ENTREP-REVIEWER

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Introduction to entrepreneurship

Entrependre- to undertake

Entrepreneur- are innovators, willing to take risk and generate new ideas to create unique and
potentially profitable solutions to modern-day problems.

Enterprise- created by an entrepreneur and the process of it's creation is called entrepreneurship.

Entrepreneurship- a process of actions of an entrepreneur who is always in search of something

new ideas to gainful opportunity.

Intrapreneurship- when an entrepreneurship describes activities within a firm or large

organization.

Importance of entrepreneurship

1. Development of Managerial Capabilities- An entrepreneur studies a problem, identifying its

alternatives, choosing best alternative which help sharpening the decision making skills of an
entrepreneur. Managerial capabilities of an entrepreneur is also use in creating new technology
and products resulting into higher performance.

2. Creation of Organization- Entrepreneurship results in the creation of organizations when

entrepreneurship assemble and coordinate physical, human and financial resources and
direct them towards achievement of objectives and through managerial skill.

3. Improving Standard of Living- By creating productive organizations. entrepreneurship helps

in making wide variety of goods and services available to the society which results into higher
standard of living for the people. Possessions of luxury cars, computers, mobile phones, rapid
growth of shopping malls point the rising living standard of people.

4. Means of Economic Development- Entrepreneurship involves creation and use of innovative

ideas, maximization of output from given resources and development of managerial skills.

Factors affecting Entrepreneurship

• Personality factors- core competencies of an entrepreneur.

a. Initiative - does things before asked

b. Proactive-identifies and utilizes opportunities

c. Perseverance-works against all odds to overcome obstacles

d. Problem solver-develops and maintains relationships with customers and financers;

conceives new ideas and introduces innovative solutions

e. Persuasion-convinces customers and " financers to patronize his business

f. Self-confidence - makes decisions and stick to his decisions

g. Self-critical-learns from his mistakes and from experiences of others

h. Planner-collects information, prepares a plan, and monitors performance

i. Risk taker-willingness to take risk (to gain or loss income)

• ENVIRONMENTAL FACTORS- this relate to the condition in which an entrepreneur has to

a. Political Climate-is the opinions of a political society at a particular time

b. Legal System-existing law pertaining business (corporation law, employment law,

taxation)

c. Economic and Social Condition-availability of food, drug problem, education,

healthcare unemployment & crime levels

d. Market Situation-size and growth trends of your market, what you will face in terms of
competition, critical issues that affect the ability to sell products

Entrepreneurial process
Joseph Schumpeter (German: 8 February 1883 – 8 January 1950)
• was an Austrian political economist. He was born in Moravia, and briefly served as Finance
Minister of German-Austria in 1919.
• He describe entrepreneur as individuals who have generated substantial value and profits
from innovation in a very short period of time.

Types of entrepreneur

1. Megaentrepreneur- willing to absorb huge risk of using enormous amount of capital in their
business ventures. Contributed much in economic progress.

2. Microentrepreneur- Introduces innovation in the form of changes in their production and

distribution process, but their contribution are minimal and attract few competitors and imitators.
Short in fund and inadequate skills, they cannot undertake projects that involves huge capital,
sophisticated technology and extensive risk.

Peter Drucker ; German: November 19, 1909 – November 11, 2005)

• was an Austrian-born American management consultant, educator, and author, whose
writings contributed to the philosophical and practical foundations of the modern business
corporation.
• Megaentrepreneurs and Microentrepreneurs have something in common, they both start
business from opportunities.

ENTREPRENEURIAL PROCESS- A process which involves stages from awareness of opportunity

to realization of business idea.

5 stages

1. Discovery- Refers to the recognition of a business idea or the detection of opportunities that
could make money for entrepreneur.

2. Development of business concept- This gives more details on how general business idea can
be realized. It suggest the preparation of business plan (from production to distribution).
• Business plan – is a document that describe the various internal and external
elements involved in starting a new business or expanding a new venture/ business.

3. Organizing resources- Describes the process of identifying, sourcing and financing human,
non human and other resources needed for the conduct of the business.
• FUNDS/ MONEY
• PEOPLE/ MANPOWER
• MATERIALS
• SUPPLIER

4. Implementation- The process of carrying out the business plan. Includes mechanism for
confronting actual and potential rivals as well as for responding to the various opportunities,
challenges and developments.

5. Reaping the returns- Pertains to the strategies related to the expansion of the business firm.

FUNCTIONS OF AN ENTREPRENEUR

1. INNOVATION- An entrepreneur is basically an innovator who tries to develop new technology,

products and markets. Innovation may involve doing new things or doing existing things
differently.

Ernest L. Cu - He transformed a simple data entry service company into becoming one of the
country`s largest outsourcing service providers.

ASSUMPTION OF RISK- A risk taker and not a risk shirker. He/she is always prepared for
assuming losses that may arise on account of new ideas and projects undertaken by him/her.

Corazon D. Ong- is a dietitian by profession who used her knowledge to create processed meat
products. She founded the CDO Foodsphere in 1975.

2. RESEARCH- An entrepreneur is a practical dreamer and does a lot of groundwork before

taking a leap in his/her ventures.

Gregorio G. Sanchez, Jr. - a civil engineer by profession formerly engaged in civil construction
works. He went into research and performed experiments

DEVELOPMENT OF MANAGEMENT SKILLS- The work of an entrepreneur involves the use of

managerial skills which he develops while planning, organizing, staffing, directing, controlling and
coordinating the business.

Socorro Ramos`s- hands-on approach in negotiating with local and foreign publishers as well as
suppliers gave the bookstore its low purchasing and low selling power.
• National Bookstore has became an institution with 108 branches in the country

3. RESISTANCE TO CHANGE- An entrepreneur always first tries new ideas at his/her level.

4. CATALYST OF ECONOMIC DEVELOPMENT- Entrepreneurs accelerate the pace of economic

development of a country by discovering new uses of available resources and maximizing their
utilization.

TYPES OF ENTREPRENEURS

• INNOVATIVE ENTREPRENEURS- These entrepreneurs have the ability to think newer, better
and more economical ideas of business organization and management.

• IMITATING ENTREPRENEURS- The type of entrepreneurs who follow the path shown by
innovative entrepreneurs. In the Philippines, a large number of such entrepreneurs are found in
every field of business activity and they fulfill their need through imitation.

• FABIAN ENTREPRENEURS- These types of entrepreneurs are skeptical about the changes to
be made in the organization. They do not initiate any inventions but follow only after they are
satisfied with its success rate.

• SOCIAL ENTREPRENEURS- They drive social innovation and transformation in various fields
including education, health, human rights, workers` rights, environment and enterprise
development.
• Cecilio Pedro developed multi-colored toothpastes for children which is lowpriced. The
company provides work opportunities to the country`s hearingimpaired community
members.

CAREER OPPORTUNITIES FOR ENTREPRENEURSHIP GRADUATES

○ MID-LEVEL MANAGEMENT- At big companies, the C-level folks develop ideas, the ground
force does the work, and the mid-level management converts the idea into execution.
○ BUSINESS CONSULTANT- Businesses today need consultants who can go to a client site,
identify problems and fix them.
○ SALES- Entrepreneurship graduates can work in sales or run the department of any
businesses.
○ RESEARCH AND DEVELOPMENT- A good quality to work in R&D is a training and education
on understanding of business concepts, procedures, and practices and entrepreneurship
○ NOT-FOR-PROFIT FUNDRAISER- Being able to raise funds requires understanding the
importance of business and networking relationships.
○ TEACHER- Those with entrepreneurial degree are qualified to teach the core subjects in SHS
and teach students the entrepreneurial skills. Also the benefits of math to business, history to
innovation and literature to persuasive advertising
○ RECRUITER- Companies who use recruiters rely upon someone who is not just people savvy,
but also, one who has an in depth business sense as well.
○ BUSINESS REPORTER- Entrepreneurship graduates can write articles, or pick up a quick
class to learn how to write. They can take a prime position to take the lead in covering a local
business beat.

Sources of Ideas for Entrepreneurial Ventures

• From the Product
• From the Process
• From the Person
• From prior employment
• From Relationships

• From existing Products or Services- Many entrepreneurs have introduced new products and
services by differentiating them from those currently in the market. You can differentiate by
changing its shape, size, color and contents.
• “Annoyance driven-innovation – is an introduction of new products because of
dissatisfaction with those available in the market.” – Karl Ulrich
• From the Process- Business ideas can likewise arise from the process of production &
distribution.
• From the Person- The individual examine his interests, hobbies, skills, dreams and even his
travels.
• From Prior Employment- Skills learned from experiences (prior employment)
• From Relations- Friends and classmates can also be sources of business ideas and partners

Characteristics of an Entrepreneur
1. ETCVA(Entrepreneurial Traits and Creation of Value Added)

• Level of Education- Studies have shown that entrepreneurs need some formal education
to be able to seize the opportunities presented by inventions, innovations and other
technological developments
• Megaentrepreneur -they need some degree of technological know-how to understand
the commercial potentials of modern inventions and innovations
• Microentrepreneurs -entrepreneurship is an alternative to formal employment

• Employment Status- Individuals who become entrepreneurs in develop countries are

usually former employees of companies in the formal sector.

• Entrepreneur's Wealth
• Megaentrepreneurs
-source their funds come from their own wealth
-borrow money from their wealthy parents
-generate capital from wealth they accumulated from their past employment

• Risk Appetite- Entrepreneurs are risk-takers.

• Risk - uncertain situations and developments that can increase the probability of lose
(pagkalugi) or business failure (bankruptcy / total business closure)

2. ETEI( Entrepreneurial Traits and Entrepreneurial Intention )

• Entrepreneurial Intentions - planned actions formulated in the mind of individuals which are
geared toward the objective of stablishing a business venture from potential business
opportunity.

• Internal Factors - includes the quality of individuals such as demographics, personal traits,
psychological characteristics, skills & prior knowledge and social ties.
a. Demographics - refers to genders, marital status, age and employment status of
individuals who are likely to form entrepreneurial intentions.
b. Personal Traits - theoretical bases for contributions of selfconfidence, determination
and enthusiasm and other positive human qualities in influencing entrepreneurial
intentions.
c. Psychological Traits - the needs for achievement, selfefficacy, and goal setting.
d. Skills & Prior Knowledge - are learned from prior employment are valuable in setting
up a business. Vocational know-how, supervisor and managerial skills acquired from work
experience can also predict entrepreneurial intentions and behavior.
e. Social Ties/ Social Connections - dealing with people.

• 2. External Factors - the environmental support and environmental influence.

a. Environmental support – support coming from government, financial institutions, and
training institutions in setting up business. ex. -availability of credit provided by financial
institutions - availability of technically adept workers (trained and skilled ) produce by
school &training institutions
b. Environmental influence – (government regulations) includes regulatory structure,
patents, protection of property rights.
Patents – a form of intellectual property that gives its owner the legal right to exclude
others from making, using, selling and importing an invention.
Property rights – define the theoretical and legal ownership of resources and how they
can be used.

METHODS FOR GENERATING OR TESTING NEW IDEAS through LOGICAL THINKING :

LOGICAL THINKING – refers to the systematic and rational way of providing answer to a question,
it is the process in which one uses reasoning consistently to come to a conclusion.

• Statistical Analysis
-Collection, examination, summarization, manipulation, and interpretation of quantitative data to
discover its underlying causes, patterns, relationships, and trends.
-Also refers to systematic analysis of data generated from a survey of individuals. This can
describe the trend in the demand

• Market Analysis
-Related with statistical analysis which is undertaken to know the various factors that affect the
demand for a particular product or service

• SWOT analysis
-(Strengths, weaknesses, opportunities, threats) is usually undertaken to describe the state of
competition within an industry.
-This can provide business ideas that the entrepreneurs can purse

• Delphi Technique
-A systematic way of generating ideas from a selected group of individuals using various rounds
of consultations and sessions.
METHODS FOR GENERATING OR TESTING NEW IDEAS through Creative Thinking:

Creativity - can be described as the capacity of the individuals to originate new ideas from ideas
the individual has been previously exposed. It also refers to thought processes that do not follow
systematic or analytical procedures that looks at things from different perspective.

Creative thinking – refers to thought processes that brings about new ideas.

1. Brainstorming - An unstructured discussion of a group to elicit ideas. All the ideas should be
entertained and the ideas will be processed and synthesized to come out

2. Problem Inventory Analysis- It uses the group discussion method to elicit ideas from
participants. It is different from usual brainstorming because it is directed to identifying all
possible problems and issues with the product or service

3. Free association Method- It is developed by Sigmund Freud. A method that has been
used in psychology to elicit the unconscious thoughts of individuals by expressing their thoughts
associated with words and ideas given by the therapist
• Sigmund Freud
- May 6, 1856 - Sept. 23, 1939
- Austrian neurologist and the founder of psychoanalysis
- He qualified as a doctor of medicine in 1881 at the University of Vienna
- Became an affiliated professor in 1902.
- Lived and worked in Vienna, having set up his clinical practice there in 1886.
- 1938 Freud left Austria to escape the Nazis. - He died in exile in the United Kingdom in
1939.

4. Checklist Method - Another creative way of obtaining business ideas from target
participants by listing all possibilities that ideas can be connected to, reprocessed, and
associated with

SCAMPER (Substitute, Combine, Adapt, Magnify, Put to other use, Eliminate, Rearrange)

- A specific checklist method developed by Alex Osborn.

SCAMPER – participants are presented with a product or service or an idea and are asked to
provide comprehensive list on how the products or service can be replaced, mixed, differentiated,
enlarged applied, removed or altered

Generating Business Ideas through Trends in Business Environment:

• Based on the trends in the business environment an entrepreneur can get business ideas from the
bargaining powers of its competitors and suppliers, major shift in government involvement in
business, technological development.

1. Bargaining powers of competitors and suppliers.

• Ex: a. lowering the selling price of products and services offered by competitors
• b. Product differentiation can alter the shape, contents and package of the product to
create brand that would established loyalty from its customers even if the price of
differentiated product is higher than the current product in the industry.
• c. High price of raw materials from supplier would pressure on firms to seek alternative
types of raw materials. d. High cost of printing packaging materials made producers of
safeguard to combine three bars into one packaging unit instead of packing them
individually

2. Government involvement in business.

• Ex: government regulation on ban on plastic bags in cities and municipalities served as an
opportunity to entrepreneurs to produce eco-bags, paper bags and other environment
friendly materials.

3. Sociodemographic changes - would provide opportunities for entrepreneurs.

Creativity: A New way of Looking at Things:

Creativity – can be described as the capacity of the individuals to originate new ideas from ideas
the individual has been previously exposed. It also refers to thought processes that do not follow
systematic or analytical procedures that looks at things from different perspective.

Factors that influence Creativity:

1. Problem Solving Factors - To a great extent, a creative person is someone who wants to
provide an answer to a problem

2. Motivational Factors - A creative individual is usually a highly motivated person

 3. Situational factors- Creativity of individual is manifested when they are confronted with
concrete situations.

4. Organizational Factors- This include, management support, risk taking incentive, flexible
rules, degrees of freedom, and positive evaluation.

Creative Problem Solving (CPS)- A procedure of answering problem with mechanism and
techniques incorporating creativity.

Two important stages in problem solving:

1. Divergent thinking (Problem identification)
2. Convergent thinking (Selection of solution)

Six Steps followed in Osborn Parnes Model in CPS

1. Setting the objective

2. Revisiting the objective
3. Identifying the problem
4. Looking for a solution
5. Selecting a solution
6. Accepting the solution