Chapter 1: A Perspective on Entrepreneurship
3. Pay taxes
1. Define entrepreneurship, entrepreneurs.
2. Know what innovation means in terms of
entrepreneurship.
3. Know the overview of concepts and tasks
relating to entrepreneurship.
Entrepreneurship is an important component of
a capitalist economy, it thrives in economic systems
that support innovation and handwork. When
entrepreneurs become successful, the nation is
immensely benefited.
ECONOMIC DEVELOPMENT
 It is scheme aimed at improving the living
standards of nation’s citizenry.
 To achieve such, proper management of the
following elements is necessary:
1. Human resources
 Labor supply, education,
discipline, motivation.
2. Natural resources
 Land, minerals, fuel, climate.
3. Capital formation
 Machines, factories, roads.
4. Technology
 Science, engineering,
management, entrepreneurship.
 The effective and efficient utilization of various
element contributes to the economic growth.
 Such growth will occur when the elements of
entrepreneurship is performed well by the
players.
 There is a need for entrepreneurs to perform the
functions of: ----- to achieve economic
development.
1. Harnessing the potential of any or all of
the various elements.
2. Determining the right quantity of
resources needed
3. Applying the elements at the right time.
ENTREPRENUERSHIP
 Refers to the economic activity of a person
who stars, manages, and assume the risk of
a business enterprise.
Entrepreneur
 Refers to the person who undertakes
entrepreneurial activities.
THE ENTREPRENEURS’ TASK
The entrepreneur can assume his role in the
development of the economy when all the economic
requirements are in place.
 Basic task of entrepreneurs in relation to the
development of economy:
1. Provides goods and services for
customers and producers.
2. Provides employment.
4. Demand for suppliers’ product and
services
5. Helps in training facilities for future
entrepreneurs.
 Basic task of entrepreneurs in relation to
attempt to make profit:
1. To supply necessary capital.
2. To organize production by buying
and combining inputs like materials
and labor.
3. To decide on rate of output, in the
light of his expectation abound
demand.
4. To bear the risk inherent to the
venture.
The freedom of competition afforded by the
capitalist economy serves to drive the entrepreneur to
innovate and get ahead of his competitors lest he is
driven out of the market.
 Buyers tends to buy or patronize innovative
offerings of any kind, hence the entrepreneur
must take in to consideration this motivations if
he wants to gain patronage.
INNOVATION
 Defined as the introduction of new method,
procedures, custom, and device, among others.
 Innovation can be any of the following:
1. New product;
2. New process of production;
3. Substitution of cheaper materials in
unaltered product;
4. Reorganization of production, internal
function, or arrangement. --- leading to
increased efficiency better product
support and lower cost.
 Improvement in instrument or methods of doing
innovation.
 It the last stage in the process of making new
products and process.
1. Invention --- refers to the discovery or
devising of new products and processes;
2. Development --- which refers to the
process by which the ideas and principles
generated from the stage of invention are
embodied in concrete product and
techniques;
3. Innovation --- refers to the actual
introduction of a new product or process
 Examples of successful innovations
o Cordless microphone
o Cellular phone
o Laser treatments
o Use of computers in architectural in
engineering fields.
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 Factors Of Economic Limiting Factor For
NEW VENTURES AND LONG TERM Production Reward Rewards Received
ENTERPRISES Land Rent Supply and demand
New venture cannot remain as such forever. Industry rate/
The entrepreneur must develop it into a small business Capital Interest government
or make it grow into a mature and bigger company if he mandated rates
is to recoup the cost of opening a new venture and take Supply and demand
Labor Wages/ salary
advantage of the opportunities presented by a mature legislation
business. Skill of
Entrepreneur Profits
entrepreneur
*4 major stages of transition from new venture to a  Rent
long-term enterprise: o refers to specifically to the price paid
per unit of time for the services of a
1. Prestart-up stage
durable good, which, most often refers
2. Start-up stage
to land or building.
3. Early growth stage
 Interest
4. Late growth stage
o Refers the compensation paid to owners
*Prestart-up stage of invested capitals.
 Wages
 Happens when the entrepreneur starts to
o Determined on a piece-rate basis
question the feasibility of an idea, product, or
 Salaries
service.
o Based on time-rate
 He seeks answers to question regarding
 Profit
potential markets, production, and financing.
o The residual amount after deducting all
*Start-up stage expenses to the gross income.
 Involves the following activities: THE ENTREPRENEUR’S PREDICAMENT
1. Formation of the business;
2. Generation of necessary capital; In the creation of a new venture, the
3. Purchase of facilities and equipment; entrepreneur may be successful in offering innovative
4. Constructing prototype products; products or services. At this stage he will reap the profit
5. Testing the market. for being ahead of the competitors.
 No full-scale activity must be undertaken at this This situation may be temporary because the
stage for simple reason that feasibility must be competitor may attempt to improve his position by
establish and verified. making moves to outpace the entrepreneur in the race.
*Early growth stage The competitor may either imitate or offer
 Activities will be on small scale, i.e., selling to better innovation, if so the profit of the entrepreneur
limited markets within limited resources. might decline.
 Of the enterprise is successful at this stage, the BUSINESS SIZE
option to move to the next stage can be
exercised. To many, entrepreneurship means running a
small business. New ventures, however, can also be
*Late growth stage undertaken on a large scale.
 The final stage before the new venture matures To effectively compete, business of whatever
into a stable enterprise. size must adapt innovative approaches t its activities.
 This is when the management is structured, Example:
long-term financing is established, and facilities
planning are undertaken. 1. Offering services on weekends or holidays.
 This is also the stage where the skills of the 2. Manufacture and sale of new product.
entrepreneur are less needed. Instead, the 3. Selling on a deferred payment scheme.
skilled manager begins to take over.
 Small business have the advantage of swathing to
another business concept whenever necessary
REWARDS FOR SUCCESSFUL  Large business cannot do the same without
ENTREPRENEURSHIP spending must. However, large businesses have
The use of any of the factors of production started to engage in “entrepreneurship” where a
deserves to receive some form of compensation. person with entrepreneurial skills and is employed
by and is tasked to launch new product.
Factors of Production and Their Rewards