ADELANTE, PATRICK DALE S.

ALINSUB, JEMERSON C.
ALAGAR, GEORGE WILLIAM T.
ALCARAZ, JERWIN VINCENT M.
BSEE -4
CHAPTER 1
 To achieve economic development goals, proper management of the following
elements is necessary:

• Human Resources
• Natural Resources
• Capital Formation
• Technology
 It refers to the economic activity of a person who STARTS, MANAGES, and ASSUMES
the risk of a business enterprise.

 The person who undertakes Entrepreneurial Activities.

 The Entrepreneur identifies an economic need, considers offering a business
solution, proceeds to assemble the resources required, and assumes the risk of
either suceeding or failing.
An Example of Entrepreneurship Activity

Entrepreneur’s Problem At Hand Entrepreneur’s Action

Concern
1. Identifying an economic 1. High income families are not 1. Establish a high standard
need. satisfied with the services school for high school students.
provided by high school in the
area
2. Assembling resources 2. Resources must be made 2. Acquire funds, hire people,
required. available. construct buildings, and the
like.

3. Assuming risk. 3. Venture must be made. 3. Prepare project study,

advertise, and maintain good
relationship with employees
and customers and among
others.
If all the requirements in a capitalist economy are in place, the entrepreneur can assume his
assigned role in the development of the economy. A review of the contributions of entrepreneurs
will reveal no business, big or small, started without the hand of the entrepreneur. Even if many
of these businesses failed to survive, still a sizable number developed and proceeded to make
the capitalist economy a viable concern.

This is made possible because the surviving enterprises are responsible for providing the
following:

1. products and services for customers and producers;

2. employment;
3. taxes;
4. demand for suppliers' products and services; and
5. training facilities for future entrepreneurs.
When a consumer is making a decision on which brand of soap he is going to buy, for
instance, he will be choosing from as many as 10 different brands.

The consumer had to produce his own requirement. and this does not refer to soaps alone
but other products as well.
Services which were not previously available are now at the beck and call of the
consumer.

The fast food canteen at the corner, parcel delivery, communication through cellphones,
cable television, short-term credit through credit card, money remittance, and the like,
are among the many services made possible by entrepreneurs.
The taxes paid to the government in the form of licenses, fees, and permits applicable to
the enterprises, as well as income taxes applicable to the employees and entrepreneurs,
easily amount to billions of pesos. The taxes collected are, in turn, poured into
development projects of the government.

The entrepreneurs also make sure that the suppliers will have a ready market for their
products and services. The retailers, for instance, assure the viability of big companies
like San Miguel Corporation and Purefoods Company. Hollow block manufacturers utilize
the output of big cement factories.

Lastly, business enterprises provide a training ground for future entrepreneurs.

A number of entrepreneurs were former employees of enterprising persons. Many of
them used their acquired skills in starting new businesses. Some even improved on the
entrepreneurial skills passed on them.
FIGURE : The Entrepreneur Task

Land Labor Capital

(Natural Resources) (Human Resources) (Financial Resources)

Entrepreneur

Production Process

Finished Goods and Services

In the attempt to make profits, the entrepreneur performs
the following specific functions:

1. to supply the necessary capital;

2. to organize production by buying and combining inputs like materials and labor;
3. to decide on the rate of output, in the light of his expectation about demand;
4. And to bear the risk inherent to the venture.

Any business enterprise must offer products or services to the buyers whether these
buyers are consumers or producers.

The products or services that will be sold to the buyers must be bought or manufactured.
In any case, there will be a need to hire the services of employees, laborers, and
managers, Equipment, furniture, and machinery must be acquired.
All of these will need funds which the entrepreneur must produce, in addition to whatever
fund reserves are required.

The next specific function of the entrepreneur is to assemble a production unit

complete with manpower and equipment, the quality and quantity of which have
been predetermined by him.

The entrepreneur will also determine and make decisions on the rate of outputthe
firm must produce. This will have to be tied up with demand. Finally, whatever risk
is involved in the entrepreneurial activity, he must suffer the consequence of losses
if he fails, but he will enjoy the profits as a reward if he succeeds.
The freedom of competition afforded by the capitalist economy serves to drive the
entrepreneur to innovate and get ahead of his competitors lest he is driven out of the
market. Buyers of commodities have a tendency to patronize innovative offerings of any
kind and if one wants patronage, he must remember this motivation. Innovation may be
defined as the introduction of a new method, procedure, custom, device, among others.

Innovation could be any of the following:

1. new product;
2. new process of production;
3. substitution of a cheaper material in an unaltered product:
4. reorganization of production, internal function, or distribution arrangement leading to
increased efficiency, better support for a given product, or lower costs; or
5. improvement in instruments or methods of doing innovation. Innovation may also be
viewed as the last stage in an important process consisting of the following:

• Invention - which refers to the discovery or devising of new products and processes;
• Development - which refers to the process by which the ideas and principles
generated from the stage of invention are embodied in concrete products and
techniques; and
• Innovation - which to the actual introduction of a new product or process.
Innovation, if it must be made successful, must provide value to the buyers over and
above those offered by competitors. To achieve this, innovation must reduce costs or
improve the quality of products or services offered for sale.

Examples of successful innovations are the following:

1. cordless microphone;
2. microwave oven;
3. cellular phone;
4. kung fu fight scenes developed by Bruce Lee in the movies;
5. karaoke music appliance;
A new venture connot remain as such forever. The entrepreneur must develop it into a
small business or make it grow into a mature and bigger company if he is to recoup the
cost of opening a venture and take advantage of the opportunities presented by a
mature business.

The transition from a new venture to a successful long-term enterprise consists of at least
four major stages. The stages are as follows:

• PRESART-UP STAGE:
• START-UP STAGE
• EARLY GROWTH STAGE; and
• LATE GROWTH STAGE
 The prestart-up stage happens when the entrepreneur starts to question the feasibility
of an idea, product, or service. He seeks answer to questions regarding potential
markets, production, and financing. This is a very important stage that the entrepreneur
must consider.

In the start-up stage , the following activities are undertaken:

• Formation of the business;

• Generation of necessary capital;
• Purchase of facilities and equipment;
• Constructing prototype products, and
• Testing the market
The early growth stage follows after establishing feasibility. Activities will be on a small
scale, i.e., selling to limited market with limited resources. If loses occur. It will naturally
be limited also. If the enterprise is successful at this stage, the option to move to the nest
stage can exercised.

The late growth stage is the final stage before the new venture matures into a stable
enterprise. This is when management is structured , long-term financing is established,
and facilities planning is undertaken.

This is also the stage where the skills of the entrepreneur is less needed. Instead, the
skilled manager begins to take over.
The Factors Of Production And Their Rewards

Factors of Production Economic Reward Limiting factor for the rewards

received
Land Rent Supply And Demand

Capital Interest Industry Rates/Government

Mandated Rates

Labor Wages/Salary Supply And Demand Legislation

Entrepreneur Profits Skills Of Enrepreneur

 In the race for winning the all-important consumer’s pesos, the business will have
to offer products or services that have certain advantages over the competition’s wares.
In the creation of a new venture the entrepreneur may be successful in offering
innovative products or services. At this stage, he will reap the profits for being ahead of
the competitors. This situation may be temporary because the competitor may attempt to
improve his position by making moves to outpace the entrepreneur in the race. The
competitor may either imitate or offer better innovations. If the competitor is successful,
the profits of entrepreneur will decline.
To be ahead again, the entrepreneur will consider offering newer and better
innovations. The cycle continues until one or both find a reason to stop.
Year Entrepreneur 1 Entrepreneur 2 Entrepreneur 3
1 introduce innovative inactive inactive
product

2 reap moderate profits introduce innovative inactive

product

3 maximize profits reap moderate profits introduce innovative

product

4 profit decline maximize profits reap moderate profits

5 introduce innovative profit decline maximize profits
product
 To many people, entrepreneurship means running a small business. New
business ventures, however, can also be undertaken on a large scale. Both small and
large business are confronted by the problems that are entrepreneurial in nature.
To effectively compete, business of whatever size must adapt innovation
approaches to its activities.
Examples of innovation:
1. Offering business services during sunday and holiday
2. Manufacture and sale of new products
3. Selling on a differed payment scheme.
 Small business have the advantage of switching to another business concept
whenever necessary. Large business cannot do the same without spending much. To
offset the disadvantage, however, large business have started to engage in
“entrepreneurship” where a person with entrepreneurial skills and is employed by
the corporation is tasked to launch new products. This person is responsible for
creating innovation of any kind in the organization.
 Entrepreneurship is an activity that assures the viability and growth of the
economy. Through entrepreneurship, goods and services are produced, employment is
provided to many people, taxes are paid to government, the products and services of
supplies are bought, and future entrepreneurs are provided with venues for training.
The entrepreneur’s task consists of assembling the resources consisting of land,
labor, and capital for the purpose of producing goods and services. The entrepreneur
also responsible for deciding on the rate of output his venture must produce. He also
bears the risk inherent to the venture. If the entrepreneur’s task appears to be a great
burden, the prospect of profits make it bearable.
 Innovation is an important aspect of entrepreneurship. It is defined as the
introduction of a new method, procedure, custom, device, among others.
New ventures must develop into small business or grow into a mature and
bigger company. This is because the entrepreneur must recover the cost of opening
the venture.
The transition from a new venture to a long-term enterprise consists of the
pre-start-up stage, start-up stage, early growth stage, and late growth stage.
The factor of production are rewarded accordingly and if the entrepreneur
is successful, he receives profits.
The entrepreneur cannot feel secure of continuous success in his venture.
There are competitors he must contend with.
Although entrepreneurship is generally regarded as a useful means of
running a small business, it is also conductive in maintaining the growth of large
corporations.
That’s all. Thank you…