Activity 1

[Selected Passages from "Wealth creation through entrepreneurship" by Linda Sanders]

Wealth creation calls for letting commercial risktakers loose on great ideas.
Sir Stephen Tindall defines an entrepreneur as “someone with drive and ideas, a person with the
potential and passion to create something new where there was nothing before – someone with a
knack for making a lot out of very little”.

I was reflecting on entrepreneurship in light of expat Peter Watson’s recent Listener comments about
wealth creation. He said: “The combination of financial literacy, entrepreneurship [and] using that in
conjunction with science, technology, innovation – that’s wealth creation.”

New Zealand certainly needs wealth creation if we are to lift our standard of living, and it’s those
with entrepreneurial skills who will make it happen. The Chinese do it through combining strength of
numbers with determination to rise above poverty. Australians, for their part, are smart developers of
their abundant natural resources. American wealth creation is built on a culture of giving a seemingly
never-ending stream of migrants the freedom to succeed in business. Each nation has bred a culture
of entrepreneurialism.

The fact is entrepreneurs are prepared to take risks to achieve a big return, through a leapfrog effect.
Of course, for every person who manages to string together one, two or several entrepreneurial coups
and become fabulously wealthy or successful, there are 100 who never make it or only modestly
achieve. It takes sound judgment to make the right decisions at the right time, but also at least a
modicum of luck.

For successful business entrepreneurship, it’s about translating a good idea into a commercial
triumph. That’s not as easy as it sounds. There’s typically a huge amount of hard work in developing
the idea, creating the business plan, securing the necessary resources and executing each stage with
care and skill, all the while keeping the end game in sight. At each stage markets, finances, personal
difficulties and other issues can intervene and kill off the most promising ideas.

Annotations: This is an article related to our lesson 1 in Entrepreneurial Behavior entitled "Economic
Value Added and Shareholders' Wealth Creation".

After reading, have your reflection/generalization by answering the following questions:

1. What have you understand about wealth creation?
2. How is wealth creation related to entrepreneurship?

Activity 2
Life Activity
Assume that you are a fresh graduate and just have reported working as a financial adviser at the
Financial Planning Firm of VM & Co. Your first task is to explain the concept of Wealth Creation in
the context of Philippine Setting to Peter, a famous athlete from Canada who expects to invest
substantial amounts of money through firm of VM & Co. He would like to understand in general
terms what will happen to his money. Your manager has developed the following questions and
statements that you must use to explain the system of wealth creation in the country to Peter.
1. How does value created “under the value based” view? Explain briefly the concept of cost and
provide some examples of cost in a typical Filipino business.
2. What wealth creation strategy or idea do you think is the best in the Philippine setting?
3. Differentiate wealth creation from value creation.
4. What is the advantage of using “Value Based Management” as compared to other management
strategies?
5. Differentiate “Economic value added” from the typical profit.
6. What is the advantage of wealth creation instead of simply saving a wealth?