MODULE II.

MIDTERM
LESSON I: SOCIAL RESPONSIBILITY
COMPETENCIES:
Explain the rights of consumers, creation of jobs and business ethics.
Discuss Social Responsibility of the entrepreneur.
Explain ethical issues facing entrepreneurship.

DISCUSSIONS:
Social Responsibility Explained
The concept of social responsibility has various meanings to different individuals, for instance, to a banker,
his social responsibility is to lend money even to the poor producers, and not only to the rich ones. To
manufactures, their social responsibility is to create quality products, and not to pollute the environment.
To the rich, their social responsibility is to share their access wealth with the less fortunate.
What then is the best social responsibility of entrepreneurs? Professor Howard Bowen defines it as” the
obligation of businessmen to pursue their policies, to make those decisions, or to flow those lines of actions
which are desirable in terms of the objectives and values of society.” Such definition is rather broad and
philosophical. Let us define social responsibility of the entrepreneur or businessman to his customer,
supplier, stockholders, fellow businessman, government, to the community, and to his employees? Such
business relationship are measured by fairness, honesty and justice.
The entrepreneur must sell quality products at fair price. He must also be fair with his suppliers by paying
them on time as agreed upon. He must give reasonable profits to stockholders for their investment. he must
pay correct amount of taxes to the government. he must promote the welfare of his employees. Equally
important is the social responsibility of the entrepreneur to his community in terms of job creation and
environmental conservation.
Historical Development of Social Responsibility
Theory of Karl Marx
Marx, a German Philosopher, stressed the social importance of labor. He said that workers are the real
producers of goods. Yet, he claimed that the benefits of production go on the capitalist and not to the
workers.
Karl Marx developed his theory of Scientific Social Evolution. He stated that in the beginning, when society
was still primitive, there was social equilibrium. However, when new ideas and new tools of doing things
were introduced, the old system was disturbed. As a result, man became greedy for power and wealth. Man
became greatly concerned with material wealth. This led to a class struggle between the workers and the
capitalist. the latter wanted to a mass wealth at the expense of the workers.
Robert Owen, the Social Utopian
Robert Owen, being a social reformer, believed that society must be completely restructured on the basis
of common ownership, equal rights, and collective labor. He contrasted his social system to that of
capitalism, which is a system of competition and exploitation. He linked the worsening conditions of the
working class to the introduction of machines during the Industrial Revolution.
In 1820, Owen strived to propagate the cooperative association of workers. Some years later, he took active
part in the cooperative and labor movement. In addition, he preached the ideas of socialism for 40 years.
In gratitude, succeeding generations honoured him as the “Father of socialism and cooperatives.”
The Influence of Labor Unions
Before the 1930s, businessmen enjoyed too much freedom. Government protection and promotion of the
welfare of the consumers and workers were minimal. It was still a laissez-faire situation.
By today’s standard, working condition were not favourable. People worked more than 60 hours and there
was no minimum wage law. Benefits, like paid vacation, medical insurance, and overtime pay were not
given by almost all enterprise ( in fact, until now in the Philippines, most businessmen do not grant such
incentives), and work areas were crowded and unsafe. There were also many industrial accidents.
Due to such abuses, workers formed their labor unions. They demanded for better working conditions and
security of tenure. However, the government was even more supportive on the side of the employers. This
is true even in many poor countries. Labor organizations have been branded as tools of the communists.

ENTREPRENEURIAL MIND 1
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
Theories on Social Responsibility
1. Economic Model. This is based on the traditional concept of business. That is, the primary objective
of business is to earn reasonable profit, as well as to offer quality good and service, and to provide
employment. Such model claims that society will benefit most from business if left alone in its
operations. Business has done its social responsibility to the needs of the consumers, by creating
job and by paying taxes to the government. Such taxes are being used by the government for social
services.
2. Social-economic Model. It believes that businessmen have their responsibility to stockholder, as
well as to their employees, customers, supplies, and the general public. It stresses not only profit,
but also the implications of business decisions on society. It is argued that since an enterprise is a
creation of a society, and that it conducts its business in the community, the enterprise has a social
responsibility to share its earned resources with the needs of society. Colgate- Palmolive, for
instance, has stated that a firm must return to the community what it has taken.
3. Classical model. an enterprise is socially responsible if it stresses to use, as efficiently as possible,
the resources at its disposal, in producing the goods and the services that society needs, at a price
consumers are willing to pay. Milton Freidman, a noted monetary economist, is a follower of the
classical view. He said that there is only social responsibility of business-to use resources and
engage in activities design of profit, so long as it stays within the rules of the game.
Arguments for Social Responsibility
1. Business cannot and should not ignore social problems because it is a part of society.
2. Business has resources, like financial, technical, and managerial, that are required for solving social
problems.
3. Business can earn more profits in the long run by helping eliminate or reduce social problems.
4. Business can expert less government intervention if it performs its social responsibility.
Arguments Against Social Responsibility
1. Business managers are primarily responsible to stockholders. Thus, their job is to earn profit for
their investors.
2. The resources of the enterprise-time, money, and talents should be used to maximize profit, not to
solve the problems of society.
3. the effects of social problems on society is very general, business should not expected to solve social
problems. This is their fundamental responsibility to the voters.
Social Responsibility to Consumers
If there are human rights, there are also consumers rights. However, consumers are not strong in
protecting their rights against capitalist exploitations. Although there are now several organizations of
consumers, their power is hardly felt. It was President John Kennedy who introduced the four basic
rights of consumers. These are:
1. The right to safety. This means products are safe for their intended use, contain clear and
complete instruction for their proper use, and have been tested by the manufacturers for quality
and reliability. It is rather very unfortunate that some industrial countries use the consumers is
poor countries.
2. The right to be informed. This refers to the availability of completed and correct information about
the use of the product. For example, food items must contain detailed information on their
ingredients. Loans must provide the true terms of payment interest rates. Likewise, products must
contain warnings on their potential dangers, if there are any. Such as in the case of wines, cigarettes
and drugs.
3. The right to choose. It is the policy of the government to encourage competition among sellers or
producers, so that consumers can choose the best products in the market. This is good because
through competition, goods and services have better quality and lower prices. If there is only one
producer, the tendency is for the consumers to be abused. For this reason, progressive governments
are against monopolies.
4. The right to be heard. This is based on the concept that “the customer is always right “Seller
should listen to their buyers and act immediately on their complaints. Good business enterprises
have their customer relations department. the job of this office is to please their customers.

ENTREPRENEURIAL MIND 2
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
Other Social Responsibilities.

1. Employment. Business enterprises should adopt the policy of “equal opportunity employment”.
This means there are no discriminations against race, sex and religion. In fact, they do not give
much importance to the diploma. What they need are competence and experience.
2. Education and Training. Business organizations, particularly the big and successful ones, should
contribute their resource to the education and training of the poor and disabled persons in the
community. Such human resource are potential assets to the community and to the business
organizations. A business enterprise cannot be stable if it is surrounded by poverty and other social
problems. Japan is very wise nation. It has been helping its poor neighboring countries build their
roads to increase its sales or cars and motorcycles. Asia is a very big market for Japanese products.
3. Community Development. The business organization is very much a part of community. Thus, it is
social responsibility to help to the development of the community, so that it will be a better place to
live in. Community development includes health and sanitation, livelihood projects and cultural and
sports development. Man giant corporations, like Ayala and Soriano Groups, are actively involved
in community development projects. Hacienda Luisita in Tarlac and Canlubang Estate in Calamba
have generous community development programs for their workers and the poor in the community.
Business Ethics
Ethics is the study of right and wrong. It is a moral choice by an individual. In business, it is the application
of moral standard on business decisions and actions. Business ethics involves relationship with employees,
investors, customers, creditors, and competitors. There are many businessmen who are not fair and honest
in dealing with the said groups. For instance, they exploit their workers , and they do not pay their creditors
on time . They cheat their buyers by selling poor quality products or use wrong weights and measurements.
Peter Drucker, an international famous management consultant, said” The first responsibility to society is
to operate at a profit. Business is the wealth –creating and wealth-producing organ of society. But what is
most important is that management realizes that is must considered the impact of every business policy
and business action upon society. It has to consider whether the action is likely to promote the public good,
to advance the basic need belief of society, to contribute to its stability, to itself, to the enterprise , to our
heritage, to our society ,and tour way of life.”

A Code of Ethics For Business

Preamble
This Code of Ethics has been formulated impelled by the belief that man has a dignity that must be
respected, and that all the resources of the earth have been created for his growth and development.
As here presented, this Code is considered a major step in the principles of business activity in the
developing of man, as such, is open to further improvement.
This code seeks to express systematically and coherently the principles of business practices accepted and
professed by Philippine business at its best, and seek to apply these to current and changing needs.
It is hope that this Code will serve as General Stimulus to renew and develop or amends existing standards
and that individual entities will expand and adopt it to the specific needs of their own organizations.
It is a General Code intended to be influential rather than coercive, It is hope that individual entities will
consciously adopt and embrace it, as a statement of principles and, having done so, will be unwilling to
incur the sanction of adverse public opinions through failure to live up to the code.
Finally, it is a code for all peoples, formulates on the premise that the modern managers must be a strategist
for human development, and that the rationale of business is to build an enterprise oriented to the
development of man.
The Concept
Business, which embraces commerce and industry, is not an accidental human activity, but an integral
elements of the social order. Its primary purpose is to meet society’s human needs by providing goods and
services as efficiently as possible. Those engaged in business should, therefore, recognize the following
basic concepts:

 All business is essentially an expression of human relationship, not only with these who work in the
enterprise, but also with those who own and provide financial resources, with those who supply it with
materials and services, with those who buy its products and services with the government, and with
the wider public whose lives are affected by the business activity. The interest of all those members of
society must be taken into account in formulating business policy.

ENTREPRENEURIAL MIND 3
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
  The owners, management, the work force, the suppliers and subcontractors, the customers, and the
government contribute to the performance of business enterprise, and are, therefore, entitled to receive
the proper worth of their contributions.

 The resources employed by a business enterprise are financial, technological, and human. The human
resources have unique quality and should be employed in a manner consistent with personal dignity.
The individual should be given opportunity to sue and develop his faculties in his work. His contribution
to the success of the enterprise should be properly recognized and rewarded.

 Business enterprise has a public responsibility to use all his resources efficiently. Profit, in a system of
a free enterprise, is recognized as a fundamental incentive, and is necessary for the maintenance and
growth of the enterprise, for raising the quality of life, and for helping meet the broader needs of society.

 Competition and inventiveness are essential for the maintenance and continuing improvement of the
quality of goods and services, for growth and for the technological progress. However, to guards against
unfair forms of competition, a consistent standards of business behavior must be established and
observed.

 In business, as in any other institution of society, any right or authority enjoyed by or entrusted to
business presupposes, and is justified by, corresponding duties, responsibilities, and performance.
Towards the Employees
Those responsible for business policy should consider not only the interest of the owners of the business,
but also the interest of those affected by the activities of the business.
Business shall recognize the unique position of employees as individuals with a vital stake in there, and at
the same time with inherent obligations to their own families, and provide:

 For recognize that, although rates of pay may often be determined by union, economic and legal pressures,
wages and salary policy should be based on the right of the employees to a fair and improved standards
of living, irrespective of race, sex, age and creed.

 For a fair recruitment practice that affords equal opportunity to all qualified job seekers;

 For the job security, adequate compensation for employees in cases of separation and retirement, and for
opportunities for fringe benefits;

 For a safe and healthy atmosphere in the work environment conducive to the physical and moral well
being and growth of the employees;

 For conditions in which human potentials and relationships can be developed at all levels of the work
force, with a view of providing therein a sense of purpose and achievement; and achievement; and

 For participatory element so that the knowledge, experience, and creativity of all who work in the
enterprise may contribute to the decision –making process.
Towards the Customer
Business shall, in the production of goods and services:

 Strive after a quality that will enable them to serve their purpose efficiently and effectively;

 Avoid anything that would be detrimental to the health, safety, or growth of the proper user or beneficiary
of such goods and services; and

 Seek to apply or make use o the discoveries and inventions of science with adaptions that will improve
their products or service, thereby benefiting customer/users and increasing their number.
In its marketing arrangements, business shall:

 Deliver the products or service in the quality, quantity, and time agreed upon, and at a reasonable price,
and avoid the creation or artificial shortages, price manipulation and like practices;

 Establish an after –sales and complaints service commensurate with the kind of product or service
supplied and the price paid; and

 Ensure that all mass media, promotional, and packaging communications be informative and true , and
take into account the precept of morality and the sound cultural values of the community , and manifest
respect for human dignity.

ENTREPRENEURIAL MIND 4
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
Towards the Suppliers
Business shall ensure:

 That the terms of all contracts be clearly stated and unambiguous, and honoured in full, unless
terminated or modified by mutual consent;

 That abuse of economic power in dealing with a smaller concern be avoided, and that , in all cases, terms
of payment be strictly and fully observed. In general, payment should always be made promptly at the
agreed time or, if no specific time is agreed upon, as quick as may be reasonable, given the
circumstances; and

 That no supplier be encouraged to commit his resources for apparently long-term purposes, unless
there are reasonable guarantees that the orders he receives from the business enterprise will not be
terminated arbitrarily.
Towards the Owners and Other Providers of Capital
In the interest of the owners and other providers of capital, business shall:

 Provide an adequate rate of return to those contributing capital to the enterprise, and ensure the security
of their investment;

 Use their financial resources to provide goods and services responsibly and efficiently;

 Furnish the owners and other providers of capital with such information as they may reasonably require,
provided that it does not adversely affect the security or efficiency of the business; and

 Pursue the specific objectives of the owners and other providers of capital; provided that these do not
run contrary to any of the principles stated herein.
Towards the Local and National Government
Although it is the responsibility of the government to enact legislation and formulate implementing policies
and programs, it is the duty of business;

 To participate in the discussion of proposed legislation and / or its implementation affecting sectored,
regional, national and international interest; and

 To propose around policies in the use of human and material resources.

Towards Society in General
Business shall recognize in their decision –making the interest of the general public and, realizing that they
are utilizing to an important degree the nation’s resources, shall:

 Take regular stock of their response to the basic needs of the society and thus, ensure that these needs
are taken into account in all policy –making decisions;

 Do their best to ensure that the way they employ their resources benefits society in general, and does
not conflict with the needs and reasonable aspirations of the communities in the areas where they
operate;

 Pay proper regard to the environmental and social consequences of their business activity, with special
attention to the duty of renewing resources where possible, and minimizing waste and pollution, and
not sacrifice safety or efficiency in the interest of short-term profitability;

 Consider the human and social costs of mechanization and technology; and

 Establish a policy allowing employees, within reasonable limits, to contribute to the public and
community service during the work time.
Some Ethical Principles of the Professional Managers
The concepts and principles for the conduct of business outlines in this document are commended to the
managers of business enterprise. Thus, although the manager is expected to act in the best interest of the
business, he cannot be expected to act in a manner that is contrary to the law or to his conscience:

 Acknowledge that his role is to serve the business enterprise and the community;

 Avoid all abuse of executive for personal gain, advantage or prestige;

 Reveal the facts to his superiors whenever his personal business or financial interest become involved
with those of the company;

ENTREPRENEURIAL MIND 5
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
 Establish a policy regarding conflicts of interest based on the principles that decision should be made
in the best interest of the business enterprise, and decision-makers should be on their guard, against
allowing personal considerations to distort their judgement;

 Not tolerate any form of illegal data gathering or any form of inducement that tends to distort normal
commercial judgement;

 Recognize that his subordinates have a right to information on matters affecting them, and make
provisions for its prompt communication, unless such communications is likely to undermine the
security and efficiency of the business;

 Fully evaluate the likely effects on employees and the community of the business plans for the future
before taking a final decision; and

 Cooperate with his colleagues and not attempt to secure personal advantages at their expense.

ENRICHMENT ACTIVITY:
Case Analysis:
The photocopying business is thriving in Dagupan City. Miss Josefina “Fina” Datu is the owner and operator
of the biggest copying firm in the city. Fina has been in the business for more than 20 years and because
of her courage and enterprise, she was able to put up three branches in each of the capital towns of the
three adjoining provinces, namely Nueve Ecija, Tarlac and Pangsinan. She is planning to operate in Nueva
Ecija and Isabela in the near future.
This business involves using machines to copy document, books, magazines, and other materials. Fina
employs six young ladies per branch. A big dealer in Manila supplies her with the latest copying machines,
paper and ink. Fina has open credit line with the dealer.
Fina personally trains new employees in the firm’s main office in Dagupan. After a month of training, the
new employees are deployed in the various branches. New employees are paid daily wages depending on
output. They are also entitled to free board and lodging.
The firm’s customers consists of teachers, students, government employees and some others. Just a week
ago, the dean of a big school in the city proposed to her the copying of books to be sold to students. The
dean indicated that she will take care of selling the book to students in her school. For the service, the dean
was expecting a 20 percent commission.
Fina thinks the proposal is s sound one and it will yield good profits. She is not yet fully convinced, however,
if the proposal is ethically right. Fine considers seeking the advice of someone who should be informing her
about the right thing to do before she makes a decision.
If you were consulted by Fina, what would you advise her? Why?

COMPREHENSION CHECK:
Answer the following comprehensively:
1. What exactly is the social responsibility of the entrepreneur?
2. What are the main rights of consumer?

Rubrics:

20 pts 15 pts 10 pts 5 pts

Content Ideas are complete and Ideas are sufficiently Ideas are limited with Minimal ideas and
substantial and well substantial and adequately inadequate elaboration elaboration
elaborated elaborated
Organization Ideas are well organized Ideas are somewhat Ideas are poorly organized Ideas are very poorly
organized organized.
Convention Evident control of Sufficient control of limited control of Minimal control of
grammar, spelling and grammar, spelling & grammar, spelling & grammar, spelling &
sentence structure sentence structure sentence structure sentence structure

ENTREPRENEURIAL MIND 6
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
LESSON II: ENTREPRENEURIAL PERSONALITY
COMPETENCIES:
Identify factors that determines the success and failure of entrepreneurship.
Define Personality
Identify and Explain characteristics of entrepreneurship.
Discuss how to motivate people to engage in entrepreneurship.

DISCUSSIONS:
Operating a business enterprise is a very challenging occupation. The rate of failure among those who dared
to make attempts is high. Only a small number of them become successful and the levels of their success
differ. Some of them become highly successful and the rest are neither moderately or slightly successful.
Those who fail also differ in terms of degree of failure.
Clearly, entrepreneurship is not for everyone. But how do we know, beforehand, that a person is a good
prospect? What determines success or failure? It is important for those interested in entrepreneurship to
know the answers to those questions. Some guides provide clues and one of them indicates that there are
two complimentary factors that determine success or failure in an entrepreneurship.
These factors are:
1. Environment
2. Personality of the entrepreneur
The Environment as a Factor
An entrepreneurship will survive and grow in an environment that is friendly or akin to. Nature
provides us with examples of what happens to entities living in certain environments. For instance, giant
clams thrive in the ocean, but not in the river. The coconut palm will grow in the Philippines but not in
Sweden. These are also because giant clams were designed by nature to survive in saltwater, and freshwater
river will be hostile to it because it is not its natural habitat. Coconut trees grow naturally in the tropics
and because Sweden has a cool, temperature climate, they will not survive there.
In the same light, entrepreneurships will survive and grow only in economic environments of free
enterprise. Full blooming entrepreneurships cannot be expected to flourish in economies that are fully
supportive of free enterprise.
In terms of support to entrepreneurships, economic environments differ from place to place. To
facilitate discussion, economic environments may be classified as follows:
1. Fully supportive of entrepreneurships
2. Moderately supportive of entrepreneurships
3. Not supportive of entrepreneurships
Economies that full support entrepreneurships make it easy for entrepreneurs to succeed. The exact
opposite may be expected in economies that ate not supportive of entrepreneurships. (Figure 1)

Types of Economic The Entrepreneur’s

Environment Task

Those fully
supportive of easy
entrepreneurships

Those moderately
Less easy
supportive of
entrepreneurships

Those not
supportive of hard
entrepreneurships

Figure 1. Economic Environment and the Entrepreneur

ENTREPRENEURIAL MIND 7
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
The Entrepreneur’s Personality
Every person has a personality that is unique and different from others. Each personality type has
a corresponding type of job that fits in. a certain personality, however, may fit in more than one type of job,
although the level of fitness will be different with each job. A given personality, for instance, may perfectly
fit the entrepreneur’s job, moderately fits the teacher’s job, but is not fitted for the engineer’s job (table 5)
Table 1. Personalities and Job Fit

Personality Types Entrepreneur’s Job Teacher’s Job Engineer’s Job

A Perfect fit Moderate fit Unfit
B Unfit Perfect fit Moderate fit
C Moderate fit Unfit Perfect fit

What is Personality?
Personality refers to the pattern of characteristics that distinguishes one person from another. It
includes the person’s traits, values, motives, genetic blueprints, attitudes, emotional reactivity, abilities,
self-image, intelligence and visible behaviour patterns.
Psychologists have made great advances in research about personality. An interesting study is that
one made by Holland (quoted in Patton and McMahen, 2006, 29-31). His proposal indicates six personality
types. They are as follows:
1. Realistic type
2. Investigate type
3. Artistic type
4. Social type
5. Enterprising type
6. Conventional type
A brief description of the foregoing personality type is presented in Table 2.
Table 2. A brief description of Holland’s Personality Types

1. realistic This individual prefers activities involving aggressive behaviour and physical
exertion requiring skill, strength and coordination.
Examples: farming and mining.
2. Investigative This individual prefers to be analytical, curious, methodical and precise.
Examples: crime investigator and arson investigator.
3. artistic This person is expressive, nonconforming, original and introspective.
Examples: songwriter and novelist
4. Social This person enjoys working with and helping others and purposefully avoids
systematic activities involving tools and machinery.
Examples: social worker
5. enterprising This person enjoys verbal activities to influence others and to attain power and
status.
Examples: manager and entrepreneur
6. Conventional This person enjoys the systematic manipulation of data, filing of records or
reproducing materials.
Examples. Accounting, finance

Characteristics of Entrepreneurs
Successful entrepreneurs possess certain characteristics that are unique and different from those
having other occupations. Based on research by experts, the following traits are considered vital to a
successful career in entrepreneurship:
1. Drive 6. Reasonable risk take
2. Thinking ability 7. Self-confident
3. Human relations ability 8. Goal setter
4. Ability to communicate 9. Accountable
5. Technical knowledge 10. Innovative

ENTREPRENEURIAL MIND 8
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
Drive. Success in entrepreneurship becomes possible when the entrepreneur is self-motivated enough to
pursue his chosen course without relenting even in the face of adversity. Reaching a goal, however, is often
achieved through a series of moves. It is rare for entrepreneurs to succeed with just single stroke. If he fails
in his first attempt, he makes another attempt. He repeats the attempts maybe with some improvements,
until he succeed. This will happen if the person has drive. The tension that occurs when a need is not met
is called drive.
Richard Branson is an Englishman who is a fine example of a person “with bucket loads of
entrepreneurial drive”, and became a successful entrepreneur. As a child, he made his money growing
Christmas trees. At 16, he started publishing a magazine. At 19, he set up a mail order business. Drive
enable him to own businesses as diverse as banking and soft drinks, condoms and airlines and became a
billionaire in the process.
Thinking Ability. The entrepreneur’s job involves solving problems and making decisions. When he finds
the correct solutions to problems that confront him and then makes decisions that are implemented, he
comes closer to realizing his goals.
If, for instance, the entrepreneur is asked to make the final decision in the promotion to vice president of
one of three qualified managers, he needs to use his thinking ability and that ability must be sufficient to
guide him to make the best choice.
A man with superior thinking ability can see through the maze of information (or disinformation) brought
before him. The ability is an ingredient of successful entrepreneurship.
Reading the biographies of successful entrepreneurs provides insight on how these people used their
intelligence to succeed in the business endeavors. A good example is Jeff Bezos who founded Amazon.com,
an online shopping site. As a child, Jeff was extremely bright. When he grew older, he used his thinking
ability to make his company generate sales of $1.92 billion in 2000, just five years since the founding of
his company.(Ros Jay, 2001)
Human Relations Ability. Three types of persons will determine the survival and growth of business firms;
(1) the customer; (2) the employees, and (3) the third party with interest in the firm.
The customer makes the decisions whether to patronize the firm or not. His decision, however, will depend
on what he thinks of the firm. Perception on customer relation will definitely be a factor.
The employee can be productive and loyal to the firm. He can help avoid production delays and shortages,
wasteful consumption of company resources, dissatisfied customers, and the like. He can be an asset
depending on what his superiors do to him.
Third party with various interests regarding the firm can also be made to be more cooperative and
accommodating. This will depend, however, on how the company relates to them. The internal revenue
service personnel and the police, for instance, can be less accommodating to the firm and they can make
business operations difficult.
All of the interests cited above can be useful partners of the firm, but this will depend to a large extent on
the ability of the entrepreneur to relate with them.
Ability to Communicate. Communication skill is a very important characteristic an entrepreneur must
have if success is expected. The ability to understand and be understood makes it easier for the
entrepreneur to transact business with customers, bankers, and government officials.
When the entrepreneur gives orders that are easily understood, wastages in time and materials are
minimized. An entrepreneur who has little ability to communicate tends to demoralize and alienate his
staff. What usually happens next is low productivity and high employee turnover.
Technical Knowledge. Operating an entrepreneurship requires the performance of major and minor tasks.
In running a restaurant, for instance, important tasks may include the following: recruitment of personnel,
purchasing of materials, bookkeeping, sanitation, cashiering, cooking and others. The restaurant
entrepreneur must at least be familiar with and possess some technical knowledge about how the various
tasks are performed.
It will be easier for him to devise a strategy on how he will manage his firm to effectively compete with
others.
Reasonable Risk-taker. When a person starts a new venture, he has already begun to assume the risk of
business failure. Entrepreneurs, however, normally do not assume unreasonable risks.
Theoretically, ventures with zero risks yield zero benefits. Those who aspire for benefits like profits must
reckon with possible losses. There are instance, however, when the possibility of benefits far outweighs the
risk involved. It is the function of the entrepreneur to determine when this is so. The entrepreneur must
calculate a reasonable trade-off between risks and benefits.

ENTREPRENEURIAL MIND 9
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
Entrepreneurs are expected to be reasonable risk-takers, not conservative but also not gamblers. They
assume risks but only after they are convinced that they have the skills and resources to overcome the
difficulties inherent in a new venture. Table 2 indicates how the entrepreneur as a risk taker is compared
with other types of risk takers.
Table 2. The Entrepreneur Compare with other Risk Takers

Types of Risk Taker Level of Risk Taken Expected Level of Benefits

Salaried employee Low Low
Entrepreneur Moderate Moderate
gambler high High

Self-confident. A person cannot achieve much unless he has sufficient confidence in himself. In any
undertaking, including entrepreneurship, a person’s belief in his ability leads him to actual performance
and eventual success. When a person has self-confidence, he does his job without inhibition.
Self-confidence is best exemplified by successful entrepreneurs who have physical disabilities. One such
person is Mr. Aurelio Dagdag whose diminutive stature did not prevent him from establishing his own
business, J.A.C. Footwear. The company is currently doing well. It is able to provide employment to as
many as 100 persons (entrepreneur, Jan-Feb.2008)
Goal Setter. Goals are very useful motivational tools, especially those related to accomplishing the
objectives of entrepreneurs. A goal performs the following functions:
1. It directs one’s attention to a specific target
2. It encourages one to exert effort toward achieving something specific;
3. It encourages persistence
4. It fosters the creation of strategies and action plans
It is easy to understand that persons who are goal getters would make entrepreneurs of high success
potentials.
Accountable. The success of an enterprise will depend much on the willingness of subordinates to comply
with the wishes of the entrepreneur. Compliance can be expected if the entrepreneur is accountable enough
to take responsibility for whatever happens to the firms.
Innovative. A free enterprise economy like ours allows business enterprise to flourish. This will depend,
however, on how well the public is convinced to patronize them. Buyers will have to be persuaded to buy
from the entrepreneur’s firm rather than from competitors. The innovative entrepreneur, however, will be
able to handle this problem.
Innovative may be only way the entrepreneur can achieve the following:
1. Penetrate the market
2. Improve employee turnover
3. Reduce manufacturing cost and
4. Improve collection rate
Walter Disney is an example of highly innovative entrepreneur. He developed and incorporate new
technology and new ides to draw customer. Some of his accomplishments in entrepreneurship consist of
Mickey Mouse, Disneyland, and Walt Disney movies (Ros Jay 2001).
What Motivates People to Become Entrepreneurs?
Not everyone desires to be an entrepreneur. Those who do, however, are motivated by any or all of
the following:
1. Desire to be one’s own boss
2. Desire for financial rewards
3. Desire to create one’s own job security
4. Desire to improve one’s quality of life

ENTREPRENEURIAL MIND 10
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
Desire to be One’s Own Boss
There are times when an employee sees some good opportunities for his employer’s business. When he
recommends action to be undertaken and is ignored, the employee may just proceed to take the opportunity
and organize his own business. For instance, a professor in university thought that it’s time for his employer
to open branches in several locations. His recommendation to the president was ignored. He could not
convince his boss about the importance of expansion. He decided to be his own boss by establishing a
school for elementary students in the nearby town.
Desire for Financial Rewards
Getting employed is the desire of most people. This is understandable because many people want sure
monthly income. Some people, however, do not get satisfaction from a fixed monthly income which, most
often, is inadequate. Some think that they deserve to be properly rewarded for their skills. The means open
to them is entrepreneurship.
Although entrepreneurship is a very serious proposition, some people are still attracted to it. This is so
because of the prospect of high financial rewards. The financial rewards reaped by successful entrepreneurs
are enough to motivate the would-be entrepreneur.
Desire to Create One’s Own Job Security
Some employees feel that their jobs are not secure. They think they could be fired for a variety of reasons.
For instance, when a company decides on downsizing its operations, employees are the first to be affected.
When management makes serious errors and it affects the company’s viability, the jobs of the employees
are compromised.
Persons who cannot bear to worry about job security may just decide to become entrepreneurs. Even if the
venture fails, the entrepreneur knows that it is the result of his poor performance.
Desire to Improve One’s Quality of Life
Oftentimes, employees do not have control over their work schedules. As a result, they could not fulfil some
important family responsibilities. A nursing mother, for instance, will have to consider other less desirable
options in providing for the needs of her baby. The same predicament confronts those who care for elderly
relatives.
Persons who travel daily to work also sacrifice valuable time that could be spent with their families.
To some people, engagement in entrepreneurship provides them with some control over their work
schedules. An entrepreneur can choose a type of business that will be compatible with the quality of life he
desires. Specifically, the business location and the type of products sold can be chosen to jibe with the
personal and family needs of entrepreneur.
The Entrepreneur and the Manager Distinguished
The terms “entrepreneur and “manager” are sometimes used interchangeably. Although both jobs
are useful to the economy, each performs distinct functions.
The difference between the entrepreneur’s and the manager’s job may be pointed out in Chapter 1’s
discussion about the stages by which the enterprise must get through before it becomes stable. (Table 3)
Table 3. Activity emphasis of New Ventures

Enterprise Stage Factor Emphasis

I. Prestart up Business idea Full
Human resource None
capital none
II. Start-up Business idea None
Human resource Limited
capital Limited
III. Early growth Business idea None
Human resource Escalating
capital escalating
IV. Later growth Business idea None
Human resource Full
capital full
V. Stable Business idea None
enterprise Human resource Full
capital Full

For the firm to get along in the first three stages, the entrepreneur’s skill is required. The last two
stages require the skills of the manager (Table 4)

ENTREPRENEURIAL MIND 11
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
 Table 4. The Entrepreneur’s Task vs. The Managers Task

Enterprise Activity Entrepreneur’s Manager’s

Stage Involvement Involvement
I. Prestart Feasibility of an idea, product or service,
up among others, is scrutinized
full none
II. Start-up Business is formed, necessary capital is
generated, facilities and equipment are
purchased, prototype of products are
built, market is tested.
full none
III. Early With limited resources, selling is
growth undertaken in limited markets.
full none
IV. Later Structured management, long term
growth financing and facilities planning are
established. declining partial
V. Stable With bigger resources, recurring sales
enterprise and profits, selling in undertaken in
bigger market.
none full
A major distinction between the entrepreneur and the manager is about orientation. The entrepreneur (also
alternatively called promoter) feels confident of his ability to seize a business opportunity regardless of the
resources under his current control. The manager (also alternatively called the trustee) emphasizes the
efficient utilization of resources.
Figure 3 illustrates the complimentary roles of the entrepreneur and the manager as they confront
competition.
Note: at the pre-start-up stage, the only activity of the entrepreneur is identifying a good business
idea. When he decides on a business idea, he starts operating with limited human resource and capital. He
does not consider new business ideas from start-up to stable enterprise. As a business grows, so does
human resource and capital. New business ideas may only be considered when the ventures fails.
Figure 3. Competition and the Complimentary Functions of the Entrepreneur and the Manager

Business Activity Competitor’s

Activity

Identify and Competitor is

Step 1 unaware
seize
opportunity
Entrepreneur’s
Step 2 Assemble Competitor
Turf resources slowly becomes
aware

Step 3 Start Competitor

operation become fully
aware

Expand Competitor
Step 4
operation makes decision
to operate
Manager’s
Step 5 Maximize Competitor
Turf profits starts operation

Meet Competitor
Step 6 shares in
competition
industry profits

ENTREPRENEURIAL MIND 12
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor
ENRICHMENT ACTIVITY:
Case Analysis:
Petra’s Cosmetics: I’ll walk Alone
Service in the military is a tradition the Bayaua family of Tuguegarao City, Cagayan is very proud of. In
fact, Sergio Bayaua was an officer with the rank of major in General Emilio Aguinaldo’s army during the
Philippine Revolution against the Spaniards in 1898. His son Donato served as an officer in the Philippine
Army during the American regime and fought the Japanese in 1942. Donato’s son, Fernando, also became
an army officer and retired as a colonel. These three prominent members of the Bayaua clan were recipients
of medals awarded for their bravery in combat. Friends and neighbors regard them as exemplary role models
for their children and they think of them as the epitome of machismo.
Just recently, however, Fernando’s sense of family pride was pricked when he discovered that his teenage
son Pedro, was exhibiting unmanly behavior. Fernando became furious when he saw Pedro applying make-
up on his face. Later, Fernando also found out that his son displayed special interest in cosmetics.
Fernando’s classmate in high school, Miss Rosario Mariano, confided to him that his son was able to
convince her to buy cosmetics in the amount of P12,500. It also turned out, later, that Pedro was also able
to convince nine ladies to buy from him.
With Pedro’s interest in selling, he opted to enroll in a business course. He tried to support himself by
selling cosmetics. This he did instead of applying for the cadetship course at the Philippine Military
Academy, the alma mater of his father. Fernando was disappointed enough to think that his son would not
be successful in anything that he does.
When Pedro graduated from college, he thought of formally starting his career in entrepreneurship, just
like his uncle Teodoro. Pedro thought of the great emotional strain that torments his father. Nevertheless,
he decided to learn the nuances of how to successfully operate a cosmetics retail shop.
Do you think Pedro’s personality will not be a hindrance to his dream of being a successful entrepreneur?

COMPREHENSION CHECK:
Answer the following comprehensively:
1. Do you think entrepreneurship is not for everyone? Why or Why not?
2. Why is the environment considered to be a factor in the success or failure of entrepreneurship?
Rubrics:

20 pts 15 pts 10 pts 5 pts

Content Ideas are complete and Ideas are sufficiently Ideas are limited with Minimal ideas and
substantial and well substantial and inadequate elaboration elaboration
elaborated adequately elaborated
Organization Ideas are well organized Ideas are somewhat Ideas are poorly organized Ideas are very poorly
organized organized.
Convention Evident control of Sufficient control of limited control of grammar, Minimal control of grammar,
grammar, spelling and grammar, spelling & spelling & sentence structure spelling & sentence structure
sentence structure sentence structure

ENTREPRENEURIAL MIND 13
Faye Marie A. Sacalamitao, MBM, MSHM
Instructor