You are on page 1of 25

CHAPTER 1

UNDERSTANDING ENTREPRENUERSHIP
LESSON 1

DEFINING KEY TERMS

You may essentially refer to an entrepreneur as a


business person and entrepreneurship as the business.
• Entrepreneur – the term entrepreneur origin from the French word entreprendre
which mean “to undertake”. To a person who strongly advocates and correctly
practices the concepts and principles of entrepreneurship in operating and
managing the self-owned entrepreneurial venture.

• Entrepreneurship – comes from the word entrepreneur. Refers to a particular


field of practice or process, as compared to an entrepreneur which is a person
practicing entrepreneurship.
- the art of observing correct practices in managing and
operating a self-owned wealth-creating business enterpriseby providing goods and
services that are valuable to the customers.
Small Business and Ordinary Small Business
• Small Business – refers to a business or enterprises that correctly
adopts and practices the principles of entrepreneurship. It is owned
by one person with a limited workforce of not more than 20 persons.

• Ordinary Small Business – pertains to a business enterprise managed


and operated by an owner who is not advocate of and does not
practice the concepts and principles of entrepreneurship.
LESSON 2

SALIENT FEATURES OF ENTREPRENEURSHIP


• Entrepreneurship consists of five salient features:
• It is an art of correct practices.
• It is a wealth-creating venture.
• It provides valuable goods and services.
• It entails opening and managing the self-owned enterprise.
• It is a risk-taking venture.
It Is An Art Of Correct Practices

Entrepreneurship is an art and not a science. It is not governed by fixed


and absolute rules, whereas science is. Thus, there is a constant change
which denotes movement and innovation . Entrepreneurship therefore
is not static or stagnant. It continuously grows, develops, improves, and
expands.
It Is A Wealth-creating Venture
• This feature sounds simple, but this has been most misconstrued
because of the word wealth. In most instances, ordinary small
business equate wealth with the term profit. In the parlance of
accounting, profit represents the excess income or revenue from the
cost and expenses.
It Provides Valuable Goods And Services

• entrepreneurship creates economic wealth by providing goods and


services to the consumers. These goods and services must have a
value in order to create wealth. Otherwise, they become wasted. One
essential principle in entrepreneurship then is, “not to sell waste to
consumers but only valuable goods and services.” anything of no
value to anybody is definitely a waste.
It entails opening and managing the self-
owned enterprise
This feature highlights two important elements: the concept of opening
a self-owned enterprise and the concept of managing it.

• The concept of intrapreneurship may include the business practices of


franchising and buy out.
• The issue in self-owned business is very clear and simple; it is plainly
about and ownership. It is neither about the amount of invested
capital nor about the nature of the business enterprise.
It Is A Risk-taking Venture

• The basic concept of risk in entrepreneurship can be expressed in this


statement, “risk is inherent in an entrepreneurial venture.” in other
words, once an entrepreneurial venture is born because of new ideas
or opportunities, risk comes simultaneously with the venture.
LESSON 3

THEORIES ON ENTREPRENEURSHIP
• A theory is a generalization that explains a set of phenomena. It is not
an absolute truth. It can be supported by another observation or
proven to be otherwise.

There are several theories on entrepreneurship, here are some of


them.
• Innovation theory
• Keynesian theory
• Alfred Marshall theory
• Risk and uncertainty-bearing theory
• Other theories on entrepreneurship
Innovation Theory
• the innovation theory of Joseph Schumpeter considers innovation as
the primary factor affecting development.
• New product
• New production method
• New market
• New supplier
• New industry struucture
KEYNESIAN THEORY

• Theory of john Maynard Keynes attributes economic growth,


especially during depression, to the government.
ALFRED MARSHALL THEORY

• Generalizes that the organization plays the most significant role


among the different factors of production.

Risk and uncertainty-bearing theory


• Frank Hyneman Knight states that an entrepreneur faces the risk of
uncertainty in the process of connecting the supplier and the buyer.
Other theories on entrepreneurship

• Weber’s sociological theory- asserts the social culture have


significant contributions to entrepreneurship.
• Kaldor’s technological theory- gives importance to the advancement
of technology as an element of production.
• Leibenstien’s gap-filling theory – advocates that entrepreneurship
fills the gap in any economic activity.
• Kirzner’s learning-alertness theory- focuses on learning and alertness
as the primary attributes of entrepreneurship.
LESSON 4
ENTREPRENEURSHIP AND ORDINARY SMALL
BUSINESS ACTIVITY
Entrepreneurship and the activities of ordinary small business differ in
the following areas:
1. Motive and opening a business
2. Perception of risk in the business
3. Reactions to changes in the environment
4. View on competition
5. Vision for development and growth
6. Horizon of business operation
7. Sources of business funds
Motive and opening a business

• New and fresh ideas for the entrepreneur lead to business


opportunities. Entrepreneurship is perceived as a wealth-creating
venture that will ultimately improve the life of the entrepreneur. The
primary goal of making it his/her source of livelihood. Major provider
of the family for their financial requirement.
Perception of risk in the business
• He/she considers it inherent in the business venture, prepares the
business, and find ways to minimize its effects.

Reactions to changes in the environment


• Changes in the business environment can bring new ideas for
entrepreneurial opportunities. The entrepreneur consider changesin
the environment a creative mechanism for development and growth
in the entrepreneurial activities.
View on competition

• The presence of competition is a sign of healthy economic


environment where the venture operates can be considered neutral
or free trade because of healthy competition.
Vision for development and growth
The entrepreneur usually outlines the course of his/her entrepreneurial
venture in terms of short-term, medium-term, and long-term plans of
action. He/she makes sure that the vision and mission of his/her
business is clear.
Horizon of Business operation
An entrepreneur thinks globally but acts locally. He is primarily
concerned with the major economic events not only in the local
environment but also in the global business market.
Lesson 5. Misconceptions on
Entrepreneurship
The common misconceptions on entrepreneurship.
• Entrepreneurship applies only to manufacturing business.
• Entrepreneurship applies only to small businesses.
• Entrepreneurship applies mostly to persons with good educational
background in business courses.
• Entrepreneurship applies only to a good economy.
• Entrepreneurship is simply opening a small business.
Lesson 6. Importance of Entrepreneurship
1. Entrepreneurship affects the lives of the Filipinos, the local
community, and the Philippines economy.
2. Entrepreneurship makes the following contributions to the lives of
the Filipinos:
a. It provides guidelines in their wealth-creating ventures.
b. It helps improve their financial and social life.
c. It helps broaden their creativity
d. It helps make their lives happy, fruitful, and succesful
3. Entrepreneurship, in one way or another, makes the following
contributions to the local community:
• It provides employment in the community
• It creates new demand in the market
• It makes substantial contribution to the raising and collection of taxes
• It facilitates the movement of the factors of production
• It creates new business opportunities
• It promotes a peaceful and loving community
• It increases constructive competition
4. Entrepreneurship makes the following contributions to the
Philippines economy:

a. It encourages competitiveness and thereby challenges entrepreneurs to


keep improving their products and services.
b. It helps find the entrepreneurial niche in the world market
c. It helps hasten the economic recovery process of the Philippines during
financial turmoil or crackdown
d. It facilitates the smooth flow of money in the local market
e. It assists the national government in its desire to have favourable economic
ratings in the world market.

You might also like