ENTREPRENEURSHIP AND ITS
RELEVANCE IN THE ECONOMY
Entrepreneurship
Lesson 1
It involves bringing about change to achieve some
benefit. This benefit may be financial but it also involves
the satisfaction of knowing you have changed something
for the better. “(Creating a Venture by Lily Kretchman et
al. Toronto: Wiley, 1991.)
Entrepreneurship and Entrepreneur
Entrepreneurship
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The act of creating a business or businesses
while building and scaling it to generate a profit.
An important driver of economic growth and
innovation.
What people do to take their career and dreams
into their hands and lead it in the direction of
their own choice.
About building a life on your own terms. No
bosses. No restricting schedules. And no one
holds you back.
Entrepreneur
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A person who sets up a business with the aim to
make a profit and creates a new business,
bearing most of the risks and enjoying most of
the rewards.
The Term “entrepreneur” comes from the French
word entreprendre which means “to undertake.”
An innovator, a source of new ideas, goods,
services, and business/or procedures.
Playing a key role in any economy, using the
skills and initiative necessary to anticipate needs
and bring good new ideas to market.
What is the Role of Entrepreneur?
Entrepreneur is the one who bears uncertainty, buys
labor and materials, and sell products at uncertain
prices. He is one who takes risks and makes innovation
on the factors of production. They are people who are
leaders in their community of employees, customers,
creditors, and suppliers. They are able to influence
people on their own way of thinking.
TYPES OF ENTREPRENEUR
1. Mega-entrepreneurs
– Individuals who are willing to absorb huge
risks of using enormous amounts of capital in
their business ventures.
2. Micro-entrepreneurs
– Individuals who are engaged in micro or small
businesses as alternative formal employment.
Characteristics of an Entrepreneur
1. Passion – those making it in business do what
they like to do because as an entrepreneur if
you are not interested in what you’re doing, you
cannot make your business standout and make
it better.
2. Willing to learn and experiment –
entrepreneurs talk to someone who can help, be
experts, competitors, suppliers or prospective
customers. They are not shy about their
ignorance.
3. Willing to work hard – there’s no substitute for
hard work. Nobody but you, who conceived of
the business, can give your one hundred
percent to it.
4. Persistent and patient – many successful
entrepreneurs have tried and failed before. They
learn from their mistakes and adopt a new
business but apply a different strategy. An
entrepreneur always tries his best to see his
plan and never learn to give up on something
that he believes in.
5. Vision – a mark of a successful man is his
ability to set a clear and realistic goal for himself
this goal is what guides his actions and
thoughts.
6. Creative and innovative – learn to be flexible
and to adapt by watching the market closely.
7. Seek opportunities – they grab opportunities
that come their way, and knows that it might not
come again, or if it did, not for a long time.
8. Persuasive and know the value of
networking – this trait is as being connected to
leadership. The entrepreneur has the power to
influence people because he has good practical
intelligence and can think clearly under stress.
9. True to their words – word of honor is very
important to the entrepreneur. They need to be
committed every time so that they will be trusted
by the people around them.
10. Take calculated risks – entrepreneurs take
more risk than the average person and makes
decisions using experiences, knowledge and
intuition. They take a chance and place his
money and time into his chosen activity.
11. Demand quality and efficiency – aspires to
give their customers products and services of
high quality. They believe that the efficient way
of doing things saves on cost, time and effort but
produces high quality goods at a low price.
12. Systematic – they always have a plan and
monitor the activities that will ensure the
attainment of the goals.
13. Confident – He/she is a self-confident person.
He believes in her/himself. The challenges
motivate him or her and is not insecure about
having experts around.
Importance of Entrepreneurship
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Generates employment
Helps in the economic growth of the country
Eradicates poverty and social unrest
Improves social and image abroad
Contributions of Entrepreneurs to
Economic Development
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Develop new markets
Discover new things
Mobilize capital resources for productivity
Introduce new technologies
Create Employment
Improve the quality of life
Contribute to more equitable income
distribution and eases social unrest
Generates new sources of materials
Stimulates investment interest in the new
business ventures being created
Serves as role model
Brings social benefits to the people
Utilizes and mobilizes indigenous resources
Provides more alternative for consumers
Marketing mix is divided into two parts;
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Strategic Marketing Mix - It cannot be changed
overnight because it takes time to get
implemented.
E.g.: product, people and place
 Tactical Marketing Mix - It can be changed
very easily.
E.g.: promotion, process, price and physical evidence
Evolution of the Field of Entrepreneurship
1. Earliest Period
“An entrepreneur is a person who sells
goods on behavior of the goods owner’’,
exhibited by MARCO POLO (1254-1324).
Marco Polo travelled to many places in Asia to
trade. He would enter into a formal agreement
with a capitalist to sell his goods. He bore all
the risks of possible damage of loss of the
goods. After everything was sold, profits were
divided between the capitalist and the trader
as agreed.
2.
Entrepreneur used to describe both as
an actor and a person who managed large
production projects. Individuals did not take
any risks because all the resources used
were provided by the government of the
country. A typical entrepreneur in the middle
ages was the priest. The person in charge of
great architectural works used to build castles
and fortifications, public buildings, abbeys,
and cathedrals.
Requirements of Entrepreneurship
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Availability of resources
Resources can be classified as human and
non-human resources
Market demands
The extent to which people may patronize the
product
Good location
The site of the business enterprise
Capital or funds
Sufficiency of the funds or capital
Entrepreneurship is always associated
with innovation. In fact, it is the capacity for
innovation, investment, and expansion according
to Nathaniel Left. Therefore, an entrepreneur is
someone who is innovative and mostly engages
in investment whether it is small, medium or large
enterprise. An entrepreneur who can offer
something new or can improve something that
already exists has already a competitive
advantage from the rest.
Marketing Mix
It is the mixture of controllable marketing variable that
the firm uses to pursue the sought level of sales in the
market.
Middle Ages
3.
17th Century
The connection of the risk with
entrepreneurship developed. An entrepreneur
was a person who entered into a contract with
government to perform a service or to supply
stipulated products.
John Law, a Frenchman was one of the
entrepreneurs in that period. The founder of
the royal bank of finance and the Mississippi
Company which had an exclusive franchise to
trade between France and the new world.
Unfortunately, monopoly on French trade
eventually led to collapse the company.
4.
18th Century
In this era, the person with capital was
differentiated from the one who needed
capital. The entrepreneur was distinguished
from the capital provider. One reason for this
differentiation was industrialization occurring
throughout the world.
Bi Whitney was an American inventor
best known for inventing the cotton gin. This
was one of the key inventions of the industrial
revolution.
Thomas Edison, was the inventor of
many inventions. He was developing new
technologies and was unable to finance his
inventions himself; he was a capital user but
not a provider.
6.
During the present century two
characteristics are associated with the
entrepreneur these are innovation and
creativity. Creativity is the ability to bring
something new into existence while innovators
are practical people and create from the
opportunities available in reality. Following
principles of innovation have emerged leading
to the success of entrepreneurs:
a. Action oriented and searching for
new ideas
b. Making the product service simple
and understandable
c. Trying, testing, and revising
d. Learning from failures
e. Hard work is the key to success
19th and 20th Century
5.
21st Century
Entrepreneurs were frequently not
distinguished from managers and were viewed
mostly from an economic perspective.
Andrew Carnegie is one of the best
examples of this definition. Carnegie was an
innovator and invented nothing, but rather
adapted and developed new technology in the
creation of products to achieve economic
vitality.
The 7 P’s of Marketing
Product
It is the item offered for sale it can be a service or an item and its purpose is to satisfy the needs and
wants of the target buyer. Decisions relating to product, includes:
 Design
 Value
 Accessories
 Technology
 Quality
 Warranties
 Usefulness
 Packaging
 Convenience
 Branding
Price
It is a value that will purchase a finite quantity, weight, or other measure of a good or service and to
make the product affordable to the target market and reflect the value of benefits provided.
Promotion
It is the way a company communicates what it does and what it can offer to customers. It includes
activities such as;
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Newspapers,
radio, and
other forms of
media
Windows
display
Fashion show
Exhibits
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Lecture and
demonstration
Product
Sampling
Quantity
discounts
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House-tohouse selling
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Telephone
E-mail
Website
Social
Network
Sales Events
Posters
Place
It is the place where customers buy a product, and the means of distributing your product to that
place, must be convenient for the customer. The following are the channels of distribution;
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Retails
Wholesale
Multi-Channel
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Mail order
Internet
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Direct sales
Peer to peer
People
They are the most important element of any services or experiences and are all the persons involved
in the activities of producing products and providing services and products to consumers. Services tend to
be produced and consumed at the same moment, and aspects of the customer experience are altered to
meet the individual needs of the person consuming it. It includes the following;
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Customer
Employees
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Management
Culture
Customer service
Process
It determines the capability of the product to supply the demand of the consumer it is about knowing what to
do and how to do it, especially in services marketing.
Physical Evidence
It pertains how a business and its products are perceived in the marketplace It is also the first distinction of a product so
that the product could easily be recognized by its appearance. Physical evidence includes the following;
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Packaging
Internet/web pages
Paperwork (such as
invoices, tickets and
dispatch notes)
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Brochures
Furnishings
Signage (such as
those on aircraft
and
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vehicles)
Uniforms and
employee dress
Business cards
Mailboxes
Types of Businesses Available to Entrepreneurs
TYPE OF
BUSINESS
DESCRIPTION
EXAMPLE
Micro Enterprise
It has an asset size not exceeding P50,000. It is usually a homebased enterprise, operating in makeshift or temporary quarters. The
owner heads the enterprise and employs from one to not more than
10 people to help him/her.
Self-employed vending food like taho, puto,
or fishballs; those selling in the public
market; and those having sari-sari or rolling
stores.
Cottage Enterprise
It has an asset of P250,000 but not exceeding P500,000. It is a
home-based business which is often managed and operated by the
members of the family.
Subcontractors of footwear like shoes and
slippers; and food manufacturers of peanut
butter/ coco jam or pastillas, as well as
decorative products like vases, candles, and
lanterns.
Small Enterprise
It has an asset of P500,000 but not exceeding P2.5 million. It is
owned by an individual or group and has enough resources to
continue operating. It employs from 10 to 20 people.
Groceries, bakeshops. Beauty salons,
medical/ dental clinics, toy makers, jeepney
manufacturers, and travel/ tour agencies.
Medium Enterprise
It has an asset of P5 million to less than P20 million. It is owned by
a single individual, business partners, or a corporation. It employs
more than 20 to 100 people. These workers are more skilled and
possess technical expertise to run the business with machines/
equipment and utilize various quality controls to make the products.
Fine dining restaurants with branches,
computer importer-dealers, garment
manufacturers, human resource providers,
and private educational institutions.
Large Enterprise
It has an asset of P20 million or more. It is often owned and
managed by a corporation. It is large in scope of operation and
number of products or services that it offers to the market. It
employs 100 or more workers who are hired on the basis of their
expertise. Its Board of Directors is responsible for its governance
and it has a Chief Operating Officer to oversee the implementation
of the directives of the Board. It operates in highly formalized but
complex systems of management.
Big fast-food chains, large department
stores, big bookstores, family-owned
commercial banks and insurance
companies.
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