2

Chapter 1
PERSPECTIVE OF ENTREPRENEURSHIP

At the end of this chapter, the students will be able to:

1. Define Entrepreneur/entrepreneurship/entrepreneurial mind
2. Discuss the characteristics of an entrepreneur
3. Identify the contributions and socio-economic benefits to the
economy
4. Explain the advantages and drawbacks of becoming Entrepreneur
5. Distinguish entrepreneur from a manager

What is Entrepreneurship?

Entrepreneurship refers to the economic activity of a person who

STARTS, MANAGES, and ASSUMES the risk of business enterprise.

It involves seeking opportunities for market, establishing and

operating a business out of the opportunity, and assessing its risks and
rewards through close monitoring of the operations.

Who is an Entrepreneur?

The word entrepreneur has a French origin and was coined from the
words entre, which means “between” and prende, which means “to
take”.
An entrepreneur is a unique individual who has the innate ability
and an extraordinary dedication to establish and manage business, and
acknowledging all the risks and reaping its rewards.

An entrepreneur identifies an economic need, considers offering

economic solution, proceeds to assemble the resources required, and
assumes the risk of either succeeding or falling.

`Positive Characteristics of an Entrepreneur

 3

1. Leadership 3. hardworking .
2. Optimism 4. creative
Core Characteristics of Entrepreneurs

Here are the most important or distinguishing traits or qualities that

entrepreneurs should possess.

1. Courage
2. Honesty
3. Integrity
4. Reasonable risk takers
(Entrepreneurs enjoy challenges, but they are careful and
calculating.)
5. hardworking
(Successful people always attribute their success to hardwork.)
6. Creative
(Entrepreurs are creative, innovative. They do things in new and
different ways.)
7. Leadership
(Entrepreneurs are leaders by the very nature of their functions.
Here are the essential leadership qualities: selfless dedication,
purpose and vision, courage, conviction, enthusiasm, integrity, tact,
and hardwork.
8. Positive Thinking
(Entrepreneurs are positive thinkers. They think of success and
bright sides)
9. Decision maker
(Entrepreneurs make decision. The success of their business
depends on their ability to make the right decisions.)

Decision-making has six distinct phases:

a. Identifying the problem
b. Gathering the data about the problem
c. Analyzing the data
d. Formulating alternative solutions
e. Selecting the best solution; and
f. Implementing the solution/decision
 4

10. Self-confidence
(Entrepreneurs have strong faith in their abilities)

In the attempt to make profits, the entrepreneur performs the

following specific function;
*supply the necessary capital;
*the production by buying and combining inputs like materials and
labor
*decide on the rate of output in the light of his expectation about
demand
*bear the risk inherent to the venture

Innovation may be viewed of an important process consisting of the

following:
1. Invention which refers to the discovery or devising of new
products and processes.
2. Development which refers to the process by which the ideas
and principles generated from the stge of invention ar embodied
in concrete products and techniques.
3. Innovation which refers to the actual introduction of new
products
or process.

New Ventures and Long Term Enterprise

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

1. Pre-start stage
2. Start-up stage
3. Early growth stage
4. Late growth stage

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

*formation of the business
*phase of facilities and equipment
*constructing prototype products
*testing the market

Examples of Innovation are the following:

 5

*offering business services during Sundays and holidays

*manufacture and sales of new products
*selling on a deferred payment scheme

Role of Entrepeurship in Socio-Economic Growth of a Country

Entrepreneurs play big role in driving a nation’s economic growth

and societal development. They inspire people to dream big and to push
the boundary of advancement. They initiate change in the way we work
and live for the better. And most importantly, they create jobs and fortune
for a nation.  They pull the process of economic development through
efficient use of resources, manpower, and finance. Their role is significant
in all types of economies—undeveloped, developing, and developed. 
Let’s take a closer look at how entrepreneurship contributes to a
nation’s economic development:

Creation Employment
Entrepreneurs are by nature job creators as opposed to job seekers.
When a person becomes an entrepreneur, there is one less job seeker in
the economy. In addition to that, that person provides employment or
multiple other job seekers. The job creation by new and existing
businesses is one of the basic goals of economic development. 

Encourages Better Standard of Living

Entrepreneurship is a key in raising the standard of living.
Entrepreneurs not only provide means for living through employment but
they also provide people’s needs and wants. They develop as well as
adopt innovations that lead to improvements in the quality of lives. The
boom in the high tech electronics, personal shopping experiences, luxury
cars and other products which have made our life easier are all a result of
this rise in our standard of living, thanks to the innovators and
entrepreneurs.

Initiate Chain of Support and Wealth Sharing

While establishing the business entity, entrepreneurs invest their
own resources and attract capital from investors, lenders and the public.
This mobilizes public wealth and allows people to profit from the success
 6

of entrepreneurs and growing businesses. This kind of pooled capital

results in wealth creation and distribution.

Enable Balanced Regional Development

Entrepreneur generally looks for places that are cheap to set up
business which are usually the least develop region.  These new
businesses and industrial units help in the development of the regions.
This eventually leads to infrastructure improvements including better
roads and rail links, airports, stable electricity and water supply, schools,
hospitals, shopping malls and other public and private services that would
not be available otherwise. 
Expanding Exports
As businesses grow, they eventually want to start exporting to
expand their businesses to foreign markets. It is considered an important
key factor of economic development since it provides access to bigger
markets which ultimately leads to currency inflows and access to cutting-
edge technologies and processes being used in more developed foreign
markets. 
Entrepreneurs not only invest their own capital but it also attracts capital
from the market. They make productive use of these savings and mobilize
them by turning it into a productive resource. The pooled financial
resource or capital is the basis of wealth creation in the economy, thus
contributing majorly to the socio-economic development of a country.
Conclusively, entrepreneurs play a very important role in a nation’s
development by starting new businesses, creating jobs, and contributing to
development in various key areas such as Gross Domestic Product (GDP),
exports, standard of living, skills development and community
development. 

Advantages and Disadvantages of Entrepreneurship

To everything in life there are advantages and disadvantages;

entrepreneurship is no exception. As a matter of fact, entrepreneurship,
evolves a lot of risk taking. Yet, it can pay off very well, with rewards
such as profits. The opportunity to be your own boss and make your own
decisions.
 7

Advantages

1. Excitement
Due to its high capacity for risk, there is a lot of adventure. It
develops excitement in entrepreneurs. It also develops positive
attitude to face challenges.

2. Originality
Innovative entrepreneurs tries to bring maximum quality and
natural products. Only a creative entrepreneur can offer a new
service or product that no one else has offered before.

3. Independence
Some wish to be their own boss and makes all the important
decisions themselves. Entrepreneurship provides opportunity to
think and to act independently.

4. Rational Salary
They are not being paid on what they doing but they earn money
for their efforts through profit. If they work hard earnings will
higher.

Disadvantages

1. Meeting Variable Cost

Starting your own business means that you must be willing to give
the security of a regular payment of cash for necessity.

2. Benefits
There are fewer benefit especially when your business is just
starting off.

3. Work Schedule
The work schedule of an entrepreneur is never predictable—an
emergency may come up in a matter of seconds. The day to day
activities of an entrepreneur changes from time to time.

4. Administration
 8

All the decisions of the business are made by the entrepreneur,

himself. In such a business, there is a chance for wrong decisions.
Such wrong decisions will lead to loss.

5. Incompetent Staff
Most of the time, the entrepreneurs find themselves working with
employees, due to shortage of experienced employees. It brings
wastage of raw materials and decrease in productivity.

Categories/Types of Entrepreneurs
The world of entrpreneurship these days has already evolved, and
new terms are coined to suit an entrepreneurs’ field of expertise. Here
as some:
Technopreneur is an entrepreneur who puts technology core of his
or her business model.

Social Entrepreneur is one who takes advantage of the country’s

social problems and turn them to profitable institutions with the intention
of helping the disadvantaged community rather than making a profit.

Intrapreneur is an entrepreneur in large company or corporation

who is tasked to think, establish, and run a new big idea.

Intrapreneurs s are usually the product managers or the business

development managers of a company.

Extrapreneur is an entrepreneur who hops from one company to

another to act as the innovation champion, providing creative and efficient
solutions.

Types of Entrepreneurs

1. Based on the type of Business

a. Trading Entrepreneur
*They procure the finished products from the manufacturers and
sell these to customers directly or through a retailer.
*They serve as the middlemen, the wholesalers, dealers, and
retailers between the manufacturers and the customers.
 9

b. Manufacturing Entrepreneur
*They manufacture products.
*They identify the needs of the customers, and, then, explore
the resources and technology to be used to manufacture the
products to satisfy the customers’ needs.

c. Agicultural Entrepreneur
*The entrepreneur who undertakes agricultural pursuits are
called agricultural enterpreneurs.
*They cover the wide spectrum of agricultural activities like
cultivation, marketing of agricultural produce, irrigation,
mechanization, and technology.

2. Based on the use of Technology

a. Technical entrepreneur
*These the entreprenrs who make use of science and technology
in their enterprise.

b. Non-technical Entrepreneur
*They are concerned with the use of alternative and imitative
methods of marketing distribution strategies to make their
business survive and thrive in the competitive market.

3. Based on Ownership

a. Sole proprietorship
*one who as an individual sets up a business enterprise.
*sole owner of the enterprise and bears the entire risks involved
in it, gets all the profit—called unlimited liability.
*Easiest and least expensive to set up

Advantages
*owner makes all the decisions, hours of business, and whom to
hire
*owner is the boss
*any profits belong to the owner
Disadvantages
*the owner may lack the ability to buy the right supplies, do
accounting, etc.
 10

*if the business loses money, so does the owner

*creditors can claim the personal belongings of the owner
*long hours of work
*if the owner is ill, the businessdoesn’ open

b. Partnerhip
*two or more individuals share cost and responsibilities
*terms of partnership is recorded in partnership agreement
*”silent partner” - partner that will front a lot of capital, but do
participatein business decisions—receive profits in return

Advantages
*two or more people share decision-making process
*One person may be better at one task than the other partner
*Sometimes its easier to borrow money if two people are
involved

Disadvantages
*share profits
*partners culd disagree
*friendship can be lost over time as a result

c. Corporation
*business with legal status
*owned by individuals, families or small groups
*ownership often broken into small unit, shares, which are sold
through stock exchange
*those who buy – shareholders
*since there are many owners, a board of directors runs the
corporation
*shareholders have limited liability, not responsible for debts
*get profits as dividends.

d. Cooperatives
*business owned by workers who use it
*run by the board of directors
*each member gets only 1 vote
*profit shared based on use
 11

4. Based on the Size of Enterprise

a. Micro entrepreneur
*one who an investment in plant and machinery of less than Php
3,000,001 and with less than 10 regular workers.

b. Small-scale
*one who an investment in plant and machinery of less than Php
3,000,001 up to 15,000,000 and with 10 to 99 regular workers.

c. Medium
*one who an investment in plant and machinery of less than Php
3,000,001 up to 15,000,000 and with 10 to 99 regular workers.

d. Large
*one who an investment in plant and machinery above Php 100M.

Distinctions between Entrepreneur and Manager

1. Motive
Entrepreneur Manager
The main motive of an But, the main motive of a
entrepreneur is to start a venture manager is to render t.he services
by setting up an enterprise. He in an entreprise already set up by
understands the venture for someone else i.e., the
personal gratification. entrepreneur.

2. Risk Bearing
Entrepreneur Manager
An entrepreneur being the owner A manager as an employee
of the enterprise assumes all risks does not bar any risk involved
and uncertainty involvedin running in the enterprise
the enterprise

3. Status
Entrepreneur Manager
An entrepreneur is the owner of A manager is an employee in the
the enterprise. entreprise owned y the
 12

entrepreneur.
4. Rewards
Entrepreneur Manager
The reward an entrepreneur Manager gets salary as reward for
gets for bearing risks involved the services rendered by him in the
in the enterprise is profit which enterprise. Salary of a manager is
is highly uncertain. certain and fixed.

5. Qualification
Entrepreneur
An entrepreneur needs qualities
and qualifications like high
achievement motive, originality
in thinking, foresight, risk
bearing bility, and so on.
Manager
A manager needs to possess
distinct qualifications in terms of
sound knowledge in management
theory and practice.

6. Innovation
Entrepreneur Manager
An entrepreneur himself thinks On the contrary, what the
ove what and how to roduce manager does is simply to
goods to meet the changing execute the plans prepared by
demands of the customers. the entrepreneur. Thus, a
Hence, he acts as an innovator manager simply translates the
also called a “change agent”. entrepreneurs’s ideas into
practice.
 13

Assessment Questions
I. Modified True or False. On the blanks provided, write T if the
statement is True; if False, change the underlined word or phrase to
make the sentence True and correct.

___________1. The manager assumes all the risks and uncertainties involved in
running an enterprise.
___________2. When a person becomes an entrepreneur, there is one less job
seeker in the economy.
___________3. The manager simply translates the entrepreneurs’ ideas into
practice.
___________4. Uncertainty is the very essence of entrepreneurship.
___________5. Entrepreneurs play a big role in driving the nation’s economic
growth and societal development.
___________6. The entrepreneur may not necessarily possess the technical
know-how of the business he is venturing on.
___________7. A manager needs to possess qualities and qualifications like
originality in thinking, foresight, risk-bearing abiity, etc.
___________8. The success of a business depends on the entrepreneur’s ability
to make right decisions.
___________9. An intrapreneur takes advantage of the country’s social problems
and turns them to profitable institutions o helping the
disadvantaged community rather making profit.
__________10. MSMEs (Micro, Small and Medium Enterprises) provides the
economy with continuous supply of ideas, skills, and innovation
to promote competition and the efficient allocation of scarce
resources.

II. MULTIPLE CHOICE. On the space provided, write only the letter of
the best answer.
_________1. It is a type of innovation aimed to develop new products with some
technological changes.
a. Technological c. breakthrough
b. Ordinary
________ 2. It is an advantage of small business owners since they are the boss
themselves.
a. personal satisfaction c. financial rewards
b. independence
 14

________ 3. The following are roles of entrepreneurs in the society. Which

does not belong to the group?
a. acts as mediator c. allows money to circulate
b. nurtures healthy competition
________ 4. It is one of the advantages of entrepreneurship to offer new service
or product that no one else has offered before.
a. excitement c. independence
b. originality
________ 5. It is the ability of an entrepreneur to see/do things in a new and
different way.
a. integrity c. decision-maker
b. creativity
________ 6. He is a uique individual who has the innatee ability and dedication
to establish and manage business.
a. entrepreneur c. manager
b. adventurer
________ 7. An entrepreneur who hops from one company to nother to ac as
innovation champion.
a. intrapreneur c. social entrepreneur
b. extrapreneur
_________ 8. Entrepreneurs who put technology as their business model are:
a. technopreneur c. intrapreneur
b. social entrepreneur
_________9. Successful people always attribte their success to:
a. positive thinking c. hardwork
b. tack
________ 10. It is a distinguishing trait of an entrepreneur to enjoy challenges but
being careful and calculating.
a. risk taker c. leadership
b. innovative

III. ANALYSIS/DISCUSSION (15 pts)

T Considering the present pandemic situation and being convinced that the
best way to get rich is to work for yourself, you are thinking of starting your own
business. You have an idea and your parents promised to give you 1M to start up.
But there is a downside: to start and manage your own business, you’ll have to
drop out from college. What financial risk should you consider in making
decision? What are the chances for succeeding with your plan? Are you willing
to take the financial risk needed to start a business? Why, or Why not? Are you
 15

really likely to make more money running your business than working for
someone else?

ASSIGNMENT
Beyond the Classroom…
Choose and interview an entrepreneur in your community. Inquire
for the following:
1. What’s the story behind the business?
2. How well does the entrepreneur fit in the characteristics
described in this chapter?
3. What advantages and disadvantages does the owner see in
owning a business?
4. What advice would he/she offer to someone considering
launching a business?