Chapter 01

FOUNDATION
AA OF
BUSINESS

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
 Prayer

Eternal God, in whom mercy is endless and the treasury

of compassion inexhaustible, look kindly upon us
AA
and increase your mercy in us, that in difficult moments
we might not despair nor become despondent,
but with great confidence submit ourselves to Your holy
will, which is Love and Mercy itself.
Amen.
Jesus, we trust in You!

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter One

What are the word/s orAAphrase that comes into

your mind when you hear or see the word
business?
Write it in our chatbox.

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter One
BUSINESS

• is a general term which

includes all profit-seeking
activities of enterprises that
provide goods and services
necessary to an economic
system.
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Chapter One
PROFIT

• Is the money that remains after

a firm deducts its expenses
related to producing and
marketing goods and services
from it revenues.

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 PRIVATE ENTERPRISE
Chapter One

SYSTEM
• is a feature of our market
economy. Under this system,
individuals are vested
E with the
right to operate enterprise for
private gain.

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Chapter One
ENTREPRENEUR

• is the one assigned to perform

the lead role in making the
private enterprise
E system work.

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 ENTREPRENEUR AND
Chapter One
ALTERNATIVE ECONOMIC
SYSTEM
Three economic system:
1. Capitalism
2. Communism E
3. Socialism

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Chapter One
CAPITALISM

• refers to the economic system in

which the means of production,
consisting of land
E and tangible
goods, are owned privately.

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 CAPITALISM HAS THE
Chapter One
FOLLOWING
CHARACTERISTICS:
1. Private enterprise and freedom of
choice
2. Freedom to compete E

3. Limited role of government

4. Prices set by the interaction of
the economic forces of supply
and demand
5. Profit motive 6-10
Chapter One
COMMUNISM

• The direct opposite of capitalism

where the means of production
are owned by the
E society as a
whole.

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Chapter One
COMMUNISM

• The direct opposite of capitalism

where the means of production
are owned by the
E society as a
whole.

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 COMMUNISM IS AN ECONOMIC
SYSTEM CHARACTERIZED BY THE
Chapter One

FOLLOWING:
1. State ownership of economic
resources
2. Social and economic
E equality
3. Central planning for economic
and social activities
4. No freedom of competition

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Chapter One
SOCIALISM

• Midway between capitalism and

communism where the state
owns only the essential
E industries
like steel, utilities like water and
power, transportations and the
like.

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Chapter 01

A PERSPECTIVE
AA
ON ENTREPRENEURSHIP

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter One ECONOMIC
DEVELOPMENT
• is a scheme aimed at
improving the living
standards of the nations
citizenry.

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Chapter One ECONOMIC
DEVELOPMENT
1. Human
development
2. Natural resources
3. Capital Formation
4. Technology
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Chapter One
ENTREPRENEURSHIP

•refers to the economic

activity of a person who
starts, manages, and
assumes the risk of a
business enterprise.
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 ENTREPRENEUR PROVIDES
Chapter One

THE FOLLOWING:
1. Products and services for
customers and producers
2. Employment
3. Taxes
4. Demand for supplier’s products
and services
5. Training facilities for future
entrepreneurs
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 ENTREPRENEUR PERFORMS
Chapter One

THE FOLLOWING FUNCTIONS:

1. To supply the necessary capital
2. To organize production by buying
and combining inputs like materials
and labor
3. To decide on the rate of output, in
the light of his expectation about
demand.
4. To bear the risk inherent to the
venture
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 INNOVATION COULD BE ANY
Chapter One

OF THE FOLLOWING:
1. A new product
2. A new process of production
3. The substitution of a
cheaper material in an
unaltered product
4. The reorganization of
production, internal function
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 INNOVATION COULD BE ANY
Chapter One

OF THE FOLLOWING:
or distribution arrangement
leading to increased efficiency,
better support for a given
product or lower costs.
5. An improvement in instruments or
methods of doing innovation.

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 INNOVATION AS THE LAST STAGE IN
Chapter One
AN IMPORTANT PROCESS
CONSISTING OF THE FOLLOWING:
a) invention – refers to discovery or
devising of new products and
processes;
b) Development – refers to the
process by which the ideas and
principles generated from the stage
of invention are embodied in
concrete products and techniques

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 INNOVATION AS THE LAST STAGE IN
Chapter One
AN IMPORTANT PROCESS
CONSISTING OF THE FOLLOWING:

c) Innovation – which refers to the

actual introduction of a new
product or process.

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 EXAMPLES OF SUCCESSFUL
Chapter One

INNOVATIONS ARE THE FOLLOWING:

1. cordless microphone
2. microwave oven
3. cellular phone
4. Kung fu fight scenes developed by Bruce
Lee in the movies
5. Karaoke music appliance
6. Use of Laser in the treatment of eye
conditions
7. Use of computers by engineers and
architects in the design of buildings
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 NEW VENTURES AND LONG-TERM
Chapter One
ENTERPRISES
FOUR MAJOR STAGES:

1. The prestart-up stage

2. The start-up stage
3. The early growth
stage
4. The late growth stage
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 IN THE START UP STAGE, THE
Chapter One
FOLLOWING ACTIVITIES ARE
UNDERTAKEN:
1. Formation of the business
2. Generation of necessary capital
3. Purchase of facilities and
equipment
4. Constructing prototype products
5. Testing the market

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Chapter One ENTREPRENEURSHIP
AND BUSINESS SIZE

1. Offering business services

during Sundays and holidays
2. Manufacture and sale of new
products
3. Selling on a deferred payment
scheme

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Chapter One Rewards for Successful
Entrepreneurship
The use of any of the factors of production deserves to receive some
form of compensation. The factors referred to as “things required for
making a commodity” consist of land, labor, and capital. To make them
work, however, a fourth factor becomes necessary and this is the
entrepreneur.
RENT - refers specifically to the price paid per unit of time for the
services of a durable good, which, most often, refers to land or buildings.
WAGES may be determined on a price-rate basis, while SALARY is based
on time-rate.
INTEREST is the compensation paid to owners of invested capital.
When all the factors of production are properly compensated, whatever
is left as profits are regarded as income.

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Chapter One
ASSIGNMENT

1. What is entrepreneurship?
2. What role does the entrepreneur play?
3. To make profits, what specific functions are performed
by the entrepreneur?
4. Why is innovation an important entrepreneurship
activity?
5. What does “innovation” consist of?
6. What stages comprise the transition from a new venture
to a successful long-term enterprise?
7. What is the reward accorded to the successful
entrepreneur?

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Chapter One QUESTIONS FOR REVIEW AND
DISCUSSION
1. What is entrepreneurship?
2. What role does the entrepreneur play?
3. To make profits, what specific functions are performed
by the entrepreneur?
4. Why is innovation an important entrepreneurship
activity?
5. What does “innovation” consist of?
6. What stages comprise the transition from a new venture
to a successful long-term enterprise?
7. What is the reward accorded to the successful
entrepreneur?

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Chapter One SUGGESTED ITEMS FOR
RESEARCH

1.) Identify a business in your area which

became successful due to innovation. Write
about the role played by innovation in its
success.
2.) Prepare a list of five innovative products or
services currently introduced in the market.

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Chapter One

THANK YOU!

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