4 types of Entrepreneurial Ventures: Survival, Lifestyle, Managed Growth, and Aggressive Growth. Survival entrepreneurial venture their main objective is to sustain 1 person or 1 family because Survival entrepreneurial venture have no permanent work they just sell whatever they have to gain money and to survive.The size of this venture is micro size and for the exit approach survival entrepreneurial shut down directly. Different with Survival entrepreneurial venture, lifestyle entrepreneurial venture aim for income substitution and the business more organized than survival entrepreneurial venture. Lifestyle entrepreneurial does not sell everything but maintenance of working they already have procedures to follow even though the procedures are simple. If there is problem there are other solution than shut down, the owner can sell or transfer depends if there are any investor that want to buy the business and mostly lifestyle entrepreneurial categorized as small size business. For Managed Growth and Aggressive Growth their objective is wealth creation. Both ventures already use high technology, Aggressive Growth slightly better because they invest more in technology. Managed grow always think how to grow the business even bigger and strategy that they can use. On the other hand, Aggressive growth already think about scalability and not only strategic but also proactive. There are some exit approach for managed growth such as: sell, transfer, and merge. Managed growth will not exit empty handed unlike survival that will exit with empty handed or lifestyle that have slight chance exit empty handed because business in managed growth is medium size business. Aggressive growth business is public limited company means that people can buy the company share in the stock market. For aggressive growth only selling the company share is another way for exit approach and they also can sell or merge. Aggressive growth company mostly large business.
How Micro and Small Business Impact the economy?
Figure 2a, General Characterization of Indonesian MSME’s
On the figure 2a, This was the data on 2009 and 2010 about total business in Indonesia in 2009 and 2010. As we can see in this statistic 52.723.470 or 99.92% business in Indonesia were categorized as micro to small business. This shows that majority of indonesian people work in micro to small business. However, the total growth for micro scale business is the lowest if using percentage with 1,98%, Actually there are 1.059.129 million business open in a year.
Figure 2b, SMEs by Industry 2010
Indonesian known with their culture and natural resources that is why half micro and small scale business work in agriculture, livestock, Forestry and Fishery. According to thejakartapost Indonesian possess a lot of natural resources such as 2nd oil reserve in South East Asia, 8th largest gold producer in the world, 5th largest nickel and copper producer in the world, and 2nd largest exporter of liquefied natural gas in the world. That is why many indonesian people work in natural resources industry (Hanafi and martawardaya,2015).
There are plenty natural resources in Indonesia but overtime the resources will finished because natural resources are limited and not renewable. If the natural resources finished there will be many indonesian citizen out of job and the economy of indonesia will decreasing steeply (Hanafi and martawardaya,2015).
Figure 2c, Growth of GDP according to their Scale
MSMEs ( Micro Small and Medium Enterprises) or known in Indonesia as UMKM (Usaha Mikro Kecil Menengah) account for 57% of the Indonesian GDP in 2010 (Bellefleur, 2010). This statistics shows that micro and small business is crucial for indonesian economy because without micro and small business Indonesia will lose approximately 3,466,393.3 billion rupiah. The statistics also shows that MSMEs in Indonesia also growing by 15.81% and this illustrate that Indonesia is developed and growth country.
Importance of Small Business to the Growth of the Social Economy:
Since there are 52.723.470 small and micro business this shows that more than 52 million indonesian people depends on small business to provide 1 family. If the number decreasing this will shows there will be many unemployee indonesian people because 79.7% owner of small to micro business do not finished (d3) or associate degree in Indonesia (Bellfleur,2010).
Conclusion
In conclusion, There are many types of entrepreneur in Indonesia, Each type of entrepreneur have strengths and weaknesses. Those entrepreneur can find opportunities in Indonesia because Indonesia rich in Natural resources and that is opportunities for entrepreneur to develop. However, Natural resource are limited and nonrenewable. Small to micro business have a huge impact in Indonesia without small to micro business Indonesia will lose half GDP and many indonesian people unemployee.
Reference:
Badi R.V., Badi N.V. (2010), “Entrepreneurship”, Vrinda Publications (P) Ltd., Delhi.
Roger L.M., (2007), “Social Entrepreneurship: The Case for Definition” Available at: https://ssir.org/articles/entry/social_entrepreneurship_the_case_for_definition [Accessed on: 31 July 2017].
Beshel B., (2001), An Introduction to Franchising, Available at: https://unstats.un.org/unsd/nationalaccount/workshops/2008/newyork/IG27.PDF [Accessed on: 31 July 2017].
Forbes., (2013), Who is A Founder?. Available at: https://www.forbes.com/sites/greggfairbrothers/2013/05/06/who-is-a-founder/#245350103654 [Accessed on: 31 July 2017].
Weinfuther D., (2013), Second Stage Entrepreneurship. Available at: http://www.palgrave.com/us/book/9781137302588 [Accessed on: 31 July 2017].
Bailetti T., (2012). Technology Entrepreneurship: Overview, Definition, and Distinctive Aspects. Available at: https://timreview.ca/article/520 [Accessed on: 31 July 2017].
Sakhdari K., (2016). Corporate Entrepreneurship:A Review and Future Research Agenda. Available at: https://timreview.ca/sites/default/files/article_PDF/Sakhdari_TIMReview_August2016.pdf [Accessed on: 31 July 2017].
Lauri., (2017). Running Small Business in Indonesia. Available at: http://emerhub.com/indonesia/running-small-business-in-indonesia/ [Accessed on: 31 July 2017].
Bellefleur D., (2010). A Snapshot of Indonesian Entrepreneurship and Micro, Small, and Medium Sized Enterprise Development. Available at: https://crawford.anu.edu.au/acde/ip/pdf/lpem/2012/20120507-SMERU-Dan-Thomson-Bellefleur.pdf [Accessed on: 31 July 2017].
Azwan I., (2009). Perbedaan Entrepreneur dan Technopreneurship. Available at: https://azwan87.wordpress.com/2009/02/04/perbedaan-entrepreneurship-dengan-teknopreneurship/ [Accessed on: 31 July 2017].
Carter, S. & Jones-Evans, D., 2012. Enterprise and small business: principles, practice and policy, Harlow, England: Pearson.
Nugent, Pam M.S., “SOCIAL GROWTH,” in PsychologyDictionary.org, April 13, 2013, https://psychologydictionary.org/social-growth/ (accessed July 31, 2017).
Hanafi M.F., Martawardaya B., (2015). Natural Resources: From Curse to Blessing. Available at: http://www.thejakartapost.com/news/2015/10/12/natural-resources-from-curse-blessing.html [Accessed on: 31 July 2017].
Site Title 