MODULE 1: INTRODUCTION TO ENTREPRENEURIAL MANAGEMENT

LESSON 1: CONCEPT OF ENTREPRENEURSHIP

 Entrepreneur – the originator or the initiator of an enterprise.

 Entrepreneurship – the process of bringing together creative and innovative
ideas. (Appleby, 1989) Entrepreneurship as seemingly a discontinuous process
of combining resources to produce new goods and products. (Stoner&Freeman,
1992)
 Entrepreneurship – attributed to Gordon Pinchott, an American who founded a
school for entrepreneurs to help managers from large corporations to take
responsibility for creating innovations and turning ideas into profitable reality.
 Intrepreneur- An employee or manager who is innovative and creative in an
existing organization.
 Patriotism – the spirit of supporting loyally one’s nation.
 Major Thrust of Patriotism – is to refrain from corruption and sabotage or
subversion.
 Relationship between entrepreneurship and patriotism:
1. Creating jobs without oppressing fellow citizen workers, the entrepreneur will
be expected to provide good working conditions and be a worker – centered.
2. Charging fair and affordable prices
3. Producing quality products which compare with international standards.
4. Conserving natural resources.
5. Practicing good ethics and social responsibility in business and the
community
6. Generating foreign currency without externalizing it or taking it to the black or
parallel market for exchange, but to the registered banks for official exchange.
7. Generating government revenue through paying corporate tax.
8. Playing supportive role to the giant firms by being subcontracted in
construction, manufacturing and distribution.
9. Reducing anti-social activities such as theft, robbery, murder, promiscuity by
creating employment for self and other citizens.
10. Reducing rural to urban migration by creating employment opportunities in
rural areas.
 Entrepreneurial Characteristics – entrepreneur is the most important person,
has the responsibility to initiate, manage and see the success of the business.
The success of a business depends on entrepreneurial or personal
characteristics.
1. Action Oriented – they want to start producing results immediately.
 2. Success oriented/Optimism – All they think about is how they are going to
succeed and not and not what they are going to do if they feel. They are
always positive/optimistic, not negative/pessimistic.
3. Perception of opportunity or opportunity seeking – they are able to see
and act on new business opportunities.
4. Moderate risk taking- they are expected to be able to take moderate and
calculated risks. They should not be gamblers and high-risk takers.
5. Goal setting – They have the ability to set goals which are specific,
measurable, achievable, realistic and time bound (SMART) basing on their
strengths, weaknesses, opportunities and threats (SWOT).
6. Long-term perspective- They should be able to accommodate hurdles,
difficulties and temporary failures in business.
7. Self-motivation/self-esteem/Self-faith/Self confidence
8. Innovativeness/ Initiative ness/ Creativeness – have the ability to come up
with new products, methods or techniques of production and the
accompanying machinery and tools.
9. Adventuresome ness – they are interested in testing out and experimenting
phenomena in an endeavor to come up with solutions to the needs and wants
of people.
10. Commitment –they are willing to put your business before almost everything
else.
 Entrepreneurship Environment – split into two. The macro- environment &
microenvironment.
 Macro – environment – also known as external environment. It indirectly affects
the business activities positively or negatively. It involves PEST analysis and
natural phenomena.
 PEST – stands for political, economical, social and technological environmental
variables.
 Political Environment- may provide initiative solutions towards the success of
the entrepreneur especially where the political climate is not stable.
 Economic Environment- the macroeconomics focuses on the aggregate
economic conditions that may affect the business either positively or negatively.
 Social Environment- this relates to the cultural values, beliefs and artifacts of a
group of people or society.
 Technological Environment- Entrepreneurs are expected to be well versed with
the Internet systems for effective communications with suppliers, customers and
the publics in general.
 Natural Phenomena – these are the situations or conditions which can
adversely or positively affect the entrepreneur’s activities such as road accidents,
fire outbreaks, floods and all duhh hago hahahaha
 Microenvironment- this relates to those conditions which directly affect the
entrepreneurial investment activities either positively or negatively.
 Employees- These are the people who work for the entrepreneurs and those
who are likely to work for him/her (potential employees). If the employees are not
treated well, the entrepreneur will lose them to his/her rivals.
 Providers of finance- these are the financial institutions which supply financial
services to the entrepreneurs.
 Customers- the people who make the business successful.
 Suppliers- the firms that supply the entrepreneur with raw materials.
 Government- entrepreneurs should respect and obey the law even where they
regard as not in their best interest.
 Competitors- These are the rivals of the entrepreneurs who produce substitute
products or the same products.
 ENTREPREPRENEURSHIP STRATEGIES
A. GROWTH STRATEGIES
1. Market Penetration – gaining more market share with the current
company is exposed to growing dimensions under intensive growth.
2. Market Development Strategy – company efforts to find or develop new
markets for its current products.
3. Product Development- in addition to penetrating and developing markets
for its current products.
B. INTEGRATIVE GROWTH- business sales and profits can be increased
through backward integration, forward integration or horizontal integration.
 Backward integration- is when a company acquires one or more of its suppliers
to gain more control and generate more profit.
 Forward integration- is when the company acquires some wholesalers and
retailers especially when they are highly profitable.
 Horizontal Integration- is when a company acquires one or more competitors
provided the government policies allow. Example, monopoly and oligopoly.
C. DIVERSIFICATION GROWTH –the most favorable growth strategy if good
opportunities can be found outside the present business.

TYPES OF DIVERSIFICATION

1. Concentric Diversification – holds that the company could seek new

products.
2. Horizontal Diversification – holds that the company can produce totally
unrelated products.
3. Conglomerate Diversification- holds that a company seeks new business.
D. FRANCHISING – a system of distributing products/ services through
associated resellers.
 Business Ethics – refers to the rules/ principles that define right and wrong
conduct in business or at work to the publics or the organization.
EXAMPLES – using telephone for personal long distance calls, showing
favoritism, unfair dismissal.

ETHICAL POSITIONS

1. Utilitarian View of Ethics – relates to the decisions made solely on the basis of
their outcomes or consequences.
2. Rights View of Ethics – this calls upon individuals to make decisions consistent
with fundamental liberties and privileges.
3. Justice View of Ethics- this requires individuals to impose and enforce rules
fairly and impartially so there is an equitable distribution of benefits and costs.
IMPORTANCE OF GOOD ETHICS
- Corporate image is built or improved
- Efficiency and productivity is enhanced.
- Sales and profits are boosted.
 Social Responsibility- is a broader concept that also covers business ethics.
 Charity Principle – the doctrine of social responsibility requiring more fortunate
individuals or entrepreneurs to assist less fortunate.
 Stewardship Principle- Biblical doctrine
 Customer Care- the manner in which customers are treated by the business.
Also defined as meeting needs and creating comfort.

TEN TIPS FOR CUSTOMER CARE

1. Reliability – refers to the consistency of performance and dependability.
2. Responsiveness-refers to the willingness.
3. Competence - refers to the possession
4. Accessibility – refers to the degree of approachability
5. Courtesy – refers to the politeness, respect, consideration and friendliness.
6. Communication - keep your costumer well informed.
7. Credibility- refers to being trustworthy and faithful
8. Security – customers should be protected from danger.
9. Knowledge of customer- the entrepreneur should know the client specific
requirements.
10. Tangibles- this could include the physical evidence. This could also include the
appearances of your personnel.
 SBU – Strategic Business Unit
 Build – increases SBU’s market share.
 Hold- preserves SBU’s market share especially for strong cash flow.
 Harvest- the object is to increase the SBU’s short cash flow regardless of long
term effects.
 Divest – dogs and question marks.
FORMS OF PARTNERSHIP
1. Sole Proprietorship – owned and run by one person.
2. Partnership - commercial undertaking set up and run by at least two people
but not more than 20.
3. Private Limited Company- it is one of the joint-stock companies where at
least two but not more than fifty people come together to run a business with
the main aim to make a profit.
4. Public Limited Company- it is one of the joint-stock companies where at
least two persons associate to form a common stock (capital) for profit. They
must appoint an auditor.
5. Cooperatives- a form of business where at least ten members have a
voluntary agreement to work together as equals for a common goal or
ALL ABOUT PARTNERSHIP FORM OF BUSINESS
 Ordinary partnerships- the liabilities of partners are unlimited.
 Extraordinary partnerships- usually called special or limited partnerships.
1. Partnership Encommandite- the business is carried out by the disclosed or
active partners in their own name alone.
2. Anonymous Partnership- contributes their agreed shares to the business
capital but take no part in the running of the business.
 SDECO - Small enterprise Development Corporation
 AFC- Agricultural Finance Corporation
 AAG – Affirmative Action Group