Entrepreneurship in Tourism and Hospitality
Overview
This course will introduces the concept of
entrepreneurship, the relation between
entrepreneurship and economic development,
the entrepreneur, and the necessary skills
and characteristics of an entrepreneur. It also
discusses the entrepreneurial options (i.e.,
start-up, buy out, and franchise) as well as
the feasibility study and business plan which
are
essential for the creation of a business
venture.
Learning Objectives
• Understand the concept of entrepreneurship and the entrepreneur
04
• Discuss the role of entrepreneurship in economic development
• Discuss the risks and rewards of becoming an entrepreneur
• Identify different Entrepreneurial options.
• Identify the elements of a feasibility study and business plan
• Distinguish the differences and similarities of a business plan and a feasibility stud
Key Terms
• Entrepreneur – someone who identifies an idea that no one else has acted on or
identified
• Entrepreneurship - process where an individual discovers, evaluates and exploits
opportunities independently
• Economic Development – increase of a nation’s wealth and standard of living
• Gross Domestic Product – the monetary value of all finished goods and services
produced in a country with a specific time period
• Per Capita Income – measure of the amount of income earned per person in a
nation or geographic region
• Creativity – development of new idea
Key Terms
• Innovation - new idea, process, or product, or a change to an existing product or
process
• Start-Up Business – business that is started from scratch
• Franchise - a license granted to an entrepreneur to operate under the franchise’s
name
• Receivables – amounts owed to the business
• Feasibility Study – a tool to determine whether a business idea is viable
• Business Plan - formal document that typically describes the business and
industry, market strategies, sales potential, and competitive analysis, as well as the
company’s long-term goals and objectives
Lesson 1: Entrepreneurship
and the Entrepreneur
Concept of Entrepreneurship
Entrepreneurship is defined by several people in different ways. And sometimes to understand
the meaning of entrepreneurship, one must first define an entrepreneur. An entrepreneur is someone
who sees a need or a problem that nobody else has addressed and proceeds to shoulder the financial
risk to act on it. Economists and business consultants, like Richard Cantillon, Frank H. Knight and
Peter Drucker, share the same view that entrepreneurs are risk-bearers, “willing to put his or her
career and financial security on the line and take risks in the name of an idea, spending much time as
well as capital on an uncertain venture” (Osorno & Bajao, 2020). However, the risk we are talking
about here is calculated risk, wherein prior to decision-making, one must conduct necessary data
gathering and research that minimizes unfavorable outcomes.
On the other hand, Joseph A. Schumpeter, an Austrian economist, took a different approach
on the understanding of entrepreneurship which focused on the role of innovation. According to
Schumpeter, entrepreneurship occurs under five cases: introduction of new goods, new
production methods, new markets, new sources of materials, or new organizations (Schumpeter, 1911).
This new creation that an entrepreneur introduces to the world is what sets him or her apart from the
small business owners, whereas they operate on an existing business model
Entrepreneurship in the Economic Development
According to the International Economic Development Council:
No single definition incorporates all of the different strands of economic development.
Typically, economic development can be described in terms of objectives. These are most commonly
described as the creation of jobs and wealth, and the improvement of quality of life. Economic
development can also be described as a process that influences growth and restructuring of an
economy to enhance the economic well being of a community. (p. 3)
With that being said, putting up a business does not only mean that you get to provide for
yourself and your family, it also means that you are also contributing to your local community, your
region and the country as a whole.
Entrepreneurship plays a vital role in the development of a
country. As one of the most important inputs of economic development, it thrives in economic
systems that support innovation and hard work. And when entrepreneurs succeed in their
entrepreneurial endeavors, the nation is immensely benefitted.
Roles of Entrepreneurship in the
Economic Development:
➢Wealth Creation and Sharing- by creating a business, an entrepreneur would need
resources and capital to build it, either from his own or from investors or the public.
Because of this, public wealth is stimulated, allowing people to be benefitted from
successful entrepreneurs and growing businesses
➢Job Creation – more often than not, entrepreneurs would need to hire employees for
their businesses. In this way, entrepreneurs help the economy by reducing unemployment
in the country.
➢Balanced Regional Development – entrepreneurs who build their business in
underdeveloped areas help improve its regional development. Creation of such businesses
lead to improvements in infrastructure like roads, airports, hospitals, schools, reliable
supply of water and electricity, as well as other public and private services.
➢Increase in GDP and Per Capita Income – entrepreneurs who are always on the
lookout for business opportunities to take advantage of encourage effective mobilization of
resources such as capital and skill. Because of this, entrepreneurs help increase the
country’s gross domestic product as well as the per capita income of the people.
➢Improvement of Standard of Living – a key characteristic of economic development in
a country is the increase of standard of living of its people. Entrepreneurs play an
important role in the improvement of standard living not only by providing jobs but also by
adopting latest innovations in production of wide varieties of goods and services at lower
cost. This allows people to access goods of much better quality but at lower prices thus
improving their standard of living.
➢Promote Country’s Export Trade – an important component of economic development
is the country’s export trade. Entrepreneurs promote the export trade by producing goods
and services in large scales in order to earn huge amount of foreign exchange from
exports in order to combat import dues requirement.
Portrait of an Entrepreneur
Social
Entrepreneur –
entrepreneurs that
act as agents of
change for
society because they
build their businesses
to solve social,
environmental or
economic problems.
Career
Serial
Entrepreneur –
Lifestyle Entrepreneur –
Entrepreneur – this
these are the
these are entrepreneurs
is what we call
entrepreneurs who
who create their
entrepreneurs who
take on the day-to-
businesses primarily to
are involved in
day management of
change their own lifestyles
creating one
the venture as its
rather than for the purpose
entrepreneurial
owner, accepting and
of making money. They
venture after another.
enjoying the
focus on leading fulfilling
They are more
daily risks and
lives and meaningful
interested
rewards of managing
careers and build their
in the early creative
and building the
business in order to
stages of generating
business
support it.
business ideas
Characteristics of an Entrepreneur:
•
•
•
•
•
•
•
•
•
•
•
Courage – willingness to take calculated risk in spite of possible losses
Creativity – thinking outside the box; to look at problems and opportunities in new ways
Curiosity – willingness to learn and ask questions
Determination – to not be discouraged by failures and refusing to quit
Discipline – to stay focused and remove distractions from achieving goals
Empathy – to be sensitive towards other people’s thoughts and feelings
Enthusiasm – to be passionate about working towards your goals
Flexibility – ability to adapt new situations and unexpected changes
Honesty – to be truthful and sincere not only with oneself but more importantly to others
Patience – to understand that some goals take time to be achieved and that it does not happen overnight
Responsibility – being accountable for one’s actions and decisions
Skills of an Entrepreneur:
Business Skills – knowledge and understanding of how to manage a business
Communication Skills – ability to listen, speak and write well
Computer Skills – ability to effectively use the tools in technology
Decision-Making and Problem-Solving Skills – ability to formulate sound strategies and using good
information and evidence to make business decisions
• Mathematical Skills – using math to create budgets and accurate records; to analyze financial statements
• Organizational Skills – ability to plan and manage things effectively and efficiently
• People Skills – ability to persuade and motivate people; to resolve differences between people in a
mutually beneficial way
•
•
•
•
Why Be an Entrepreneur?
Other than having personal financial gain or making money out of running a business,
there several more advantages of becoming an entrepreneur. But as well as there are
rewards, entrepreneurs also face risks of having their own businesses. Here are some of the
risks and rewards of being an entrepreneur:
Advantages
Control Over Decision-Making
When you own a business, you have greater control over the
decisions you make and act on. You have the final word on what
goods/services the business will provide
Doing Work You Enjoy
When you work at something you’re really passionate about, it
won’t feel like work at all. Motivation like that helps a business
succeed.
Disadvantages
Potential Business Failure
The downside of making decisions for the business is the possibility
of making the wrong ones. Getting to make these decisions means
carrying the burden when the business fails.
Long Hours and Hard Work
Especially in the initial process of putting up a business,
entrepreneurs will need to put in extra hours of work in order for
the business to be successful. These long hours of hard
work can keep you from spending time for your family or friends
Creating Greater Wealth
Financial Insecurity
There is no limit to what an entrepreneur can earn, especially when
The amount of money you earn depends on how well your business
he or she keeps growing his or her business
is performing. New businesses usually make little to none profit in
the beginning of its life, and during rough times, you might even put
more money in the business just so you could pay your employees.
Helping Your Community
Unexpected Obstacles
Entrepreneurs open up opportunities that help their communities in In creating and managing a business, there will always come a time
more ways than one. For example, they help the community by
when you are faced with a problem you least expect. It can be quite
providing products/services that improve quality of life, or create
discouraging unless you keep a positive attitude and have a form of
jobs for those seeking it.
emotional support such as friends and family
Empower other Entrepreneurs
Being an entrepreneur, you’ll not only have the chance to influence
your family or your employees but also inspire other upcoming
entrepreneurs. This also gives rise to healthy competition that
encourages higher quality products.
Activity: "Innovate & Elevate: Tourism Startup Pitch“
Objective: To introduce students to the concept of entrepreneurship by encouraging them to think creatively and identify opportunities in the tourism and hospitality industry.
Instructions:
1.Icebreaker Discussion (10-15 min)
1. Ask students:
1. What does it mean to be an entrepreneur in tourism and hospitality?
2. Can they name successful tourism or hospitality businesses that started as small ideas?
3. What problems or gaps do they see in the industry?
2.Group Formation (5 min)
1. Divide students into small groups (research group).
3.Brainstorming (15 min)
1. Each group comes up with a new tourism or hospitality-related business idea.
2. Encourage innovative solutions that address real-world challenges (e.g., sustainable tourism, tech-driven services, unique accommodations, etc.).
4.Mini Pitch (10 min per group)
1. Each group presents a 1-minute elevator pitch of their business idea to the class.
2. The pitch should answer:
1. What is the business idea?
2. What problem does it solve?
3. Who is the target market?
4. What makes it unique?
5.Feedback & Reflection (15 min)
1. After all pitches, the class discusses the most promising ideas and why.
2. Instructor provides insights on feasibility and potential improvements.
Lesson 2: Creating Blueprints for Your Business
Learning Objectives:
•
•
•
•
•
To enumerate the creative process of becoming an entrepreneur;
To identify the qualities of innovative products;
To define each entrepreneurial options;
To enumerate the advantages and disadvantages of each entrepreneurial options;
To give examples of each entrepreneurial options.
Generating
Sound
Business Ideas
We have mentioned earlier that one of the characteristics of an entrepreneur is empathy which
means that he or she is sensitive towards other people’s thoughts and feelings. By practicing
empathy, the entrepreneur can relate to people and see the problem through their eyes. And if we
recall the definition of an entrepreneur, he or she is someone who identifies a problem and takes it
upon himself to act on it. Now that the entrepreneur has identified the problem, he or she can start
thinking of how to address it.
1. Ask family and friends
The first place any entrepreneur should look when coming up with new business ideas is their own
network of family and friends. After all, these are the people who know you best and will be most likely to
support your new venture.
By asking those closest to you for ideas, you'll not only get some great suggestions, but you'll also get an
idea of what kind of business would be a good fit for your skills.
Your friends and family will also have very different perspectives than you. They have their situations they
deal with every day that you may not have thought of.
2. Consider problems in your everyday life then solve them!
The best business ideas come from solving problems that you or others face every day. If there's something in your
life that frustrates you, chances are there are plenty of other people who feel the same way.
Come up with a list of different problems you face going about your day. Once you have a list of about 10 different
problems, try to brainstorm 1 to 3 different solutions that don't exist yet.
By identifying these pain points and coming up with a solution, you'll be well on your way to starting a successful
business.
3. Build on your hobbies
You're not going to get many business ideas for rocket engineering if you've never even built a model rocket before.
This is why it's important to look at your hobbies and interests when trying to come up with a business idea. It's
much easier (and more enjoyable) to build a business around something you're passionate about.
If you love hiking, for example, you could start a hiking gear rental company or a hiking tour company. If you're into
cars, you could start a car detailing business or a classic car restoration business.
Whichever option you choose, you'll end up following the journey till its end because you care more about the
outcome.
4. Consider if there are tasks you could make
easier
The problem many entrepreneurs run into when thinking of a new business idea is trying to create the next biggest
thing. But sometimes the best business ideas are those that solve a more mundane problem.
A great way to come up with new business ideas is to think about ways you could make existing tasks easier or more
efficient.
For example, let's say you're a real estate agent. You could come up with a service that helps people find their dream
home by doing all the research for them.
You could also start a business that helps people stage their homes for sale or that provides virtual tours of
properties.
By thinking about ways to make everyday tasks easier, you'll be able to come up with plenty of new business ideas
that have the potential to be successful without all the mental effort.
5. Build on existing products or services
If you're struggling to come up with new ideas for a business, it often helps to build on products or services that
already exist. You won't have the pressure of coming up with something completely new, and you can focus on improving
upon what's already out there. Research similar businesses; what are they doing well? What could you improve upon?
A great way to do this is by looking at the current services or products you're already using and asking yourself the
"What if?" questions. What if this service was available in my city? What if this product was cheaper/better quality/easier
to use?
Creativity and Innovation: Essential to the Entrepreneurial Toolkit
Creativity and innovation are important concepts that you will need in your entrepreneurial
journey and success. Although some people use these terms interchangeably, there is a
difference between the two. Creativity is the ability to create and develop something new and
unique, whereas innovation is the application of creativity. Innovation is the actualization of
creative ideas.
In a fast-paced and competitive world such as the hospitality industry, creativity will be an
essential attribute of an entrepreneur. The ability of the entrepreneur to create something new
and unique will distinguish the business from its competitors. If the entrepreneur fails to be
creative, the business will struggle to survive among its competitors.
Although creativity may be innate or naturally possessed by some people, it can be learned
and refined with practice. If we look at the creative process according to Graham Wallas in
The Art of Thought, it has the following stages:
• A time for goal setting
• Involves investigating and absorbing relevant information
• Observing skilled practioner's at work and how they put meaning to their work so you can establish benchmarks to use in
your own work
• A time to incorporate what you have learned and practiced in the preparation stage
• Remove oneself from the problem to allow subconscious to work on the problem
• Change of environment is key to incubating idea
• Sometimes called "illumination"; the "Eureka" factor or "aha" moment
• When the solution to your creative problem becomes available to your conscious mind
• Compare ideas and product prototype to the goals determined in the preparation stage; compare insights with products and
ideas encountered in preparation
• Validating the ideas through prototypes (e.g. new menu items, new inclusive to packages, new operations and food
production procedures, etc.)
• Actual production
• Transform idea into viable reality
It is worth noting that people create brilliant ideas every day, but not all of those ideas are pursued or
made into reality. That is why entrepreneurs should not only be creative but also innovative so that creative
business ideas don’t remain as ideas but are made into actual products and services.
According to marketing guru Guy Kawasaki, innovative products have Five Key Qualities: deep,
indulgent, complete, elegant, and emotive.
❖ Deep – Deep products anticipate the users’ needs before they have them
❖ Indulgent – Indulgent products make the user feel special for having purchased the product or for having
found the service
❖ Complete – Complete products include services wrapped around it; users understand the product well
enough to be comfortable using it
❖ Elegant – refers to intuitive design that immediately makes sense to the customers
❖ Emotive – products that evoke the intended emotion and demand to be admired and shared
Entrepreneurial Option: Start Up, Buy Out, or Franchising
We have established that entrepreneurs are risk-takers. But a sensible entrepreneur knows that before he
or she takes on the risks of an opportunity, he or she has to make the necessary investigation and evaluation
before deciding whether or not to pursue the opportunity. This is true in choosing the most suitable
entrepreneurial option.
A. Starting a New Business
Start-up businesses are ventures that are in their initial operations, created by
entrepreneurs who believe that there is a demand for the product/service that the business offers
Advantages
Disadvantages
Lower start-up costs
High commitment
–depending on the type of business you start, costs may be
lower than a franchise where there is no up-front purchasing fee or supply costs
– starting your own business requires a higher
commitment of time and energy
Independence
Delayed profitability
– you make all decisions
and create all business systems
– where the market may not already be
established, it may take longer to become profitable
Site selection
Limited financing
– you choose where to
locate your business and what marketing
procedures to follow
– financing for a
new business is more difficult to
obtain
No baggage
takes time and energy to create an
image, build patronage, works out
new system and procedures, and
reach a breakeven level of sales
– there is no history to overcome when you start a new venture
Easier to innovate and make further
improvements.
great uncertainty about the market
demand for the new product or
service
Excerpt from “5 Filipino start-ups that showcase a different Philippines” by Lyra Reyes
Tagline: Trips by travelers like you.
When April Cuenca and Ragde Falcis started FlipTrip back in 2014, the idea was to give
travellers a platform where they can customise their own trips to off-the-beaten-path destinations
in the Philippines. A couple of years in, though, they noticed that travellers don’t create their own
trips; they join the trips already organised by the company.
Realizing that trip joining is a growing trend in the adventure travel market, FlipTrip pivoted their
model, and Tripkada was born.
Launched in August 2016, Tripkada offers trips created, organised, and led by their curated
community of travelers. The trips feature smaller and lesser-known destinations where their
travel groups can interact with the locals, creating livelihood opportunities and promoting
sustainable tourism development in local communities.
Tripkada collaborates with various organisations to create its trips. They also encourage
individuals to become part of their community of trip organisers. Travellers can join their trips
through the website or by downloading their app.
B. Buying an Existing Business
For some entrepreneurs, they prefer to acquire an existing business because they pose
lesser risk than starting a new one from scratch. Buying a business means taking over an already
operating venture, together with its establish customer base, its reputation and its employees
who are already familiar with every aspect of the business.
Advantages
Disadvantages
Significantly reduce start up time
Business might actually have a bad
reputation
Facilities and technology are already
available
Significant changes might have to be
necessary
Market for the product/service will have
already been demonstrated
Success of the business might
depend on the skills and experience
of the previous owner
Brand is already established
Business may have legal problems
Probable immediate cash flow because of
existing inventory and receivables
Hidden problems relating to business
and receivables actually prove to be
uncollectible
Excerpt from “Hospitality Entrepreneur Acquires Historic Rise Hall”
by Steve Everett
Luxury wedding and events venue Rise Hall has been acquired by Leeds-
based hospitality entrepreneurs Daniel Gill and Helen Gill.
Gill, founder of award-winning event and catering management business
Dine, has acquired the Grade II*-listed building near Beverley from property
developer and TV personality Sarah Beeny and her husband Graham Swift Dan,
together with his wife Helen, will continue to operate the prestigious, 29- bedroom
building as a luxury wedding and events venue.
Dan and Helen are well-respected in the hospitality industry, having
successfully built Dine into a £3m turnover business. Dine operates at luxury
venues throughout the UK including its flagship venue, The Mansion at Roundhay
Park in Leeds.
Dine will work alongside the existing team at Rise Hall, including manager
Stuart Ward, who remains with the business.
C. Franchising
A franchise or franchising is a legal agreement between two parties, a franchisor and a
franchisee, wherein the franchisor grants the franchisee the right to operate under the
franchisor’s trade name and business systems in exchange for an initial fee to set up the business
and a continuing fee thereafter.
Advantages
Disadvantages
Lower failure rate - the business is
already successful and a proven idea
You cannot run the business
independent of the franchisor
Buying Power – business will benefit the
collective buying power of the franchisor
(the parent company) because they can
buy supplies in bulk and pass down the
savings to franchisees
Ongoing costs – a percentage of
your business’ revenue will be paid to
the franchisor each month; other
additional fees like cost of advertising
may be charged
Profits – franchise business are
immensely profitable
Reputation can suffer if other
franchisees have bad reputation
Supported by the franchisor which give
you access to training, information and
resources
Costs – franchising well-known
business can be quite expensive
Market exposure is higher because the
business is already an established brand
Ongoing Support – Not all franchisors offer the same assistance in setting up the
business and operating it successfully
Systems are already in place
Buying a little-known and/or inexpensive franchise can be a real gamble
Excerpt from Manila Bulletin’s article, “Big hotel franchise moves HQ to
PH”,
by Bernie Cahiles-Magkilat
ZEN Rooms, the leading budget and mid-range hotel franchise in the
region, is moving its headquarters to the Philippines drawn by the country’s rosy
economic and tourism prospects aside from being a natural hub for the hospitality
industry.
“We are placing the heart of our company in one of the most hospitable
nations in the world. By having our headquarters in the Philippines, we believe we
can build the strongest hospitality team in the region,” said ZEN Rooms co-founder
Nathan Boublil. ZEN recognizes the country’s growing economy and potential for
innovation. Boublil noted that even in a time of global uncertainties, the Philippine
economy remains bullish with GDP growth of 6.2 percent in the 3rd quarter of
2019.
Business Plan Vs.
Feasibility Study
If you're considering starting a business, you'll need
both a feasibility study and a business plan. Both documents
should be written after conducting thorough research and
critical thinking, and conveyed in formats that others can
understand. That way, you can show both to people whose
opinions you value as well as to those you hope will invest in
your idea. Before you begin, it's important to define and
distinguish between a feasibility study and a business plan.
Defining Both Terms
A feasibility study is done before starting a business, when you have the idea for the business but you want to
make sure it's feasible, or advisable. Put another way, is it worth your time, effort and money to create this business?
Several different professionals may contribute to the study, such as an accountant, entrepreneurs who have opened
successful businesses, and Realtors who advise on the worth of the location and pricing, comparing similar
businesses in the area.
A business plan details how the business will operate. It assumes your feasibility study has been completed
and it was determined the idea is viable. Now you're going to spell out your financial and other objectives, the
methods you plan to use to achieve them, and your proposed organizational structure.
Consider the Similarities
Comparing the similarities between feasibility study and business plan is important because both are used in
different ways to help you create a profitable business. Similarities between the two documents include:
•Timing: Both are initially done before the business opens, and can be conducted again later to determine the next
steps on future ideas.
•Input: Both include input from several individuals or departments that have different skills.
•Format: Both include other documents that are pulled together in order to compose the report.
•Components: Some of the issues analyzed are similar, including examining the target market, market conditions and
financial costs.
•Usage: Both help the organization's management make decisions, and can also be shown to potential investors.
Understand the Differences
It's equally important to understand the difference between feasibility study and business plan. They are not the
same, and one cannot substitute for the other. Differences include:
•Purpose: Feasibility studies determine whether to go ahead with the business or with another idea, whereas
business plans are designed after the decision to go ahead has already been made.
•Methodology: Essentially, feasibility studies are research projects, whereas business plans are projections for the
future.
•Risks: Feasibility studies determine the risks associated with the idea, whereas business plans explain how
management will deal with the risks so that it will make a profit.
•Cost: Feasibility studies can require hiring outside professionals with expertise who will conduct thorough studies,
whereas business plans are written by employees of the business, as part of their jobs.
Conducting a Feasibility Study
If you're doing the feasibility study yourself, conduct a complete competitive analysis considering the following:
•Product demand: Is there a need or want for your product or service? Is the need already being met, or is there
room for another product?
•Market conditions: Who would buy your product and where are they? Can you serve their location? Is the market
saturated, or is there room/need for more products?
•Pricing: What do current users pay for similar products? What do you need to charge so that you will be profitable,
and will consumers pay your price?
•Risks: What are the risks associated with your idea?
•Probability of Success: Can you reasonably overcome the risks to become profitable?
Writing a Business Plan
Writing a business plan may seem daunting, but if you take it step-by-step, it will come to fruition. The Small
Business Administration advises that business plans should include the following:
•Executive Summary: Include your mission statement, products and or services, some brief information about your
leadership team and key employees, as well as the location of your business. To attract investors, add current
financial information and projections for growth.
•Company description: Detail the problems your business solves; its target market; its competitive advantages,
compared with the competition, and anything else that makes your company superior to others: i.e., product awards
or recognition, big increases in sales, and so on.
•Market analysis: Perform competitive research of what other businesses are doing; their strengths and weaknesses,
and how and why your business will be competitive and successful in the market.
•Organization or management: State the legal status of your business, such as a corporation or partnership, and
include an organizational chart showing management levels, departments, and so on.
•Service or product line: State what you will sell or provide and describe the benefits of each. Explain any research
done, and any patents filed, and so on.
•Marketing and sales: Explain in detail your marketing strategy and how sales will be made.
•Funding request: If necessary, detail the amount of funding you’ll need for the next five years - specifically, what
you’ll do with the funds, and the terms you’re asking for.
•Financial projections: This is the business’s financial outlook for the next five years. Include current financial
statements, if the business is in operation.
•Appendix: This includes supporting documents or requested materials, such as resumes, product photos, letters of
reference, patents, licenses and so on.
Entrepreneurship
and the Entrepreneur
MSME and
Large Enterprises
MSME
Micro, small, and medium enterprises (MSMEs) play a significant role in the Philippine
economy due to their impact on employment, income, and overall economic development.
According to the Philippine Statistics Authority, MSMEs comprised 99.5 percent of all registered
business establishments in 2019. They generate 62.4 percent of the country's total employment,
contribute 36 percent of gross value added, and account for 25 percent of total exports.
MICRO
SMALL
MEDIUM
LARGE
PHP 3,000,000 or
less in assets
PHP 3,000,001 to
PHP 15,000,000
in assets
PHP 15,000,001
to PHP
100,000,000 in
assets
over PHP
100,000,001 or
more in assets
One to nine
employees
and 10 to 99
employees
and 100 to 199
employees
and 200 or more
employees
Almeda and Pobre (2012) revealed that most local MSMEs are managed by their owners,
especially among microenterprises, and most (63%) are led by women. Out of 1,740 respondents
in the study, 30 percent started their business with a capital of less than PHP 150,000. Thus,
most of them are microenterprises, such as sari-sari stores and other businesses that offer goods
and products that are readily available.
STRUGGLES OF MSME FOR GROWTH AND EXPANSION
MSMEs often struggle to access affordable
financing options. Financial institutions may perceive
them as risky borrowers due to their small size, lack
of collateral, and limited financial track record, which
may hamper their growth and expansion. Raquiza
(2022) noted that they have minimal credit access
from formal lending institutions. They seldom
approach commercial banks due to their high-interest
rates, high minimum loan requirements, voluminous
requirements, short repayment periods, and difficulty
in restructuring loans.
Large Enterprises
Characteristics of Large Enterprises
Some of the main characteristics of large enterprises are:
• They're usually international.
• They're
usually
international.
Although
large
enterprises are typically based in one
country, they tend to operate in many
other countries throughout the world.
Depending on the exact nature of the
business, it can be managed remotely
from its headquarters or have
branches in multiple geographical
locations.
Large Enterprises
Characteristics of Large Enterprises
Some of the main characteristics of large enterprises are:
• They have highly specialized departments.
They have highly specialized departments. Large organizations have distinct departments, such
as human resources, finance, marketing, sales and research and development. They're
independently managed by department managers and employ specialists in their fields.
Large Enterprises
Characteristics of Large Enterprises
Some of the main characteristics of large enterprises are:
• They're usually organized as corporations.
•They're usually organized as corporations. Unlike small and mid-market enterprises, which are
usually directly owned by a person or group of people, large organizations are usually organized as
corporations to separate their tax burden from their owners.
•Their owners don't usually run them directly. Corporate owners don't usually manage their
companies. Instead, they appoint a board of directors by vote and task them with making all
business decisions.
•They tend to appeal to a wider range of consumers. While smaller companies can generate a
profit by focusing on a single product or service, a small geographical area of a specific customer
type, large organizations usually appeal to a wide range of consumers and constantly look for ways
to sell their goods and services to new markets.
Large Enterprises
Characteristics of Large Enterprises
Some of the main characteristics of large enterprises are:
• Their owners don't usually run them directly.
Large Enterprises
Characteristics of Large Enterprises
Some of the main characteristics of large enterprises are:
• They tend to appeal to a wider range of consumers
Sustainable
Business Theory
Social Contract Business Theory
Social contract theory is an ancient philosophical idea that
states that an individual's ethical and political obligations relate
to an agreement he has with every other individual within a
society. The agreement can be written, as in the form of laws, or
it can be a tacit agreement, an unspoken or unwritten agreement
of social norms and customs. In business, social contract theory
includes the obligations that businesses of all sizes owe to the
communities in which they operate and to the world as a whole.
This involves corporate philanthropy, corporate social
responsibility and corporate governance.
Stakeholder vs Shareholder Theory
Stakeholder theory
Stakeholder theory
Stakeholder theory is based on the idea
that businesses have a moral responsibility to
consider the interests and well-being of all
their stakeholders, not just their shareholders.
Stakeholders are any groups or individuals who
can affect or be affected by the business's
activities and decisions. According to
stakeholder theory, businesses should balance
the needs and expectations of their
stakeholders and create value for them in a fair
and sustainable way.
Shareholder theory
Shareholder theory
Shareholder theory is based on the idea that businesses have
a legal and economic obligation to maximize the profits and returns
for their shareholders, who are the owners of the business.
Shareholders are the primary and most important stakeholders, and
their interests should prevail over those of other stakeholders.
According to shareholder theory, businesses should pursue their
own self-interest and efficiency, and any social or environmental
concerns are secondary or irrelevant.
Triple Bottom Line
What Is the Triple Bottom Line (TBL)?
In 1994, John Elkington—the famed British
management consultant and sustainability
guru—coined the phrase "triple bottom line" as
his way of measuring performance in corporate
America. The idea was that a company can be
managed in a way that not only makes money
but which also improves people's lives and the
well-being of the planet.
The 3 Ps of the Triple Bottom Line
According to TBL theory, companies should be working simultaneously on these three bottom
lines:
Profit: This is the traditional measure of corporate profit—the profit and loss (P&L) account.
People: This measures how socially responsible an organization has been throughout its history.
Planet: This measures how environmentally responsible a firm has been.
Profit
In the context of the triple bottom line, profit can mean more than just how much money a
company makes. A company must ensure it earns its income in ethical, fair manners. This includes
soliciting business partners and vendors with which it aligns philanthropically. It also defines how a
company develops its strategy or financial operating plan. For instance, profit also ties to a company's
responsibility to pay its lenders, creditors, and employees what is due to them and to have a sense of
financial responsibility for these obligations.
Some users of the triple bottom line may also say profit refers to not only a company's profit but the
profit of those around the company. This specifically refers to the community in which the business
operates. This may include:
• Ensuring the company is paying its fair share of local, state, or federal income taxes on a timely basis
• Making sure the company is fostering economic wealth within its community by shopping local or
utilizing small businesses.
• Committing to financially investing in the community through partnerships, developments, or corporate
sponsorships.
People
In the context of triple bottom line, people refers to every individual that is in touch with a company. This
includes but is not limited to:
Employees. This means ensuring workers receive a fair wage in a safe environment that encourages
professional development.
Vendors. This means ensuring a diverse set of suppliers are used and prioritizing small businesses or
minority-owners when appropriate.
Customers. This means ensuring customers have fair access to products and their feedback regarding
equity or safety are considered.
Planet
The largest deviation from purely financial reporting relates to reporting on environmental impacts.
Often, a company must be forced between a lower-cost option or a more environmentally-friendly
alternative. A company may also choose between a less favorable alternative; for example, ecofriendly transit will likely be slower than aircraft.
Instead of reporting a company's positive changes to the planet, it is often much easier to assess the
impacts of the alternatives elected by the company. Imagine a company that redesigned its
distribution channels to reduce its energy use; such an activity would be reported as saving a certain
amount of greenhouse gas emissions.
Examples of Companies That Subscribe
to TBL or Similar Concepts
Today, the corporate world is more conscious than ever of its social and environmental
responsibility. Companies are increasingly adopting or ramping up their social programs. Consumers
want companies to be transparent about their practices and to be considerate of all stakeholders. Many
consumers are willing to pay more for clothing and other products if it means that workers are paid a
living wage and the environment is being respected in the production process.
The number of firms—of all types and sizes, both publicly and privately held—that subscribe to the
triple-bottom-line concept, or something similar, is staggering. Here are a handful of these companies:
Ben & Jerry's
Ben & Jerry's is the ice cream company that made conscious
capitalism central to its strategy. As stated on its website, "Ben & Jerry's is
founded on and dedicated to a sustainable corporate concept of linked
prosperity."
The company opposes the use of recombinant bovine growth
hormone (rBGH) and genetically modified organisms (GMOs) and fosters
myriad values such as fair trade and climate justice.
LEGO
The LEGO Group (privately held; Billund, Denmark)
has formed partnerships with organizations like the
nongovernmental organization (NGO) World Wildlife
Fund. In addition, LEGO has made a commitment
to reducing its carbon footprint and is working
towards 100% renewable energy capacity by 2030.
Mars
Mars Incorporated (privately held; McLean, Va.) has
a sustainable cocoa initiative called Cocoa for
Generations. It requires cocoa farmers to be fair
trade certified to ensure they follow a code of fair
treatment to workers providing labor. In exchange
for
certification,
Mars
provides
productivity
technology and buys cocoa at premium prices.
Starbucks
Starbucks Corporation (SBUX), has been socially
and environmentally focused since its inception in
1971. The company has hired more than 30,000
veterans since 2013 and is committed to hiring
5,000 more per year going forward.
Midterm
Requirement
Your are to have a Case Study about a successful local
entrepreneur. Put into details his/her entrepreneurial journey.
How did he/she became an entrepreneur, what inspired
him/her for venturing into the field, his/her struggles and
breakthroughs.
This will be done by the same group and will be presented after
Midterms. The document will also be submitted on the day of
the presentation. Format will be A4 sized bond paper, font size:
12, font style is Arial.