o A law to promote, support, strengthen
ENTREPRENEURSHIP
A.Y. 2020 – 2021
CHAPTER ONE:
UNDERSTANDING ENTREPRENEURSHIP
LESSON ONE: DEFINING KEY TERMS
• Entrepreneur
o French word entreprendre – “to
undertake”
o Strongly advocates and correctly
practices the concepts and principles
of entrepreneurship in operating and
managing the self-owned business
venture (or enterprise)
Entrepreneur Business Man
Original Idea Copies the Idea
To change the world To sheer profit
Take calculated and
Take crazy risks
managed risks
• Entrepreneurship
o Comes from the word entrepreneur
o Art of observing correct practices in
managing and operating a self-
owned, wealth-creating business
enterprise by providing goods and
services that are valuable to the
customers
• Small Business
o Business/enterprise that correctly
adopts and practices the principles
of entrepreneurship
o Owned by one person with a limited
workforce of not more than 20
persons
o SMEs – small and medium
enterprises
• Ordinary Small Business
o Managed and operated by an owner
who is not an advocate of and does
not practice the concepts and
principles of entrepreneurship
• MSMEs Defined
o Micro, small, and medium enterprises
o Any business activity/enterprise
engaged in industry, agri-business
/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
• Republic Act No. 9178 - Barangay Micro
Business Enterprise (BMBE) Act of 2002
By Asset Size
Micro Below P 3M
Small P3,000,001 – P15M
Medium P15,000,001 – P100M
Large Above P100M
• RA 9501: Magna Carta for Small Enterprise
of 2008
and encourage the growth and
developments of MSMEs in
partnerships with the private sector
o Banks be it private or government are
mandated to increase their loan
portfolios from 6-8% for micro and
small and maintain the 2% allocation
for medium-sized companies.
• MSMEs contribution
o Rural industrialization
o Rural development and
decentralization of industries
o Creation of employment
opportunities and more equitable
income distribution
o Use of indigenous resources
o Earning of foreign exchange (forex)
resources
o Creation of backward and forward
linkages with existing industries
LESSON TWO: SALIENT FEATURES OF
ENTREPRENEURSHIP
• Art of correct practices
o Dynamic
o Creativity – backbone of entrep
• Wealth-Creating Venture
o Wealth
- Profit in Ordinary Small
Business People
- Profit, in parlance of accounting,
is the excess income or revenue
from the cost and expenses
- Profit does NOT equate to wealth
- Abundance – the very essence of
wealth in entrepreneurial
endeavor
- Feedback – results
• Providing Value to Customers
o Creates economic wealth by
providing goods and services
o “not to sell waste to consumers but
only valuable goods and services” –
essential principle in
entrepreneurship
o Goods – the most basic products of an
economic system that consists of
tangible consumable items and tasks
performed by individuals
o Services – a valuable action, deed, or
effort performed to satisfy a need or
to fulfill a demand
o Customers – a party that receives or
consumes products and has the ability
to choose between different products
and suppliers. Buyer!
o Consumers – an end user, and not
necessarily a purchaser, in the
distribution chain of a good or service
• Entails Opening and Managing the Self-
Owned Enterprise
o Self-initiative
o Own Ideas
o Managing of day-day activities
o Does not fall under the concept of
Intrapreneurship
 o Intrapreneurship – business o Good customs and traditions,
practices of franchising and buyout religious beliefs, and moral
o Managed by the owner itself • Kaldor’s Technological Theory
• Risk-Taking Venture o Nicholas Kaldor
o “Risk is inherent in an o Gives importance to the advancement
entrepreneurial venture.” of (modern) technology as an
o Risk in entrepreneur = business risk element of production
• Leibenstein’s Gap-Filling Theory
o Henry Leibenstein
LESSON THREE: THEORIES OF o Entrepreneurship fills the gap in an
ENTREPRENEURSHIP economic activity
o Entrepreneur is expected to possess
• Innovation Theory abilities that will connect the different
o Joseph Schumpeter, an Austrian markets
economist and political scientist o X-efficiency – degree of inefficiency
o Innovation – primary factor/tool in the use of resources within the firm
affecting development • Kirzner’s Learning-Alertness Theory
o Entrepreneurship – “creative activity” o Israel Kirzner
o Entrepreneur “engine of growth” o Learning and alertness as the
o Five chuchu primary attributes of entrepreneurship
1. New product • Economic Theory of Entrepreneurship
2. New production method o The availability of bank credit
3. New market o High capital formation with a good
4. New supplier flow of savings and investments
5. New industry structure o Supply for loanable funds with a
• Keynesian Theory lower rate of interest
o John Maynard Keynes, a British o Increased demand for consumer
economist goods and services
o Attributes economic growth, o Availability of productive resources
especially during depression, to the o Efficient economic policies like fiscal
government and monetary policies
o Emphasis on the role of the o Communication and transportation
government facilities
o Economic development –
experiencing economic depression
• Alfred Marshall Theory LESSON FOUR: ENTREPRENEURSHIP AND
o Alfred Marshall, an English ORDINARY SMALL BUSINESS ACTIVITIES
economist
o Four factors in the production of • Motive in Opening a Business
goods and services in the economy • Perception of Risk in the Business
1. Land • Reactions to Changes in the Environment
2. Labor • View on Competition
3. Capital • Vision for Development and Growth
4. Organization • Horizon of Business Operation
o Organization as the coordinating
• Sources of Business Funds
element
o Entrepreneurs – prime movers in the
organization
LESSON SIX: IMPORTANCE OF
• Risk and Uncertainty-Bearing Theory
ENTREPRENEURSHIP
o Frank Hyneman Knight, an American
economist • Compounded Benefits of Entrepreneurship
o Entrepreneur faces the risk of
uncertainty in the process of
connecting the supplier and the buyer
o Uncertainty – important factor in the
production of goods and services
o Features
1. Risk creates Profit
2. HINDI KO ALAM
3. Profit as Reward and Cost
4. Entrepreneur’s Income is
Uncertain
• Weber’s Sociological Theory
o Max Weber
o Culture – primary driving element of • To the Filipino People
entrepreneurship 1. Provides guidelines in their wealth-
creating ventures
 2. Helps improve financial and social life financing, equipment,
3. Helps broaden creativity land, work, space, or
4. Helps make their lives happy, fruitful, assistance
and successful ▪ Committed
• To the Local Community - Does not entertain
1. Provides employment in the community negativism and skepticism
2. Creates new demand in the market - Accepts full responsibility
3. Makes substantial contributions to the for what has been
raising and collection of taxes promised to the customers
4. Facilitates the movement of the factors of - Establishes proper
production coordination with and
5. Creates new business opportunities among workers
6. Promotes a peaceful and loving - Seeks to prioritize the
community satisfaction and interest of
7. Increases constructive competition customers
• To the Philippine Economy - Directly related to interest
1. Encourages competitiveness and thereby ▪ Persistent
challenges entrepreneurs to keep - Take repeated or different
improving their products and services actions in order to
2. Helps find an entrepreneurial niche in the overcome the obstacles
world market - Make personal sacrifices
3. Helps hasten the economic recovery or exert extraordinary
process of the Philippines during effort to complete the
financial turmoil or crisis required task
4. Facilitates the smooth flow of money in - Stick to his/her own
the market judgment in times of
5. Assists the national government in its opposition and failure
desire to have favorable economic ratings - Quit and surrender – not in
in the world market my dictionary
- Foundation of
commitment
CHAPTER TWO: ▪ Risk-taker
ENTREPRENEURIAL - Aggressive risk-taker –
not scared to take any
risks
LESSON ONE: CHARACTER TRAITS - Moderate risk-taker –
COMMON TO SUCCESSFUL more calculative in taking
ENTREPRENEURS risks; analyzes the
situation before taking the
leap
- Conservative risk-taker –
not very eager to take any
kind of risk; satisfied with
managing a small business
and a regular clientele
▪ Efficient and quality-oriented
- Always performs the
required tasks in
accordance with existing
standards of excellence or
continuously improves on
his/her past performance
- Strives to do things better
and faster with minimal
• Entrepreneurial Character Traits cost
o Character Trait – mark or attributes - Related to the cost
o Largely influence success involved in the production
• Small Enterprise Research and of goods and services
Development Foundation (SERDF) – Ten • Total Quality Management (TQM) – apply
Entrepreneurial Characteristics grouped into the principles – how you handle/lessen the
three major clusters: zero defects
1. Achievement Cluster 2. Planning Cluster
▪ Opportunity-seeker - Plan = blueprint
- Sees and acts on new ▪ Goal-setter
business opportunities - Goals – long-term
- Seizes unusual - Objectives – short-term
opportunities to obtain
 -
Guided by the SMART
Principle (Specific,
Measurable, Attainable,
Realistic, and Time-
bound)
▪ Information-seeker
- Seeks a strong basis to
make sound decisions
- Seeks relevant
information on target
customers, suppliers of
raw materials, and
competitors
- Verifies available
information from various
sources, both private and
public
- Seeks opinions and advice
from experts in the
business field
- Finds other possible ways
to make sure that the
desired information is
complete
▪ Systematic in planning and
monitoring
- Systematic – rational and
logical approach in
performing the activities
- Planning – setting of goals
and objectives
- Monitoring – evaluation
of the activities and
adopted courses of actions
3. Power Cluster
▪ Persuasive and positive
networker
- Adopts a specific strategy
that will influence and
convince others while
maintaining the highest
degree of respect
- Makes use of positive
contacts in the business
community in order to
meet the goals and
objectives
▪ Self-confident
- Manifestation of the
entrepreneur’s strong trust
or belief in himself/herself
LESSON TWO: SKILLS AND CORE
COMPETENCIES IN ENTREPRENEURSHIP
Entrepreneurial Skills
• Skills
o personal abilities to do things well
o totality of the knowledge, practice or
experience, and aptitude of a person
o acquired and developed through
constant and correct practice
• Cognitive Skills
o ability to learn new things, generate
new ideas, express knowledge in both
oral and written
o brain – responsible for the
development of the cognitive skills
• Problem-solving Skills
o Analytical skills
o Defining the real problem
o Gathering information about the
problem
o Formulating alternative solutions
o Evaluating alternative solutions
o Selecting and implementing the
optimal solutions
o Evaluating the decision
• Technical Skills
o Innovation
o Fully equipped
o Dynamic/adaptability
• Interpersonal Skills
o Building a good relationship within
your organization and the third parties
involve in your business
o Stakeholders – employees, board of
directors, shareholders and
management
o external – supplier, government,
customers, creditors and all the
members of the society
• Core Competencies
o Defining capabilities or advantages
that a business may have that
distinguish it from the competition
o Foundation for sharpening a
company’s competitive edge, and it
guides brand reputation, business
growth, and marketing strategy
o They’re not easy for competitors to
imitate
o Can be leveraged widely to many
products and markets
o Without you having a good and
competent employee inside your
organization makes your business
weak (Bagus, Jovee).
• Total Perspective of Successful Entrepreneur
 CHAPTER THREE: THE ENVIRONMENT OF
THE ENTREPRENEURIAL VENTURE
LESSON ONE: THE PHYSICAL
ENVIRONMENT
Physical Environment
• Climate
• Physical Resources
• Wildlife
LESSON TWO: ENVIRONMENTAL
SCANNING: SOCIETAL ANALYSIS
Societal Environment
• Economic Forces
• Cultural Forces
• Social Forces
• Political Forces
• Legal Forces
• Technological Forces
• Environmental Scanning
o Scanning Tools (analytical approach)
1. PESTEL Analysis
- Stands for Political,
Economic, Sociocultural,
Technological,
Ecological, and Legal
Forces
- Tabular framework of the
trends and developments
in the different forces in
the external environment
2. Environmental Forces Matrix
- Modified version of the
issue priority matrix
adopted by Wheelen and
Hunger
- Classifies the various
environmental forces into
their frequency of
occurrence and level of
effect to the existing or
proposed business
LESSON THREE: ENVIRONMENTAL
SCANNING: INDUSTRIAL ANALYSIS
Industry Forces
• Government
• Suppliers
• Customers
• Competitors
• Employees
• Creditors
Industry Analysis Scanning Tools
• SWOT model
• Forces of Competition Model
o Popularized by Michael Porter
o A competitive environment
o Five Forces of Competition
1. Potential new entrants
Intensity of its threat will be
affected by the presence of the
following barriers:
- Strict government policy
- Substantial capital
requirement
- Economies of scale
- High cost of product
differentiation
- High switching cost
- Difficulty in accessing
distribution channels
2. Buyers
Will be less if the following
factors exist:
- Has the potential for
backward integration
- The cost of switching the
supplier cost is minimal
- The buyers purchase large
portions of the seller’s
product or services
- There are several
suppliers available in the
market
- The product represents a
high percentage of the
buyer’s cost
3. Substitute products
Can pose great threats if the
following factors are present:
- Price of the substitute
product is substantially
lower
- Preferences and tastes of
customers easily change
 - Quality of substitute
products dramatically
improves
- Switching cost is low
- Product differentiation is
hardly noticeable
4. Supplier
Strong if the following factors
hold true:
- Product/service is unique
- Switching cost is very
high
- Suppliers in the industry
are few, but the sales
volume is high
- Substitute products are not
readily available in the
market
- The supplier has the
ability for forward
integration
5. Rivalry among existing firms
Attributable to the following
factors:
- Number of competing
firms
- Rate of industry growth
- Characteristics of the
products or services
- Amount of fixed cost
- Increased capacity
- Diversity of rivals
• Competitive Forces Matrix
LESSON FOUR: ENVIRONMENTAL
SCANNING: INTERNAL ANALYSIS
• Internal Environment – environment
within the business
• Business Resources
o Assets or properties owned or
controlled by the business
o Tangible resources – have physical
appearance and form. Money,
building, equipment, machinery, land
o Intangible resources – do not have
physical appearance or form.
Copyright, patents, formula,
reputation, and goodwill.
o Capability to utilize the available
resources
• Business Culture
o Organizational or Corporate culture
o Collection of values, beliefs,
principles, and expectations learned
and shared by the employees,
founders, stakeholders, and members
o Types of Culture
1. Culture of the Business or
Organization
2. Individual Culture of the
Employees
o Cultural acceptance – employees
accept the culture of the unit or
business
o Cultural integration – all units
across the business accept and share a
common culture
• Business Structure
o Formal organizational arrangement of
the business in terms of hierarchy of
positions, flow of communication,
relationship of functional areas, and
production and marketing processes
• SWOT Analysis
o TOWS analysis
o George Albert Smith, Jr. and Roland
Christensen
o Strength – are resources and
capabilities that can be used for
competitive advantage (internal)
o Weaknesses – are areas where the
business needs improvement
(internal)
o Opportunities – are favorable factors
that could give an organization a
competitive advantage (external)
o Threats – are factors that have the
potential to harm an organization
(external)
 • BCG Analysis Matrix
o Boston Consulting Group

• Business Competency

ADDITIONAL NOTES: (MAKALAT)

• According to ma’am, there’s no standard
definition of entrepreneurship
• Single Prope – One Owner
• Cooperative – No limit as long as one lang
objective
• Partnership – two or more
• Corporation – popular; globe/smart is a
brand; max of 5 shareholders
• Shareholders – may-ari ng mga stocks, the
same as stockholders/owners
• Assets – machineries (binibili na need para
mag-operate)
• Sabi sa batas, di kasama yung land
• In terms of classifying your business, di
isasama yung land as asset. Total assets
excluding the value of land.
• Finished products – ready to wear, available
na
• Market – where the seller and buyer meet
• There should always be a second shiz
• Supplier – the one who supplies raw
materials lol
• Innovation entails new creativity to sustain
the economic
• RD – Research and Development
• Economic Depression – equilibrium
• Good thing abt entrep is we can apply it to
reality daw
• Primer movers – kayo yan
• If you’re going to start a business, start it right
para you can influence others
• The more risk, the more gain