Entrepreneurship

Entrepreneurship is defined as the process of identifying opportunities to develop a new good, service, or method and
locating the resources required to take advantage of the opportunity and enhance people’s quality of life.

Contemporary Economics Issues Confronting the Filipino Entrepreneur

Learning Key Takeaways

At the end of this chapter, the learners will be able to:

1. Identify the characteristics of an entrepreneur;

2. Analyze the effects of contemporary issues such as exchange rate and unemployment in our economic
condition;

3. Understand the investment and the kinds of investments; and

4. Discuss the meaning and importance of rentals.

Entrepreneurship

Planning, starting, and managing a business operation are all aspects of entrepreneurship. Some people create
significant construction businesses, while others run little craft shops. Entrepreneurs strive to comprehend consumer
wants and satisfy them. Their firm prospers and they make money when they are successful.

The term "entrepreneur" is used to describe someone who combines concepts and ideas from the managerial, business,
and personal worlds. Particularly, this century has seen a thorough exploration of the idea of entrepreneurship from a
human standpoint. Following are three definitions that are reflective of this investigation:

 According to economists, an entrepreneur is a person who adds value to existing assets by integrating them in
ways that increase their value. Due to his or her ability or business sense, he or she brings about change,
inventions, and a new order in the world.
 Such a person, in the eyes of a psychologist, is motivated by particular forces, such as the desire to acquire or
reach something, to experiment, to complete, or possibly to evade social control.
 An entrepreneur could seem like a danger or a competitive rival to a businessman. Some people might consider
a particular entrepreneur to be an inconvenience, but for others, he or she may be a friend, an ally, a client, a
source of supplies, or even someone who influences the weather.
 According to practically all definitions of entrepreneurship, Entrepreneurs are those who take the initiative to
restructure social and economic systems. Every industry, including those in the government, distribution, legal,
medical, science, and education, is home to entrepreneurs. The entrepreneur must contribute value in some
way, even if it is not entirely fresh or unique.

Entrepreneur and Employee

Employee is an individual that is hired to work for a person or company that pays them a wage or salary in return.

1. Employees seek direction while entrepreneurs create a path.

2. Employees do while entrepreneurs listen.
3. Employees take fewer risks while entrepreneurs live for them.
4. Employees are often specialists while entrepreneurs are generalists.
 5. Employees get paid for their role while entrepreneurs get paid for results.
6. Employees love holidays because they get the day off while entrepreneurs do because they can work all day
with few interruptions.
7. Employees appreciate steady employment while entrepreneurs are comfortable without job security.
8. Employees follow rules while entrepreneurs break them.
9. Employees are responsible for some decisions while entrepreneurs are responsible for them all.
10. Employees execute tasks while entrepreneur's plan.

Entrepreneur and Inventors

Inventor are highly motivated people who are driven by their own projects and original ideas. A creative problem-solver
who can simplify difficult issues is what makes an invention. The average inventor sets a high value on achievement and
gauges success by the quantity of new inventions produced.

Types of Entrepreneurial Business

1. Manufacturing is the creation or manufacturing of items with the use of equipment, personnel, machines, tools,
and chemical or biological processing or formulation. It is the core of the economy's secondary sector.
2. Wholesaling is the exchange of commodities or merchandise for money, whether to wholesalers, retailers,
industrial, commercial, institutional, or other professional business users.
3. Retailing the act of offering goods and specific services to customers. It typically involves a business established
for that express purpose selling single units or small lots to numerous buyers.
4. Service is an action or a use that a customer, company, or government is willing to pay for.

Characteristics of Successful Entrepreneur

1. Successful entrepreneurs are independent.

2. Successful entrepreneurs are self-confident.
3. Successful entrepreneurs have determination and perseverance.
4. Successful entrepreneurs are goal-oriented.
5. Successful entrepreneurs know what they want, and they are able to focus on achieving it.
6. Successful entrepreneurs have a need to achieve and to set high standards to themselves.
7. Successful entrepreneurs are creative.
8. Successful entrepreneurs are able to act quickly.

Advantage of Entrepreneurship

1. Entrepreneurs are their own bosses.

2. Entrepreneurs can choose a business that interests them.
3. Entrepreneurs can be creative.
4. Entrepreneurs can make a lot of money.

Disadvantage of Entrepreneurship

1. Entrepreneurship is risky.
2. Entrepreneurs face uncertain and irregular income.
 3. Entrepreneurs work long hours.
4. Entrepreneurs must make all decisions by themselves.

Entrepreneurial Process

The process of starting a new business entails more than just problem-solving, as it would in a standard managerial role.
By overcoming the obstacles that prevent the development of anything new, an entrepreneur must identify, assess, and
capitalize on an opportunity. According to Hisrich et al. (2008) the process goes to four distinct phases:

1. Identification and evaluation of the opportunity

2. Development of the business plan.
3. Determination of the required resources.
4. Management of the resulting enterprise.

GOOD BUSINESS PLAN

The Importance of a Good Business Plan

A good business plan just be developed in order to exploit the defined opportunity. A good business plan guides you
through each stage of starting and managing your business. The importance of a good business plan are the following:

1. It will help you steer your business as you start and grow.
2. It’s not as hard as you think.
3. It will help you to reach business milestones.
4. It can help you get funding.
5. There’s no wrong way to write a business plan.

A good business plan is essential in developing the opportunity and determining the responsibility required, obtaining
those resources, and successfully managing the resulting venture.

Role of Entrepreneurship in Economic Development

The contribution of entrepreneurship to economic development goes beyond raising income and output per capita. It
also entails starting and sustaining changes in the social and economic structure of the economy, which spurs expansion
and higher output. Economic growth depends on innovation, which is essential for both creating new goods for the
market and piquing investor interest in new businesses.

Though innovation is generated and marketed through entrepreneurial activity, which in turn spurs economic growth,
there is still a lack of understanding of the product evolution process. The majority of inventions that are released onto
the market are commonplace innovations with little originality or technological advancement, and there are very few
breakthrough innovations.

Ethical and Social Responsibilities of Entrepreneurs

Being an entrepreneur is challenging because you must balance societal obligations, economic necessity, and ethical
obligations. Entrepreneurs tend to depend on their own personal system more than other managers when determining
ethically appropriate actions and are particularly sensitive to peer pressure and social norms. As opposed to non-
metropolitan areas, this is particularly true in metropolitan areas. The concept of ethics is a broad field of study
exploring the general nature of morals and the special moral choices to be made by the individual in their relationship
with others. Ethics refers to the study of whatever is right and good for humans.

INVESTMENTS

Investments is the use of saving to become future income. The term more specifically refers to the use of funds to
acquire capital goods.

Capital goods are items that are necessary to produce other goods and services.

Different Kinds of Investments

Direct Investments

 Business Investments - Involves investing capital to do business

 Real Estate- People invest in real estate when they buy homes, land, or rental properties.

Indirect Investments

 Savings Account- a basic type of financial product that allows you to deposit your money and typically earn a
modest amount of interest.
 Bonds- are investment securities where an investor lends money to a company or a government for a set period
of time
 Stocks- is a type of investment that represents an ownership share in a company.
1. Common Stocks – have voting rights in the company
2. Preferred Stocks – no voting rights, prioritized during divided distribution
 Other Kinds of Indirect Investments
1. Mutual Funds- it is the money collected from individuals or businesses that is invested in stocks or bonds. A
qualified fund manager will be in charge of managing it.
2. Diversification- refers to changes in an area or nation's economic condition or the utilization of a wide
variety of economic activities.
3. Life Insurance- it is an agreement between an insurance policy holder and an insurer or assurer states that,
in the event of an insured person's passing, the insurer will pay a specified beneficiary a certain amount of
money.

ECONOMIC ISSUE

 Buying Stocks- The broker may relay the purchase order to a representative at a stock exchange where stocks
are traded. The representative then carries out the requested transaction. The investor pays the purchase price
of the shares plus a commission for the broker’s services. The broker also sells stocks for investors.
 Online Investing- also called electronic trading is a buying and selling through computers wherein they can
access the brokerage accounts virtually anytime and from anywhere in the world
 Economic Rent- is money earned in excess of what is necessary for economic or societal needs.
 Rent- is a payment of a factor of production in excess of its opportunity cost. It is what is paid to any input in
more than you would have had to pay it.
Four Types of Rent
1. Inframarginal Rent- “Infra” means below or under. “Marginal” means at the margin or the end or
last. It is quasi rent earned by a perfectly competitive firm in the short run.
2. Pure Economic Rent- is any payment made to a factor of production or anything that is fixed in
supply.
3. Pure Economic Rent- is any payment made to a factor of production or anything that is fixed in
supply.
4. Monopoly Rent- they are payments made to monopolists that are more than the minimum that the
firm would accept.
 Unemployment- when a person, who is actively searching for employment is unable to find work.
Types of Unemployment
1. Frictional Unemployment- this kind of unemployment is temporary because it takes time to obtain
another job after leaving a company.
2. Cyclical Unemployment- it happens as a result of the business cycle. During recessions, cyclical
unemployment increases, while during expansionary periods, it decreases
3. Structural Unemployment- people who lose their jobs because their abilities are out of date are a
result of technological improvements.
 Minimum Wage- is the lowest salary that employers can legally pay their workers.