Study Guide in IC2 - Entrepreneurship Module 2: Unit 2 - ECONOMIC DEVELOPMENT AND

ENTREPRENEURSHIP

Module No. 2

Unit 2 – ECONOMIC DEVELOPMENT AND ENTREPRENEURSHIP

MODULE OVERVIEW

In economic development, the bottom line is the quality of the people of a given country. Knowledge,
skills and values are the main determinants of economic growth. Needless to say, values constitute the
key to economic success of any nation. The Japanese are risk takers, Japan a prosperous and self-reliant.
Such entrepreneurial qualities have made Japan a prosperous nation. But above all, the Japanese love
their country- including its culture traditions, institutions and products. This chapter presents major
topics, such as the economic history of Philippine Development, entrepreneurial economy, economy
priorities and fundamental problems of the economy, among others.

LEARNING OBJECTIVES

In this unit the student should be able to:

a. Discuss and explain the scope of economic development and entrepreneurship; and
b. Examine the theories for future entrepreneurial utilization

LEARNING CONTENTS

The national economy is composed of business enterprises, households and the government. These are
the major sectors of the economy. The strength or weakness of one sector affects the other sectors
because of their interdependence. However, it is the government which provides the leadership in
improving the economy.

Basically, we have a market economy or free enterprise economy. This means there are economic
freedoms, like free competition, free choice of investments, and prices are determined by the interaction
between demand and supply. The role of the government is to extend financial and technical assistance,
and to formulate policies that are conducive to economic growth.

So, let us now tackle where shall it all started.

PHILIPPINE ECONOMIC DEVELOPMENT

About 250, 000 to 300, 000 years ago, there was already inhabitants in the Philippines. They came from
other countries in Asia through the land bridges. Over the long years, many other foreign groups as
settled in the Philippines. They lived by hunting, fishing and food gathering. Later on, more civilized
migrants introduced primitive agriculture and handicrafts. The barter system was also practiced
throughout the century. This time, the people were no longer nomadic. They established permanent
settlements.

As early as the 10th century, there was already trade with the Arabs. Three hundred years later, the
Chinese dominated the trade from Batanes to Sulu. Such foreign trade created new communities in bay
areas and in places near the major rivers. Santa Ana is an example. Also, foreign trade expanded domestic
trade. Local traders went as Malacca, China and Borneo to conduct their businesses. They paid taxes to

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the Ming Emperor to be able to enter Chinese ports.

THE COLONIAL RULE

The Philippine became the slave of three colonial masters: Spain, United States and Japan. For more
than three countries we were under Spanish rule and about half a century under the American regime,
the Chinese dominated the retail trade business even during the Spanish time. The Chinese clustered
around Intramuros- which literally means,” city within the walls” – the Spanish colonial capital. Tondo,
Binondo and Santa Cruz were inhabited by the Chinese. Parian (near the site of the Post Office building)
was the commercial center. The only economic contributions of the Spanish rule were the encomienda,
galleon trade and tobacco monopoly. All these benefitted the colonial masters while the Filipinos were
exploited.

Under the American regime, many Filipinos thought that the coming of the Americans was a great
blessing. At that time, the tremendous of factories in the United States created big problems. Where to
sell their surplus factory products and where to get their raw materials were the big problems. To solve
these problems, the United States colonized new territories like the Philippines.

To control Philippine trade, the United States set up free trade through the Payne- Aldrich Act in 1909.
All U.S. goods in unlimited quantities entered the Philippines free of tax. Philippine products also
entered the United States tax free, but only primary products like sugar, tobacco, coconut and abaca. To
complete U.S. economic exploitations, our Philippine economy was designed for agricultural
development, not on industrial development which is the economy of the rich countries.

Likewise, Japan invaded the Philippines and other Southeast Asian countries for economic reasons. It
had problems such as population explosion, shortage of raw materials and surplus of factory products.
Japan could not penetrate the world market due to trade barriers. It sold the idea of Co-prosperity Sphere
to Southeast Asian countries. This was an economic cooperation against the United States and Europe.
Because the Asian countries did not buy the Japanese idea of economic cooperation, Japan used military
force to conquer Southeast Asian countries.

Our economy was at its worst during the Japanese time. Goods and services were extremely scarce. The
production of sugar stopped for lack of foreign market. As a result, inflation became very high. This was
aggravated by the printing of money by the Japanese government. Most Filipinos starved

THE REPUBLIC: 1946-1972

The United States granted our political independence on July 4, 1946. Filipinos rejoiced and expressed
their gratitude to the U.S. government, only to realize later than that our independence was not
meaningful. The United States still influenced our political and economic policies.

The Americans imposed the Bell Trade Act of 1946. This gave the American businessmen the right to
exploit our natural resources, to operate public utilities and other businesses, and to enjoy the Pre-war
free-trade agreement. The Philippine government accepted the Bell Trade Act in exchange for war
damage payment.

When the Philippine economy plunged into its lowest level, the United States agreed to impost import
and foreign exchange control. Clearly, this reduced U.S. exports to the Philippines. But the United States
had no better alternative for fear of communist takeover once the national economy became bankrupt.
The import control program of the Philippine government provided Filipino entrepreneurs
opportunities to put up their own enterprises. There was no foreign competition, in 1959, President
Carlos Garcia introduced the Filipino First Policy. It granted the Filipinos preferential treatment in the

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Philippine economy. Thus, more Filipino factories were established, particularly along EDSA.

However, the control program lasted only for seven years. The US government pressured the Philippine
government to return to free trade which naturally favored US business interests. In 1962, the newly
elected president Diosdado Macapagal abolished the import and foreign exchange control. In exchange,
the Philippine government received more than 500 million dollars loan from the United States.

The abolition of control pulled down the economy. President Ferdinand Marcos, in his 1965 State of
the Nation Address, said that more than 1,500 industries were in distress, and hundreds of workers were
jobless. Despite Marcos criticism of the decontrol program, he was forced to continue such program
due to heavy pressure from the WB-IMF. The Philippine government was heavily indebted to the United
States, and it needed more funds for its projects. During Marcos regime, the peso was devalued several
times.

THE MARTIAL LAW REGIME

There was a fast decay in Philippine society and deterioration in the economy. To prevent further ruins,
martial law was declared. It was supported by the United States. On the other hand, critics of martial
law claimed that its real objective was to protect the interests of the local elite and foreign capitalists.

The WB-IMF played a dominant role in the economy under the martial rule. The said giant financial
institutions were responsible in imposing financial reforms, import liberalization, foreign investor,
export processing zones, tariff reduction, high interest rates, devaluation, and tight credit policy

Due to US Intervention in our economic policies, by means of WB-IMF conditionalities, foreign

investments through multinational corporations practically monopolized the production, processing and
marketing of products. Ion agriculture, production of cash crops, instead of food crops, was given the
first priority. Such capitalist agriculture was controlled by the United States and Japan.

The remaining few years of martial law was marked with economic devastation and political instability.
In 1984, inflation rate reached 50 percent. Foreign debts rose to 27 billion dollars from 600 million in
1965. The GNP growth rate was negative 4.1 percent. Government financial institutions like the PNB
and the DBP were bankrupt. Crony capitalism and dictatorship led to the destruction of the economy
and society. Finally, in February 1986, people power ended the Marcos regime.

THE AQUINO ADMINISTRATION

Economic recovery was the first priority of the Aquino government. It stresses rural development and
the development of labor-intensive industries. Such economic development program was planned to
poverty and to generate jobs and incomes for the poor, especially in the rural communities. The Aquino
6-year development plan was based on the following principles:
-respect for human rights
-promotion of social justice
-wiping out of poverty
-attainment of economic growth
-market economy

Here are some of the major national policy thrusts:

1. Greater reliance on the interplay of market forces and private sector initiative;
2. Provision of basic infrastructure and social services;
3. Implementation of tax reforms to enhance the efficiency and fairness of the tax system

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and improve tax administration;

4. Establishment of more effective means of helping the poor, including the proper
implementation of the agrarian reform program, and the delivery of basic social services;
5. More effective implementation of the population program; and
6. Improvement of agricultural and industrial productivity.

THE RAMOS GOVERNMENT

Unlike the Aquino government, President Fidel V. Ramos was lucky in inheriting political stability,
together with democratic institutions in place. Likewise, long range economic and social infrastructures
have been undergoing construction. Basically, the Ramos government in just an extension of the Aquino
administration

Aside from continuing the good social and economic programs of the previous government, like
cooperatives, agrarian reform, foreign investment, rural development, decrease of poverty and market
economy, the Ramos government has given priorities to the problems of energy, peace and order, and
the strengthening of local government units. The success of the Ramos government on these areas
would certainly mean business growth. More local and foreign investments would be encouraged to put
up their businesses. And this would result to more jobs and incomes for the people.

In any government, political will is important in pushing good government programs for the masses. As
long as there are graft and corruption, nepotism and social injustice, there would be no economic
progress for the people- only for the few.

THE ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT

There are various definitions of entrepreneurship. However, the key concept is innovation. This refers
to new or different ways of doing things, like technology, marketing, human relations, management, and
so forth. When an individual creates new product, it is innovation. When he sells his product in a
different approach, it is also innovation.

Evidently, a more efficient way of producing goods and services contributes to economic development.
Likewise, a more economical and faster methods of distributing goods and service accelerates economic
development. A more appropriate system of utilizing the inputs of production, such as money, materials,
machines and manpower can favorably contribute to economic development. All the three
aforementioned situations comprise entrepreneurial activities.

In view of the innovative nature of entrepreneurship, it is capable of generating more jobs, incomes,
goods and services. Ultimately, this means better economy and higher standard of living for the people.
However, the real contributions of entrepreneurship are measured in terms of the welfare of the masses.
It should be Filipino entrepreneurship for Filipino economic development- whose benefits seep down
to the level of the masses.

ECONOMIC DEVELOPMENT AND GROWTH EXPLAINED

Development is a process while growth is a product. So, growth is the result of development. In
agriculture, the application of fertilizers, pesticides, labor, machines and other productive input
represents a process or development. In simple terms, development is input while growth is the output.

In economics, development does not only include economic factors like money, machines and materials,
but also other factors which are non-economic, such as culture, values, religion government and
education. These mixtures of economic and non-economic factors which are applied in the creation of
goods and services constitute economic development. Clearly, it is not effective to solve economic

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problems with economic solutions alone. For instance, extravagance is not only an economic problem.
It is also caused by the unfavorable culture or social values.

In poor countries which are usually dominated by poverty, illiteracy, unjust distribution of wealth,
income and power, the concept of economic development has a more relevant definition. Under this
socio-economic context, economic development refers to a progressive process of improving human
conditions by eliminating or reducing poverty, unemployment, disease, illiteracy, injustice and
exploitation.

What are needed in poor countries are more economic activities through the operations of factories,
agricultural production, trade and service industries. In concrete terms, such economic activities multiply
jobs and incomes. However, social justice must prevail. There should be a fair distribution of wealth,
income and power. Unfortunately, it is almost impossible to redistribute wealth in poor countries. Their
land reform programs are failures, because there was no political will on the part of top government
officials who obviously prefer to sustain the existing socio-economic order.

In view of the very limited access to economic opportunities by the masses, a better option is to develop
an entrepreneurial class. With the strong support of the government and the private sector, small-scale
enterprises can flourish in the countryside, such community-based projects can generate jobs and
incomes for the poor. This is all what they need to uplift their social and economic conditions.

Development and Growth theories

1. Laissez Faire theory. These are French words introduced by the Physiocrats to mean
economic freedom. This theory explains that the government should not interfere in
economic activities. It is absolute free-enterprise economy.
2. Keynesian Theory. The government should play the key role in economic development,
particularly in less developed countries, or those with depresses economic conditions.
This theory contends that during economic depression the government should put up
massive public works, like construction of roads, bridges, and other labor-intensive
projects.
3. Ricardian Theory. This is the theory of David Ricardo, an English classical economist.
He believes that the key factor in economic growth is land. This means that agriculture
plays a major role in economic development. Such theory was earlier supported by the
Physiocrats. They claim that all wealth comes from the land. People cannot live without
food and natural resources. Hence the importance of land or agriculture.
4. Harrod-Domar Theory. This was conceptualized by Sir Harrod of England and
Professor Domar of the United States. The key factor in economic growth is physical
capital like machines. The theory claims that more products can be produced through
the use of machines.
5. Kaldor Theory. Nicholas Kaldor maintains that the key factor is technology. This theory
explains that the application of modern technology in the production of goods and
services has been responsible for the economic success of the highly developed countries
like the United states, japan, Great Britain, France, Italy and Germany, in the case of
Japan, it can raise vegetables without the use of soil. Only fertilized water is used. Such
technology has been exported to the Middle East where agricultural lands are scarce.
6. Innovation theory. This was developed by Joseph Schumpeter. He stresses the role of
innovators or entrepreneurs in economic development. Schumpeter says that it is the
innovator who has the courage and imagination to handle old systems, and be able to
transform theory into reality. It is the innovator who introduces change for the better.
7. Non-economic theories. There are several other theories which are non-economic in
nature. Their key factors are political stability, efficient public administration, open

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society and positive cultural values. Max weber, author of Protestant ethics and the Spirit
of Capitalism, claims that Protestant countries are more prosperous than Catholic
countries and others. He says that the thrift, industry and an entrepreneurial spirit have
contributed much to the economic growth of Protestant countries. Not a few
economists argue that corruption in the government is the No. 1 enemy of economic
development in Asia.
In the case of highly developed countries, their values and institutions are conducive to
economic growth. Their governments are efficient and honest. Their values such as
punctuality, industry, and dedication are effective instruments of development. Above
all, they have many good entrepreneurs who have created employment and wealth for
their economies.

THE FILIPINO ENTREPRENEURIAL ECONOMY

One of the top programs of the government is the development and promotion of Filipino
entrepreneurship. There are many government agencies and private organizations which extend financial
and technical assistance to micro and small-scale enterprises. Many are not aware of such assistance,
especially the poor and unschooled rural folks. Those who know are not enthusiastic about the program
due to numerous conditions and paper works, not to mention red tape. For the same reason, the rural
poor prefer to depend on usurers for their credit needs, rather than borrow from lending institutions.

Our economic resources are mostly in the hands of few local elite and multinational corporations. A
great majority of the people are workers, laborers and office clerks. They only get salaries which are not
even enough to support their basic needs. Such unjust distribution of income can be corrected by giving
people easy access to business activities. Through business, even the poor are likely to improve their
social and economic conditions.

Claro M. Recto, considered that father of modern Filipino nationalism, said that we need economic
nationalism to attain real economic growth. He defined economic nationalism as the control of the
economic resources of the country by its own people, and their use of such resources for their own
benefit and enjoyment. Recto also claimed that the cause of our poverty is that we allow foreigners to
dominate our economy. He blamed the U.S. educational system

“The educational system fired our people’s desire for political liberty, but it purposely neglected to
develop economic nationalism among the citizens, and instead insidiously inculcated in them ideas of
economic dependence on America”

At present, our educational system should stress patriotism and economic nationalism. Although this is
mentioned in our Constitution, it appears that colonial mentality is still infused in the minds and actions
of many Filipinos. Such attitude is clearly counter-productive as far as the Philippine economy is
concerned. Pride and preference for foreign goods, especially American products, are still strong.
Peoples in other countries patronize their own products. And this is good for their economy.
Our educational system should also emphasize in its curriculum the importance of local
entrepreneurship. By and large, Filipinos are employee-oriented, especially for white- collar jobs. We are
not risk-takers. Many of us are afraid to put up our own business because of the possibility of bankruptcy.
Suh lack of entrepreneurial spirit, particularly among professionals, has encouraged foreigners to take
advantage of our cheap labor and rich natural resources. They are the ones who are now rich. And they
are our masters in our own country.

THE GOVERNMENT AND ENTREPRENEURSHIP

In underdeveloped economies, the government plays a major and active role in economic development.
Aside from setting up the economic infrastructures, like roads, bridges, transportation, communication

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and electric facilities, the government is directly involved in business and industry where the private
business sector has no or inadequate investment. However, when the economy has developed, the
government has to phase out its economic activities in favor od entrepreneurs. At this stage, it is the
private business sectors that become the engine of economic growth. Because it is more efficient and
proper.

Although, entrepreneurs are risk-takers, self-reliant and optimistic, there are factors which encourage or
discourage them to invest. Obviously, the primary factor or determinant of investment is profit. This is
brought about by several factors like peace and order, income of the people, electricity, transportation
and communication facilities.

It is very clear, therefore, that there is a very strong and direct relationship between the government and
entrepreneurship. It is the government that provides basic incentives to entrepreneurship. In return,
entrepreneurship accelerates economic development through more employment, production and
consumption. Precisely, this is the goal of the government for the people. Hence the great interest of
the government in the promotion og entrepreneurship.

Determinants of investment
Profit is the first consideration of investment. It is profit that stimulates businessmen to go into business.
Only the government can possibly engage in the business without profit. However, profits depend on
population, income, peace and order, political stability, government policies and other external
economies scale like energy, transportation and communication facilities. The internal economies of
scale, such as management, technology, working conditions and financial incentives, also help in the
attainment of profits for the enterprise.

The entrepreneur has control or influence in the operations of the internal economies for scale, for
instance, he can improve management. He can change his technology. He can raise the salaries of
employees. But in the case of external economies, the entrepreneur is greatly dependent on what the
government can perform. Only the government had the resources to maintain peace and order.
Entrepreneurs would not construct highways and national communication network. This is the job of
the government. Besides, it is too expensive for entrepreneurs to undertake such projects.

In the case of income and population, these constitute markets for the entrepreneurs or investors. More
people increase the number of buyers and higher incomes likewise increase the number of buyers.
Governments which believe that peoples are important in economic development do not practice
population control. They argue that Japan and other rich countries have more oeoples than the poor
countries like the Philippines and African countries. They claim that the solution to poverty is not to
control the population growth, but to create more production and employment.

The Role of the Government

In a democracy, the fundamental function of the government is to serve the best interest of the people.
Those who run the government are called public servants. Their salaries come from the people through
their tax payments. Hence, they should serve the people well.

During the 1700s in Europe, particularly England, the laissez faire system of government was practices.
The non-interference of the government in economic activities led to the growth of capitalism. The
capitalists, however, abused their powers and privileges. They exploited their workers in terms of low
wages and long hours of work, usually 17 hours a day. They also paid very low prices for the raw materials
produced by farmers. These miserable situations happened during the height of the Industrial
Revolution in England. The evils of the Laisses faire policy created great social reformers like Karl Marx
and Robert Owen. Their crusade against the capitalists spawned the birth of labor unions and

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government programs for the workers

The bitter English experience offers a good lesson to governments of nations. The role of the
government is to promote the welfare of all sectors- producers, consumers, employees, businessmen
and the rest of the society and the economy. It is, of course, difficult to strike a happy balance of support
among all members of society. But a good government always considers social justice as the basic
yardstick in public administration. The welfare of the poor and powerless must always get the first
attention and assistance from the government. As long as a sick and weak society exists. A healthy
economy and stable government cannot be achieved. Hungry people obey no laws.

Support for Entrepreneurs

As explained earlier, entrepreneurs play a very important role in economic development. They
are the ones who create goods, services and jobs. Considering our poor economy, there is clearly a great
need for more and more entrepreneurs in our country. Prices of goods are high because their supply is
scarce. Jobs are few because economic activities are also few. In Japan and other industrial countries,
they experience labor shortages due to so much activities in agriculture, trade and industry. They use
machines and import labor from poor countries with labor surpluses.

With proper and adequate assistance programs, our government can develop a larger entrepreneurial
economy. Priorities should be focused on micro and small enterprises. Such mass and community-based
project utilize labor, material, management and technology. Hence, the poor masses are benefited.
The key factor of development if the Ramos government is people empowerment. Actually, in a truly
democratic society this is the essence of government. As Lincoln said, a government is for the people,
of the people and by the people. The best way to empower the people is to improve their knowledge,
skills and values. Then give them reasonable financial and technical support to organize their enterprises.
But these are not the last inputs of the government, the government should likewise provide the
necessary programs in the forms of peace and order, transportation and communication facilities, fiscal
and monetary policies, electricity and other favorable assistance in order that the people can productively
use their power for their own interests.
The legendary former President of Tanzania, Africa, Julius Nyerere said:

“Development is people’s development of themselves, their lives, their environment… freedom

is essential to development, not just a product of it… but it should not be freedom to exploit.
People cannot develop if thy have no power, and development occur if, and only, the people
can organize their own power in their own interest.”

Government assistance program

1. Peace and order. Countries with news of forthcoming rebellion or revolution cannot
attract investments, the various coups of rebel soldiers have driven away not a few
big foreign investments. Also, kidnappings of foreigners and rich Chinese have
discouraged investors. In fact, some big Chinese businessmen went abroad. The
NPAs likewise contribute to the decline of investments in the rural areas.
Businessmen have to pay revolutionary taxes to NPAs in exchange for their safety
and that of their enterprises.
2. Political stability. There is political stability when there is no frequent change in the
government, especially through the use of force or violence. In our country,
government policies are not stable. Every change in administration is also a major
change in government policies. This is not conducive to entrepreneurship. The
programs of the government policies. This is not conducive to entrepreneurship.
The programs of the government change as soon as a new President assumes his

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office. There is nothing wrong with change if it is for the beter. But Philippines
politics is different. There are many political debts to pay to big businessmen who
contributed campaign funds. As a result, favoritism creeps in to the prejudice or
disadvantage of small businessmen who have ni connections.
3. Price stability. Prices are stable if there are no abrupt changes or fluctuations in the
prices of goods and services and in the exchange rates. When the value if the US
dollar falls, importers are happy but not the exporters, when prices keep on
increasing, investors are reluctant to do their business. It is hard to plan costs of
production and project profits when prices are not stable.
4. Taxes. These are needed to fund government projects and programs. However, the
payment of taxes should be based on the ability to pay scheme. Tax incentives can
encourage entrepreneurs. Many foreign investors choose other countries due to their
fair tax programs. The “lagay system” is a form of additional tax. It is used to expedite
transactions in government agencies. There is a “highway tax” imposed by men in
uniform for products coming from the provinces, there is also the NPA tax in the
rural areas.
5. Infrastructures. These constitute the foundation of economic development. Roads,
bridges, transportation, communication and electricity are vital to business. Without
them, trade, commerce and industry remain primitive and limited. In the Philippines,
the beautiful super highways have no real economic value if these are not linked to
the farms. Until now, many remote farms have no farm-to-market roads. Because of
this shortcoming, the supply of products has become scarce in urban centers. And
yet in remote agricultural villages, there is a surplus. This is not favorable to village
producers because they cannot market their products.
6. Education and training. It has been said that real development is people
development. Money, machine, land and material are only productive if people know
how to use them properly. Knowledge and skills are not enough. If productive
resources benefit only a few, it is not wisely utilized. What is more needed is relevant
social values, aside from knowledge and skills. The bible says the fruits of the earth
should be enjoyed by everyone. The best way to develop the mind, body and spirit
is through education and training. The school system should infuse into the minds
of students the importance of social responsibility to our productive resources, to
our environment, to our communities and to our fellow men.
7. Public administration. Entrepreneurs prefer efficient public administration. In
dealing with the various government agencies, red tape and “expediting fee” are
encountered. To put up just a simple business, there are numerous requirements.
Securing such requirements from various government agencies, takes time, not to
mention the many fees to pay. Such cumbersome procedures are naturally very
frustrating, especially for those prospective entrepreneurs who are unschooled. The
government should simplify business requirements and place these in just one office
of building. This will save time, effort and money. In addition, government clerks
should also be efficient and courteous.
8. Production technology. Aside from skills training, the government should provide a
simple production technology which is accessible to the masses at a nominal price
or even free. At present, the Technology and Livelihood Resource Center (TLRC)
has been conducting livelihood and technology courses for business opportunities
to aspiring and practicing entrepreneurs. Examples of such courses are: how to make
fiberglass products, how to operate a pawnshop, how to grow bonsai, how to process
meat and fish, how to manufacture candles, and many others. Other non-
governmental organizations (NGOs) are also actively engaged in similar livelihood
projects for the benefit of low-income groups.

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9. Marketing assistance. Encouraging the poor to become entrepreneurs without

corresponding marketing assistance is an exercise in futility. It is foolish to encourage
people to produce goods if there are no markets. Marketing assistance may be in the
form of promotions, identification of buyers, and ways of reaching the buyers. The
Department of Trade and Industry appears to be active in export promotions and
foreign business development. It is hoped that DTI is helping small entrepreneurs.
10. Financial assistance. Funds are important to poor entrepreneurs. In fact, may people
would like to go to small and micro- business if they have capital. To encourage the
growth if a n entrepreneurial economy. Adequate and cheap credit facilities should
be made available to the masses. There are many pro-poor credit programs which
appear in newspaper. Unfortunately, many of them seem to be “paper programs”
like the KKK program of the Marcos regime, it benefited only top government
officials, instead of the poor. Even the low-cost housing program of the government
is beyond the reach of ordinary employees. It requires about 7, 000 monthly income
to qualify for a unit in such housing projects.

GOVERNMENT PROGRAMS FOR ENTREPRENEURS

As stated earlier, both governmental and non-governmental organizations, as well as foreign agencies,
offer financial and technical assistance to micro and small entrepreneurs, particularly for those in the
rural communities.
These materials are not only useful to students, but also to others who are interested in setting up their
micro or small business. They provide detailed services in the forms of loans and skills training.
The following reprints are “Magna Carta for a Small Enterprises”, “Kalakalan 20”, Micro-Enterprise
Development Program”, “Self-Employment Loan Assistance Program”, and “Training programs for
Small and medium enterprises.” All these informative materials of the DTI are envisioned to promote
entrepreneurship in order to create more jobs and incomes, thus alleviating poverty which is one of the
major thrusts of the present administration.

Primer: Magna Carta for Small Enterprises

1. What is R.A, 6977, otherwise known as the Magna Carta for Small Enterprises
R.A. 6977, signed on 1991 January 24, is an act to promote, develop and assist small and
medium scale enterprises (SMEs) through the creation of a Small and medium
Enterprises Development (SMED) council, the establishment of a small business
Guarantee and Finance Corporation (SBGFC), the mandatory allocation of credit
resources to small enterprises and the rationalization of government assistance programs
and agencies concerned with the development of SMEs.

2. Who will benefit from the Magna Carta for Small Enterprises?
Small and medium enterprises will benefit from the Magna Carta for Small Enterprises
3. What is small and medium enterprise?
A small and medium enterprise is defined as any business activity or enterprise in
industry, agribusiness and/or services, whether single proprietorship, cooperative,
partnership or corporation whose total assets, inclusive of those arising from loans but
exclusive of the land on which the particular business entity’s office, plant and equipment
are situated, must have value falling under the ff. categories:
Micro: less than – P 50, 000
Cottage: P 50, 001- P 500, 000
SMALL: P 500, 001- P 5, 000, 000
Medium: P 5, 000, 001- P 20, 000, 000
4. What is the small and medium enterprise development council?
The council shall be the primary agency responsible for the promotion, growth and

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development of SMEs in the country by way of facilitating and closely coordinating

national efforts to promote the viability and growth of SMEs, including assisting relevant
agencies in the tapping of local and foreign funds for SME development, as well as
promoting the use of existing guarantee programs.
5. Who are the members of the members of the SMED Council?
The Council is headed by the Secretary of Trade and Industry as Chairman. The
members are the following:
a. Director General of the National Economic and Development Authority
b. Secretary of Agriculture
c. Secretary of Labor and Employment
d. Secretary of Environment and Natural Resources
e. Secretary of Science and Technology
f. Chairman of small business guarantee and Finance Corporation
g. Chairman of the small and medium enterprises promotion body which the president
shall undertake to establish under this act
h. Three [3] representatives from the private sector all Filipino citizens to represent
Luzon, Visayas, Mindanao to be appointed by the President, one of whom shall
come from the banking industry.
6. What are the powers and functions of the SMED Council?
The Small and Medium Enterprises Development Council shall have, among others the
following powers, duties and functions:
a. To recommend to the President and the Congress and policy matters affecting small
and medium scale enterprises;
b. To coordinate and integrate various government and private sector activities relating
to small and medium enterprise development;
c. To monitor and determine the progress of various agencies geared towards the
development of the sector;
d. To provide the appropriate policy and coordinate framework in assisting relevant
government agencies, in the tapping of local and foreign funds for small and medium
enterprises;
e. To promote the productivity and viability of small and medium enterprises by way
of directing and/or assisting relevant government agencies and institutions at the
national, regional and provincial levels towards the:
1. Provision of business training courses, technical training for technicians and skilled
laborers and continuing skills upgrading programs;
2. Provision of labor -management guidance, assistance and improvement of the
working conditions of employees in small and medium-sized firms;
3. Provision of guidance and assistance regarding product quality/product
development and product diversification;
4. Provision of guidance and assistance for the adoption of improved production
techniques and commercialization of appropriate technologies for the product
development and for increase utilization of indigenous raw materials;
5. Provision of assistance in marketing and distribution of products aof small and
medium scale enterprises;
6. Intensification of assistance and guidance to enable greater access to credit through
a simplified multi-agency financing program;
7. Provision of concessional interest rates, lower financing fees, which may include
incentives for prompt credit payments, arrangements tying amortizations to business
cash flows, effective substitution of government guarantee cover on loans for the
borrower’s lack of collateral;
8. Provision of bankruptcy preventive measures through the setting up of a mutual

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relief system for distressed enterprises, and the establishment of measures such as
insurance against extraordinary disasters;
9. Intensification of information dissemination campaigns and entrepreneurship
education activities;
10. Easier access to and availment of tax credits and other tax and duty incentives as
provided by the Omnibus investment Code and other laws;
11. Provision of support for product experimentation and research and development
activities as well as access to information on commercialized technologies.
12. F. to assist in the establishment of modern industrial estates outside urban centers.
7. What is the Small Business Guarantee and Finance Corporation (SBGFC)?
It is a corporate body created to provide, promote. Develop and widen in both scope
and service reach, various alternative modes of financing for small enterprises, including
but not limited to:
- Direct and indirect project lending’
- Venture capital
- Financial leasing
- Secondary mortgage and/or rediscounting of loan papers to small businesses
- Secondary/regional stock markets
The abovementioned programs are exclusively targeted to small, cottage and small
micro-sized enterprises.
Crop production financing shall guarantee loans obtained by qualified borrowers.

8. What loans can be guaranteed by the SBGFC?

The Corporation shall guarantee loans obtained by the following under such terms and
conditions adopted by its Board.
-qualified small enterprises
-local and/or regional associations of small enterprises and industries
-private voluntary organizations and/or cooperatives

9. What are the guarantee schemes that may be provided by the SBGFC?
-The SBGFC may guarantee loans up to one hundred percent
-It may also provide second level guarantee (i. e. re-insurance) on the credit and/or
investment guarantee made by credit guarantee associations and other institutions in
support of small entrepreneurs.
10. What does the provision on the “Mandatory Allocation of Credit Resources to Small
Enterprises” provide for?

a. Section 13 R.A. 6077 provides that all lending institutions whether, public or private, shall set
aside a portion of their total loam portfolio based on their Consolidated Statement of
Condition/Balance Sheet as of the end of the previous quarter, and make it available for small
enterprises credit.

The portion mandated to be so set aside shall at least be five percent by December 31, 1991,
ten percent by December 31, 1992 through December 31, 1995, and five percent by December
31, 1996 and may come down to zero by December 31, 1997.

b. The purchase of government notes, securities and other negotiable instruments with the
exception of such instruments, as may be offered by the SGBFC, shall not be deemed
compliance with the foregoing provision.

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LEARNING POINTS

History repeat itself. The students may understand how does our economic development started.
By deep understanding, students can also give importance to the economic theories on the
environment of entrepreneurship. It is also evident that an entrepreneur seeks profits and
development. Not only for them but also for the whole community.

LEARNING ACTIVITIES

Exercise
Name: _______________________________________ Date: ________________
Year & Section: _______________________________ Score: _______________

Directions: Write Your Answer with a maximum of 50 words

Essay:

Search for Magna Carta for Small Enterprises and tell what have you understand.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
______________________

REFERENCES

Scarborough, Norman M. (2013) Essentials of Entrepreneurship and Small Business Management. Sixth
Edition. British Library Cataloguing-in-Education Data. Pearson Education Publishing

Fajardo, Feliciano R. (1994) Entrepreneurship. National Bookstore. Jose Cruz cor. Legaspi St. Ugong,
Pasig City, Philippines. Capitol Publishing House, Inc.

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Module No. 3
Unit 3 – PLANNING, ORGANIZING AND MANAGING THE ENTERPRISE

MODULE OVERVIEW

This chapter presents the fundamental principles of planning, organizing and managing an enterprise.
This module aims of the curriculum is to understand the management on entrepreneurship.
As per stated from Proverbs 29:18, “Where there is no vision, the people perish”, evidently, management
strategies are very necessary in all forms of economic development.

LEARNING OBJECTIVES

In this unit the student should be able to:

a. Understand the importance of management in the enterprise;

b. Identify the competencies on Planning, organizing and managing an enterprise; and
c. Describe the factors on building a new venture team and planning strategies for the next
generation.

LEARNING CONTENTS

PLANNING THE ENTERPRISE

Planning in plain and simple language is thinking ahead. In business, it is thinking ahead of objectives,
strategies, financing, production, marketing, profit prospects, and growth possibilities.
However, business planning should be realistic. This means planning is based on available resources and
is responsive to the needs of the community. Otherwise, planning is no different from dreaming. Not a
few business and government projects fail because their objectives do not match their resources.

Planning is what to do. Planning is how to do it. Planning is when to do it. Planning is what to expect
in the future.

Business planning involved the attainment of the goals, and the way to accomplish such goals. A time
frame is needed in attaining goals. Supposing you want to put up a poultry project. How do you do it?
Do you have the funds? Do you also have the skills and interests? Assuming there are no problems in
money, skills and interests, when are you going to start the project?

Starting the business is not the end of business planning. Ultimately, it is the consumer satisfaction that
requires planning. This should be properly planned because consumer satisfaction means business
stability and growth. In financial language, consumer satisfaction is profit. Thus, business planning is a
continuous process until consumer satisfaction is maximized and sustained.

PRINCIPLES OF PLANNING

Here are some basic principles in planning which have general application, particularly for micro and

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small business:

1. Planning must be realistic. It must be based on available resources- human, financial and
physical resources. If these are not enough, then it would be impossible to implement
successfully the project. Any planning which is not supported by adequate resources is likely to
fail.
2. Planning must be based on felt needs. The objectives of the entrepreneurs should fit the
needs of the people in a community. Such needs can be known through observations, personal
interviews, and questionnaires.
3. Planning must be flexible. Resources, needs and economic conditions change. Planning
should be adjusted to such changes to be effective and relevant. For instance, fundamental
changes in government policies require changes in planning the affected aspects of the business.
Likewise, planning should be responsive to the trends in consumer tastes and preferences.
4. Planning must start with simple projects. In the Philippines, many people are poor and have
no business experiences. The most appropriate project for them is the micro business
experiences. This requires very simple management and technology. It also needs simple and
few resources in terms of funds, materials and equipment. Such simple business enterprise has
a greater possibility of success. More importantly, it provides a good training experience for
operating a business. Later on, the operator can engage un bigger business projects as he acquires
more resources and management experiences.

STAGES OF BUSINESS PLANNING

Professor Philip Kotler, author of Marketing Management, said that there are four stages of business
planning. Businesses which have passed these stages are on their way to sophisticated planning. Many
enterprises are classified in each of these stages

Unplanned stage. At the start of the business, the owner-manager is busy looking for funds,
customers, materials and equipment. He has no time for planning. His entire attention is devoted to the
daily operations of his business in his intense desire to survive.

Budgeting-System Stage. Eventually, the owner-manager realizes the need to develop and use
a budgeting system. Estimated incomes from sales and expected expenditures are made. This is done to
facilitate the orderly functions of the growing enterprise.

Annual planning stage. The owner-manager drafts an annual plan. He can use either the top-
down or bottom-up planning. In top-down planning approach, he owner-manager provides the goals
and let the employees comply with them. In the case of the bottom-up planning approach, he encourages
his employees to participate in planning the goals and strategies of the enterprise. This first approach in
planning is autocratic while the other one is democratic.

Strategic planning. As the business enterprise becomes bigger, a long-range planning is needed.
This is a three-or five-year plan. Such plan has flexibility to able to adjust to changing conditions. An
executive of the Xerox Corporation claims that some of their plans are being revised every day of the
year. At this stage, planning develops into a more strategic character.

CRITERIA OF EFFECTIVE PLANNING

1. The plan should state clearly its objectives. Such clear statement is necessary so that those who
will be involved in the execution of the plan will understand, believe, accept and support it.
2. The plan should provide measures for a satisfactory accomplishment of the objectives in terms
of quality, quantity, time and cost. These help in delegating responsibility and measuring results.

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3. The plan should state the policies which should guide people in attaining the objectives
4. The plan should indicate what department or unit will be involved in accomplishing objectives.
It may or may not spell out the procedures for performing the required work.
5. The plan should not indicate the time which should be allowed for each activity. It may be
necessary to establish a target data for completing the activity.
6. The plan should specify the required resources and their corresponding costs.
7. The plan should designate the officers who will be held accountable for the accomplishment of
the objectives. Sufficient authority should be delegated to such officers/executives.

COMPONENTS OF BUSINESS PLANNING

1. SWOT. The chances of a product or service can be evaluated through the SWOT Analysis.
Every product or service has its own strength, weakness, opportunity and threat. Planning
should include the improvement of the product/service in order to survive competition.
2. Objectives. These should be specific and realistic. Such objectives can be daily, weekly and yearly.
For example, 10 percent increase in sales after 6 months of operations. Environmental factors
should be considered in formulating business objectives. Peace and order, power supply and
government policies affect business activities.
3. Strategies. These are ways of accomplishing the objectives. Such ways are stated in the financial,
production, marketing and organizational plans of the enterprise. For instance, in the objective
of increasing sales by 10 percent after six months of operations, there are several ways of
attaining it. One way is to advertise the product. Another is to improve customer relations. It
can be also done by reducing the selling price, or a combination of the three ways
4. Time frame. In business, time is gold. For this reason, an entrepreneur must be efficient in time
management. Every activity has its own time schedule. Activities which are completed on time
save money. Here is a sample time schedule for a small business: p109- entrepreneurship

CHARACTERISTICS OF A SOUND BUSINESS PLAN

1. Objective
2. Clear
3. Logical and simple
4. Flexible
5. Stable
6. Complete and integrated

OBTAINING THE FACTS FOR A BUSINESS PLAN

Facts about the prospective business can be obtained from research surveys, government agencies,
accountant, bankers and lawyers. Here are the questionnaires to get the necessary data:
1. What is unique about my product/services?
2. Who are my competitors?
3. How will my customers buy?
4. What is my share in the market?
5. What is the market potential?
6. Who are my customers and where are they located?
7. Where will I put up my business?
8. How big should be my plant or place of business be?
9. What equipment will I need and what size?
10. How will I create customers?
11. What personnel do I need?
12. How will I organize my enterprise?
13. What kind of records do I need?
14. How much capital do I need?

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15. How profitable will the business be?

16. How financially healthy will I be?
17. What is my break-even point?

Outline of a business plan

- Cover sheet: name of business, name of principals, address and phone number
- Business goals
- Strategies
- Table of contents
Section one: The Business
a. Description of the business
b. Product/service
c. Market
d. Location of business
e. Competition
f. Management
g. Personnel
h. Application and expected effect of loan (if needed)
i. Summary
Section two: Financial data
a. Sources and application of funding
b. Capital equipment list
c. Balance sheet
d. Break-even analysis
e. Income projections (profit and loss statements)
1. Five-year summary
2. Detail by month for first year
3. Detail by quarter for second, third, fourth and fifth years
4. Notes of explanation
f. Cash flow projection
1. Detail by month for first year
2. Detail by quarter for second, third, fourth and fifth years
3. Notes of explanation
g. Deviation analysis
h. Historical financial reports for existing business
1. Balance sheet for past five years
2. Income statement for past five years
3. Tax returns
Section three: Supporting documents

Personal resumes, personal balance sheets, cost of living budget, credit reports, letter of
reference, job descriptions, letters of intent, copies of leases, contracts, legal documents and anything
else relevant to the plan.

Steps in business planning

1. Evaluate your personal resources and interests, and the resources of the community.
- Do you have the necessary funds?
- Do you have the skill or management experience?
- Does the government provide financial and technical assistance?
- Are raw materials available?
- Are you interested in such business?

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- Do you have good human relations?

2. Analyze your market
- Is there a good demand for your product or service?
- How many competitors are there in the market?
- What is your estimated share in the market?
- Who are your customers?
- Are they interested in the existing product/service?
- Is it possible for you to offer a better quality or a lower price?
- Is there a reasonable profit?
3. Choose a proper business location
- Is it near your prospective customers?
- Is it accessible to raw materials and other supplies?
- Is the place clean, decent and peaceful?
4. Prepare a financial plan
- What are your objectives?
- How much money do you need?
5. Prepare a production plan
- Is it more economical to rent or buy a production equipment?
- Do you have inventory control?
6. Prepare an organizational plan
- What type of business organization is most suitable?
7. Prepare a management plan
-what are your goals and objectives?

THE IMPORTANCE OF BUSINESS PLANNING

1. Planning can eliminate business risks
2. Planning can minimize cost of production
3. Planning can detect the weaknesses of the business operations

Further discussions on crafting a business plan will be tackled on the next chapter.

ORGANIZING THE BUSINESS

When one starts to organize a business enterprise, it is presumed that he has conducted feasibility or
market study. That is, he knows his resources, the needs of the community, the strengths of his
competitors and so forth.

The Levi Story

‘More than a hundred years ago, a young man from Bavaria went to the United States as an immigrant.
His objective was to seek his fortune. Little success at first encouraged him to return to his country. But
he decided to try prospecting for gold in California. At that time all roads led to California. Likewise,
luck was not for him as a gold prospector.

However, the young man recognized the needs of his fellow gold prospectors for sturdy and durable
work pants. Exploiting his talent for tailoring and using is last money. He put up his tailoring shop. Over
the years his business prospered. Until it became transnational in operations. The name of young
immigrant is Levi Strauss.

He did not discover gold in California. But just the same he acquired something worth more than gold.
The Levi Strauss and Company has become the largest apparel company in the world. Famous chain
stores throughout the world sell Levi’s jeans. Annual sales have been recorded at 3 billion dollars.

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WHY DO YOU GO TO BUSINESS?

Even if you have plenty of money, going to business is not as easy and as simple as it seems. You should
first evaluate your interest, experiences, skills and community needs.

Aside from positive personal qualities as an entrepreneur, good planning and are essential in setting up
an enterprise. Of course, money and other valuable resources are needed I the business. But without
proper planning and adequate preparation, such resources may disappear. Such loss is unfortunate and
unnecessary since it can be prevented.
Here are the reasons why people go to business:
1. Personal satisfaction
2. Family involvement
3. Independence and power
4. Social activities
5. Profit expectation

What is an organization?

An organization is a group of two or more persons who work together to attain a common set of goals.
A sari-sari store owned and managed by a family is an organization. In the same manner, san Miguel
Corporation is an organization. A credit cooperative is also an organization.

Organizing is a process of combining and coordinating resources and activities in order to accomplish
efficiently and effectively certain objectives. However, organizing has a more important role. This is the
proper development of human resources. The best resources of the organization are its employees- not
money, machines, materials or buildings. Hence, the entrepreneur must hire the best and the brightest,
and then further develop then in line with the philosophy of the organization.

Every organization has a structure which indicates positions and relationships. These are shown by an
organizational chart.
(show an example of organizational chart)

FORM OF BUSINESS ORGANIZATION

There are three most common forms of business organization in a capitalist economy. These are the
sole proprietorship, partnership and corporation. However, there are other forms of business
organizations, such as the cooperative, joint venture and syndicate. Many successful firms started from
single proprietorship until they became corporations.

Single proprietorship. This is a form of business organization that is owned and usually managed by
one person. It is the oldest and simplest form of business ownership. It is also the easiest to start.

The advantages of a single proprietorship are:

1. Ease and low cost of formation and dissolution. It requires small capital there are no legal papers
needed.
2. Retention of all profits. This is the greatest incentive or reward to the entrepreneur.
3. Independence and flexibility. The owner is the boss
4. Tax advantage and less government regulation. The owner’s earnings are taxed as personal income
tax.

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The Disadvantages
1. Unlimited liability. The owner assumes all financial obligations
2. Lack of stability. If the owner sies, it is the end of the business
3. Limited access to credit. Banks and other financial institutions are usually not willing to lend
large amounts of money to single proprietorships.
4. Limited business skills and knowledge. The owner must master all functions. There is no
specialization.

Partnership. It is an association of two or more persons who act as co-owners of a business. Each
partner contributes money, property or service to their organization. There are two types of partners:
general and limited partners. The liability of a general partner extends up to his contribution to business.
In our country, we have also the capitalist partner and the industrial partner.

The advantages of partnership are:

1. Easy to organize. Like single proprietorship, a partnership is relatively easy to form, much easier
than a corporation
2. Availability of more capital and credit. Suppliers are willing to extend money credit to a
partnership than to a single proprietorship
3. Retention of profits. The partners get all the profits of their business
4. Better business skills and knowledge. Each partner contributes his skills and knowledge in the
organization
The Disadvantages
1. Unlimited liability. Each partner is personally responsible to all the debts of the business.
2. Lack of stability. A partnership is terminated in case of the death, withdrawal or legally declared
insanity of any one the general partners
3. Management disagreement. As soon as the capitalists learn how to operate the business, they
may kick out their industrial partners
4. Idle investment. It is quite easy to invest money un partnership. But sometimes it is difficult to
get it out.

Corporation. It is an artificial being created by operation of law, having the right of succession, and
the powers, attributes and properties expressed authorized by law or incident to is existence.
The shares or certificates of ownership of a corporation are called stocks. The owners are called the
stockholders or shareholders. There are two types of corporations:
1. Private/close corporation, it is owned by a few individuals, usually relatives and friends;
2. Open corporation, owned by any individual who buys shares of stock which are traded in the
stock markets.

The advantages of corporation:

1. Limited liability. The liability of a stockholder is only up to his shares of stock.
2. Easy to raise capital. A corporation cans ell shares of stock to the public for additional funds
3. Perpetual life. The life of a corporation does not end with the withdrawal or death of key owners.
4. Specialized management. A corporation can hire professional managers and specialists

The disadvantages
1. Difficult to organize. It requires the services of a lawyer and are accountant to prepare the legal
forms and financial documents
2. Strictly regulated and supervised by the government. Corporations have to comply with
government laws, policies and regulations
3. Some corporations are socially irresponsible. They sell worthless securities (stocks and bonds),

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they pollute the environment and sell substandard goods.

4. Formal and impersonal employer-employee relationship. There are few corporations which
strive to maintain a small business atmosphere in order to sustain camaraderie in the
organization.
MANAGING THE ENTERPRISE
Without efficient and effective management, a business organization cannot survive. Such kind of
management is more needed in a very competitive market. It is survival of the fittest, and the fittest is
one that has the best management.
Peter Drucker, a world-class management consultant, said that the first function of a business enterprise
is economic performance. This is measured in terms of profit. Such economic success means
development and growth for the enterprise. Without profits, a business organization cannot sustain its
existence.

“Management as a process by which a cooperative group directs actions towards common goals”
- (Joseph Massie, author of Essentials of Management)

“Management is one of the factors of production, together with land, labor and capital”
- (Economists POV)

“Management is a class and status system which requires an elite of intelligence and education”
- (Sociologist POV)

“Management as the process of coordinating the resources of organization in order to achieve its primary
goals.” - (Robert Hughes, author of Business)

Management is both an art and science. It is an art because management requires skills or techniques in
dealing with people in order to get the things done or to achieve organizational goals. In case of
management as a science, it uses an organized, clear and pertinent knowledge. Management is systematic
and uses scientific methods of solving business problems

Production Resources
1. Material resources. These are tangible physical resources which are used for production
2. Financial resources. These are funds
3. Human resources. It is the people who plan and implement business activities.
4. Information resources. Correct and complete information is vital to the success of any business
organization

THE ROLE OF MANAGEMENT

It should be to give top priority to labor-intensive projects. These utilize more labor and natural
resources. Thus, our idle labor force and underutilized natural resources will be productive.
It should not only to maximize profits to its stockholders, but also to help the jobless. Our country has
millions of jobless people. It is the social responsibility of management to employ such resources for
the good of the economy and society.

Basic Functions of Management

1. Establish goals of the enterprise and develop plans to attain goals
2. Organize people and other resources to achieve goals
3. Lead and motivate people towards the goals of the enterprise
4. Maintain sufficient control system to ensure that the enterprise is moving well toward its goals
Characteristics of successful managers

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1. Technical skills
2. Conceptual skills
3. Interpersonal skills
4. Diagnostic skills
5. Analytic skills

Risk Management
Any business enterprise is faced with several risk possibilities. Risk is the possibility that a loss
or injury will take place. In modern world, risk is all around us. However, if risks cannot be
avoided, at least these can be reduced by the use of the ff:
1. Employee safety program;
2. Proper safety equipment;
3. Burglar alarms, security guards and guard dogs;
4. Fire alarms, sprinkler system and similar safety measures; and
5. Accurate accounting and financial controls.

Risk and Insurance Management

To eliminate or minimize such risks, the entrepreneur must have a risk and insurance program. The
common types of non-criminal business risk are:
1. Fire
2. Natural calamities
3. Personal liabilities
4. Economic problems
5. Business interruptions
6. Loss of key personnel

Other Business Risk

1. Burglary
2. Robbery
3. Shoplifting
4. Employee theft

LEARNING POINTS

Management is the most vital factor that every organization must have. It gives life to a group especially
when the times and scenes in the group becomes tough. It requires much effort on planning, organizing
and managing an enterprise. The role of management is the top priority in every institution, even in the
entrepreneurial environment.

LEARNING ACTIVITIES

Exercise
Name: _______________________________________ Date: ________________
Year & Section: _______________________________ Score: _______________

Identification: Answer the following question with correct spellings. Wrong spelling is
considered wrong.

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1. They view the management as a class and status system which requires an elite of intelligence and
education.
2. A type of corporation that is owned by a few individuals.
3. SWOT stands for.
4. As the business enterprise becomes bigger, a long-range planning is needed.
5. It refers to a year-round planning stage.
6. This is a form of business organization that is owned and usually managed by one person.
7. A component of business planning that refers on the ways of accomplishing the objectives of the
firm.
8. Stage of business plan which the owner-manager realizes the need to develop and use a budgeting
system.
9. He discovered Levi’s jeans as a business.
10. It is a process of combining and coordinating resources and activities in order to accomplish
efficiently and effectively certain objectives

REFERENCES
Barringer, Bruce R. and Ireland R. Duane (2013) Entrepreneurship: Successfully Launching New
Ventures. Fourth Edition. British Library Cataloguing-in-Education Data. Pearson Education
Publishing

Fajardo, Feliciano R. (1994) Entrepreneurship. National Bookstore. Jose Cruz cor. Legaspi St. Ugong,
Pasig City, Philippines. Capitol Publishing House, Inc.

https://www.teachingentrepreneurship.org/online-entrepreneurship-syllabus/

PANGASINAN STATE UNIVERSITY 10