Waqar Munir Student I.D : 00100810 B.A. Business (hons.

) Business Entrepreneur Birmingham City University

Entrepreneur
An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome. The term initially originated from French language and was first described by the Irish-French economist Richard Cantillon. Now Entrepreneur is a term applied to a person who is willing to launch a new venture or enterprise and accept full responsibility for the outcome. Jean-Baptiste Say, a French economist, is believed to have coined the word "entrepreneur" in the 19th century - he defined an entrepreneur as "one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labor.

Entrepreneurship
Entrepreneurship is the act of being an entrepreneur. This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The most common form of entrepreneurship is that of actualizing new business (referred as Startup Company); however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is narrating activities within a company or large organization it is referred to as intra-preneurship and may include corporate venturing, when large entities spin-off organizations. [1] Paul Reynolds, entrepreneurship specialist and creating founder of the Global Entrepreneurship Monitor, has described entrepreneurship as "by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers." [2]

WARREN BUFFETT

Warren Edward Buffett ( born August 30, 1930) is an American investor and industrialist. He is renowned as one of the most successful investors in the world. Usually called the "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He regularly makes to the list of the world's wealthiest people. He was ranked as the world's wealthiest person in 2008[3] and is the third wealthiest person in the world as of 2011.[4]

Initial Life
Buffett was born in 1930 in Omaha, Nebraska, the second of three children and only son of businessman & politician, Howard Buffett, and his wife Leila (ne Stahl). Buffett started his education at Rose Hill Elementary School in Omaha. In 1942, his father got elected for the first time for US Congress , which saw Buffet moving with his family to Washington, D.C., Warren finished elementary school at Washington D.C., attended Alice Deal Junior High School, and then went to Wilson High School from where he graduated in 1947, where his SR yearbook picture read: "likes math; a future stock broker." Being still a kid, Buffett showed keen interest in making and saving money. He did door-to-door selling of bubble gum, Coke and different magazines. For some time, he worked in his grandfather's grocery store. Even during his high school time, he carried out several successful money-making ideas: delivering newspapers, selling golfballs and stamps, and detailing cars, among them. HE filed his first tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route. In 1945, during his sophomore year of high school, Buffett along with a friend bought a used pinball machine for $25, which they placed in the local barber shop. Within months, they owned several machines in different barber shops. Buffett's interest in the stock market and investing also dates back to his childhood, to the days 3

he spent in the customers' lounge of a regional stock brokerage near the office of his father's own brokerage company. During a trip to New York City at the age of ten, he made a point to visit the New York Stock Exchange. At the age of 11, he bought 3 shares of Cities Service Preferred for himself. While in high school he invested in a business owned by his father and bought a farm worked by a tenant farmer. By the time he got out of college, Warren had accumulated more than $90,000 in savings in todays dollars value.

Business Model of Warren Buffett

Warren Buffett was got a job at Buffett-Falk & Co., Omaha during 1951-54 as an Investment Salesperson, during 19541956 at Graham-Newman Corp., New York as a Securities Analyst, . In 1954, Buffett accepted a job at Benjamin Graham 's partnership. His starting salary was $12,000 a year (approximately $97,000 adjusted to 2008 dollars). There he worked closely with Walter Schloss. In 1956, Benjamin Graham retired and closed his partnership. At this time Buffett's personal savings were over $174,000 ($1.2 million inflation adjusted to 2009 dollars) and he started Buffett Partnership Ltd., an investment partnership in Omaha. During 19561969 he was employed at Buffett Partnership, Ltd., Omaha as a General Partner and from 1970 till Present at Berkshire Hathaway Inc, Omaha as its Chairman and CEO. In the year 1957, Warren had 3 different partnerships operating the entire duration. He purchased a five-bedroom stucco house in Omaha, where he still lives to date, for $31,500. Buffett operated five partnerships the entire year. In 1959, the business grew to six partnerships operating the entire year and Warren was introduced to Charlie Munger. By 1960, Warren had seven different partnerships operating: Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff, Mo-Buff and Underwood. He asked one of his partners, a doctor, to find ten other doctors who could invest $10,000 each in their partnership. Eventually eleven agreed, and Warren combined their money with his own $100 as startup money. In 1961, Warren let out the secret that the Sanborn Map Company was worth about 35% of the partnership's assets. He told that by 1958 Sanborn stock was traded at only $45 per share whereas the value of the Sanborn investment portfolio was $65/share. Which meant that traders valued Sanborn shares at "minus $20" per share and were not willing to pay in excess of 70 cents on the dollar. This got Warren a spot on the board of Sanborn. By 1962, Buffett was a millionaire, because of his partnerships, which by early 1962 had worth excess of $7,178,500, of which more than $1,025,000 belonged to Warren. Buffett combined all partnerships into single partnership. Warren bought stock and eventually took over control of a textile manufacturing firm, Berkshire Hathaway. Warren's partnerships began purchasing stocks at $7.60 per share. In 1965, Warren aggressively bought stock of Berkshire, and paid $14.86 per share while the company had working capital of more than $19 per share. That did not include the value of fixed assets. Warren eventually sought control of Berkshire Hathaway at the board meeting and appointed a new President, Ken Chace, to run the company. In 1966, Warren closed the partnership to new entrants. In 1967, Berkshire paid out its first and till date the only dividend of 10 cents. In 1969, following his most sparkling year, Warren dissolved the partnership and transferred their assets to his partners. Amongst the money paid out were

shares of Berkshire Hathaway. During 1970, as head of Berkshire Hathaway, Buffett started writing his now-renowned annual letters to shareholders. But he only took salary of $50000. By 1979, Berkshire started the year trading at $775 per share, and closed the year at $1,310. Warren's net worth mounted to $620 million, giving him a place on the Forbes 400 for the first time. In 1973, Berkshire started investing in the Washington Post Company. Berkshire also indirectly purchased another newspaper Buffalo Evening News for $32.5 million. In 1979, Berkshire also gained stock in ABC. Capital Cities' announced $3.5 billion purchase of ABC on March 18, 1985 shocking the media industry, as ABC was a giant in comparison to Capital Cities was at the time. Berkshire Hathaway chairman Warren Buffett made the deal happen in return for a 25 percent stake in the combined company. In 1987, Berkshire Hathaway bought 12% share in Salomon Inc., thus becoming the largest shareholder and making Buffett the director. In 1990, a scandal involving John Gutfreund (former CEO of Salomon Brothers) came to surface. A rogue trader, Paul Mozer, was submitting bids in excess of what was allowed by the Treasury rules. When this was discovered and brought to the attention of Gutfreund, he did not immediately suspend the rogue trader. Gutfreund left the company in August 1991. Buffett took over as Chairman of Salomon until the crisis settled down; on September 4, 1991, he testified before Congress. In 1988, Buffett started investing in Coca-Cola Company, gradually purchasing up to 7 percent of the company for $1.02 billion. As it would later turn out to be one of Berkshire's most successful investments, and one which it still maintains. Buffett hit billion dollar mark theoretically when Berkshire Hathaway started selling class A shares on May 29, 1990, and stock was sold at $7,175 a share. In 2002, Buffett made contracts worth of 11 billion dollars in currency exchange. By April 2006, his profits on these contracts was over $2 billion. In 2006, Buffett announced in June that he gradually would give away 85% of his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006. Buffett suffered severe criticism during the crisis of 2007-2008, part of the late 2000s recession , that he had made capital commitments too early resulting in suboptimal deals. Buy American. I am. he wrote for an opinion piece published in the New York Times. Buffett termed the 2007 present downturn in the financial sector as "poetic justice". Buffett's Berkshire Hathaway saw a plunge of 77% drop in earnings during third quarter of 2008 and many of his recent deals appear to be running heading into red. Berkshire Hathaway also purchased 10% perpetual preferred stock of Goldman Sachs. Some market analysts calculate that it has ran into about $6.73 billion mark-to-market losses. Buffett also helped Dow Chemical pay for its $18.8 billion takeover of Rohm & Hass. Making him the single biggest shareholder in the enlarged, which highlights his pioneering role during the current crisis and recession in debt and equity markets. During October 2008, it was reported in the media that Warren Buffett had agreed to buy General Electric (GE) preferred stock. It had some extra special incentives: he was given an option to buy 3 billion GE shares at $22.25 in the next five years, and also received a 10% dividend (callable within three years). In February 2009, Warren Buffett do away with part of Procter & Gamble Co, and Johnson & Johnson stocks from his portfolio. 5

Some people have questioned the investment techniques of retaining some stocks of Berkshire's major holdings, including The Coca-Cola Company which in 1998 peaked at $86. Buffett described the difficulties of not knowing when to sell in the company's 2004 annual report: That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, its the windshield through which investors must peer, and that glass is invariably fogged. In March 2009, Warren gave a television interview in which he said that the economy has "fallen off a cliff... Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen". Moreover, Buffett is more concerned about again seeing the inflation same as that seen in 1970s, which led to a disastrous stagflation that took many years to erode. In 2009, Warren Buffett put $2.6 billion in a Swiss company. Berkshire Hathaway owns a 3% stake, with rights to own more than 20%. In 2009, Warren Buffett also purchased Burlington Northern Santa Fe Corp. for $34 billion in cash and stock. Alice Schroeder author of Snowball stated that a reason for the purchase was to diversify Berkshire Hathaway from the financial industry. Calculated by market capitalization in the Financial Times Global 500 Berkshire Hathaway as of June 2009 was worlds 18th biggest company. In 2009, Warren divested his failed investment in ConocoPhillips, addressing to his Berkshire investors, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars. The merger with the Burlington Northern Santa Fe Railway (BNSF), was done upon BNSF shareholder approval in 1st quarter of 2010. This deal is worth approximately $34 billion and increases the stake from already existing 22%. Buffett invested in PetroChina Company despite pressure from different groups to not do business with it for its part in Sudanese civil war. He did, however, sell this stake soon afterwards, saving him the billions of dollars he would have lost had he held on to the company during steep drop in oil prices beginning in the summer of 2008. In October 2008, Warren put money in new energy automobile business by paying about $230 million for 10% of BYD Company , which runs a subsidiary of electric automobile manufacturer BYD Auto. Under a year, the investment has given him over 500% return of profit.

Recognition
In 1999, Warren was named as the top money manager of the 20th century in a poll by the Carson Group, ahead of Peter Lynch and John Templeton. In 2007, he was put

amongst Time's 100 Most Influential People in the world. In 2011, US President Barack Obama awarded him the Presidential Medal of freedom. Off late, Buffett, along with Bill Gates, was considered as the most influential global thinker in Foreign Policy's 2010 report.

Warren Buffetts mechanism for new business venture

Buffett's business philosophy and mechanism for starting new ventures and businesses have been achieved by his adherence to five not-so-secret secrets:

Secret #1:
Know your strengths and weaknesses; admit your likes and dislikes.

"I was wired at birth to allocate capital and lucky enough to have people around me early on-my parents and teachers and Susie [his late wife]-who helped me make the most of it," Buffett told Carol Loomis of Fortune magazine . He started the business investment in 1956 when "seven people wanted me to invest their money for them." He admitted that at the time "I did not have a plan." He let the marketat that time, those seven peoplespecify his career path and lead him in the direction of his strengths. His prominent weakness? Doesnt go well with bureaucracy, and incompetency. So he controls $141 billion firm with less than 20+ employees at its Omaha, Neb. headquarters. Buffett is pretty famous for having very simple n few likes. Hamburgershe drives through McDonald's for mealssteak, Cherry Coke, ice cream and playing bridge. He's quite fond of having private jets n that might be the only Luxury that he feels ok about and owns a Gulfstream IV-SP. According to his consideration, having Speed boats or cruises, Big Villas(He still resides in the Omaha, Neb. Home which he bought in year 1958 for $31,500),expensive cars and all other stuff which a common rich person would buy or own, are unworthy. He isnt very much interested in technology. There is no computer in his office and the cell phone is only gadget he carries with him when he travels.

Secret #2:
Don't take yourself too seriously. But take what you doespecially for your stakeholdersvery seriously. On the "Charlie Rose" T.V. program,the shows host asked Buffett about the long-term partner and CEO of Berkshire Charlie Munger that,what he thought about the plan to charity $30 billions stock to the Gates Foundation. "He said, 'You finally had a good idea,'" Buffett replied. "It took me 40 years to get that out of him Yes, one good idea. He's not expecting another one." Buffett is good at making jokes about himself. Some of the famous one-liners said by him are:

* "I buy expensive suits. They just look cheap on me." * "There are three kinds of people in the world: Those who can count, and those who can't." * "I drink five (Cherry Cokes) a day. That's 750 calories. I would have lost 70 pounds a year if I didn't drink them. Really, it's been a lifesaver." But the way he jokes around doesnt affect his seriousness and passion about making huge profits for himself, his firm and for his investors. "The first rule is not to lose," he says. "The second rule is not to forget the first rule."

Secret #3:
Treat money as a tool, not a ticket to immortality. What do you guess Warren Buffet earn? $8,500 per month. He and his CEO Charlie Munger both earn $100,000 a year each from their jobs at Berkshire Hathaway. At the Stanford Law School Directors' College some time ago, Munger spanked the "wretched excess of executive compensation," as put by San Francisco Chronicle's Kathleen Pender. "Corporate compensation in America is now offending a lot of people needlessly and it ought to be fixed," Munger said, clearly voicing Buffett's sentiments. One can say that Warren doesn't need that much money. But how about former Exxon Mobil CEO Lee Raymond, who received a $400 million retirement package in April. Did he need that much? And this is not it, there is the $30 billion-plus gift Buffet has pledged to give to the Gates foundation. "Some people write a $10,000 check to their alma mater and expect to get a plaque celebrating their generosity," said David Leonhardt in The New York Times. "And here was Mr. Buffett making a gift that will effectively send $10,000 to the Gates Foundation every three minutes for decades on end." 9

Leonhardt continues: For that amount of money, he could have founded Buffett University in his native Nebraska with an endowment larger than Harvard's, or he could have set up the world's richest foundation the Buffett Foundationand engaged in a little competitive philanthropy with his fellow bridge player Mr. Gates. Instead, by announcing that he would more than double the holdings of the Gates Foundation, Mr. Buffett made the point that giving away money should be more about results than ego.

Secret #4:
Make friends with the media. Dance to their tune and let them crown you belle of the ball. Compared to the many other rich people, Buffett has received usually friendly treatment over so many years, almost at all of that time. Berkshire subsidiary GEICO, e.g; spends about $300 million on ads each year. But being a large advertiser doesn't mean that a business exec is spared from the clutches and sharp teeth of the media attack hounds. Attitude and action play a big part for Buffett in his media success. During a press conference at New York press, "An Italian journalist asked whether Buffett had considered leaving his money to the U.S. government, which is already organized to address societal ills," reported Thomas S. Mulligan and Maggie Farley of the Chicago Tribune. A meager man, a more insecure person, may have laughed at the question-and a lot of the reporters in the room indeed had a laughter at their Italian colleague, probably for being so clueless. But Warren took the question seriously and let the reporter know that he thought the Gates Foundation could deliver better services more effectively than the federal government.

Secret #5:
Focus on the fundamentals. Practice them with the ruthless discipline of a master. Buffett was a student of Benjamin Graham, the boss of value investing, when he was getting his master's degree in economics at Columbia Business School. Warren was the only pupil Graham ever gave an A+ to in his securities analysis class.

Buffett in his owners manual how he and associate Munger focus relentlessly only on what they are good at: We delegate almost to the point of abdication: Though Berkshire has about 190,000 employees, only 17 of these are at headquarters. Charlie and I mainly attend to capital allocation and the care and feeding of our key managers. Most of these managers are happiest when they are left alone to run their businesses, and that is customarily how we leave them. Buffett usually pass his working day reading, thinking and talking on the phone. The one aspect of his life where he is secretive is what he is trading. He told Lynda O'Bryon of PBS's "Nightly Business Report" about the late Rose Blumkin, plucky and extraordinarily successful CEO of Nebraska Furniture Mart-which she built from virtually nothing and Berkshire invested heavily in. His comments go a very long way in explaining what Buffett feels important: He says that If he had a choice of going back to any business school for some time or apprenticing with her for a couple of monthsit would be a tough couple of months, incidentallybut you would know how to run a business when you got through. As he says, you don't need to know anything except the kind of thing she does. Important things considered by Warren E. Buffet * "Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy." --Groucho Marx * "Half of life is luck; the other half is discipline-and that's the important half, for without discipline you wouldn't know what to do with luck." --Carl Zuckmayer * "Bureaucracy is nothing more than the hardening of an organization's arteries." --William P. Anthony * "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself." --John Kenneth Galbraith * "We can tell our values by looking at our checkbook stubs." 11

--Gloria Steinem * "If your Riches are yours, why don't you take them with you to t'other world?" --Benjamin Franklin * "Take events in your life seriously, take work seriously, but don't take yourself seriously, or you'll become affected, pompous and boring." --Shelley Duvall * "You only have to do a very few things right in your life so long as you don't do too many things wrong." --Warren E. Buffett * Extreme delegation-giving away every task that is not in your area of special competencycan be the recipe for extraordinary riches.

Conclusion:
Buffetts looks Simple , but simple things are often complex to understand. And thats the beauty of Warren Buffetts Business mechanism and approach. At times,many things which to many people seem to be absurd make perfect sense for Buffett. As can be seen through his progress over the course of his business life. Buffetts mantra is Invest, dont speculate. That is main secret behind his success. Most of the people around the world want to make quick money without liking to wait for fruit to ripe and thus blow their chances of success. As can be evident by his business portfolio. If someone had invested $10,000 in Berkshire Hathaway in 1965 itd had worth about $30 Million today. And had it been invested in some other financial agency it would had amounted to $500,000. This example alone speaks volume about the man, his vision and success of his business strategies. Like every man he had his share of misfortunes and loses but as he himself put it he remains in circle of Competence Thus he is more able to absorb loses and recover from them and at times turn them into profitable prospects. In essence, Buffets Strategies constitute a paradigm shift in classical school of business. Its an open question to what extent Hes been successful. But so far hes a success story inspiring billions around the globe.

References

1 ^ Reynolds, Paul D. "Entrepreneurship in the United States", Springer, 2007, ISBN 978-0-387-45667-6 2^ Shane, Scott "A General Theory of Entrepreneurship: the Individual-Opportunity Nexus", Edward Elgar, 2003, ISBN 1-84376-996-4 3^ "The World's Billionaires". Forbes.com. 2009-03-11. Retrieved 2010-11-28. 4^ Luisa Kroll, Matthew Miller (2010-03-10). "The World's Billionaires". Forbes. Retrieved 2010-03-11.

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