LESSON 1

CORE CONCEPTS OF ENTREPRENEURSHIP

ENTREPRENEUR (manager)

 Business owner
 originates from the French word entreprendre which means “to
undertake”
 refers to a person who strongly advocates and correctly
practices the concepts and principles of entrepreneurship in
operating and managing the self-owned entrepreneurial
venture.
American Heritage Desk Dictionary

 person who organizes, operates, and assumes the risk of

business ventures.
ENTREPRENEURSHIP (management)

 comes from the word entrepreneur

 art of observing correct practices in managing and operating a
self-owned
 wealth-creating business enterprise by providing goods and
services that are valuable to the customers.
 particular field of practice or process, as compared to an
entrepreneur which is a person practicing entrepreneurship.
WHAT IS Venture
Is also called ENTERPRISE
SMALL BUSINESS

 business or enterprise that correctly adopts and practices the

principles of entrepreneurship.
 owned by one person with a limit workforce of not more than 20
persons.
 small and medium enterprise (SMEs) that have been strongly
promoted by both government and non-government
organizations
ORDINARY SMALL BUSINESS

 business enterprise managed and operated by an owner who is

not an advocate of and does not practice the concepts and
principles of entrepreneurship

LESSON 2
SALIENT FEATURES OF ENTREPRENEURSHIP
SALIENT FEATURES OF ENTREPRENEURSHIP

 provides better
understanding of the
whole aspect.
 act as the point of
reference in
determining whether a
particular business is
operating within the
realm of
entrepreneurship.
ENTREPRENEURSHIP IS AN ART OF CORRECT PRACTICES

 an art and not a science

 It is not governed by fixed and absolute rules, whereas science
is.
 there is constant change which denotes movement and
innovation.
 is dynamic by the moment the economic activity changes, the
political, social, and entrepreneurial activities will eventually
change.
 closely related to creativity.
 By creativity, there is constant change or evolution that
contributes towards the enhancement of the enterprise.
By creativity, there is constant change or evolution that contributes
towards the enhancement of the enterprise.
 This feature sounds simple, but this has been most misconstrued
because of the word wealth.
We often hear the old maxims “HEALTH IS WEALTH” or
“KNOWLEDGE IS WEALTH”.
ENTRENEURSHIP IS A WEALTH- CREATING VENTURE

 Ordinary small business people equate wealth with the term

PROFIT.
 In the parlance of accounting, profit represents the excess
income or revenue from the cost and expenses
 According to Random House Webster’s Dictionary, wealth is
defined as the abundance of money, property, or possession.
 The creation of wealth must gradually accelerate and benefit
both the owner and the community.
 Unless this happens, the business is not a wealth-creating
venture and may remain where it started.
 That is why an entrepreneur regularly evaluates the level of
wealth created by the business.
 Wealth is created when the value of the business has increased
abundantly and the life of its owner has improved considerably.
If not, then the business is being managed and operated not
within the framework of entrepreneurship.
ENTRENEURSHIP PROVIDES VALUABLE GOODS AND SERVICES

 Valuable goods and services highly satisfy the target buyers in

terms of quality and price.
 The entrepreneur convinces the consumers that they gain more
benefits than what they pay for the goods and services.
 entrepreneur defines value from the perspective of the buyers
and not only from his/her own because what is valuable to the
entrepreneur may not be of any value to the consumers.
 entrepreneur defines value from the perspective of the buyers
and not only from his/her own because what is valuable to the
entrepreneur may not be of any value to the consumers.
 Value, therefore, is subjective. Not every person considers the
same things as valuable.
ENTRENEURSHIP ENTAILS OPENING AND MANAGING THE
SELF- OWNED ENTERPRISE
This feature highlights two important elements
1. The concept of opening a self-owned enterprise
2. concept of managing it.
 A business is considered self –owned when the person
managing its daily activities is also its owner.
 This is a straightforward requirement of entrepreneurship.
INTRAPRENEURSHIP

 Business that are being managed by the others for the benefit
of the owners.
ENTRENEURSHIP IS A RISK-TAKING VENTURE

 -”RISK IS INHERENT IN AN ENTREPRENEURIAL VENTURE”

 Once an entrepreneurial venture is born because of new ideas
or opportunities, risk comes simultaneously with the venture.
 The risk in entrepreneurship is called business risk.
 LESSON 3.
THEORIES ON ENTREPRENEURSHIP
THEORY
is a generalization that
explains a set of facts or
phenomena. It is not an
absolute truth. It can be
supported by another
observation or proven to
be otherwise.
INNOVATION THEORY

 contributed by
Joseph Schumpeter, an Australian economist and political
scientist. wrote about it in his book “The Theory of Economic
Development.”
 Schumpeter strongly believed that innovation is the force that
will propel the revolutionary change
JOSEPH ALOIS SCHUMPETER

 an Austrian political economist

 He later emigrated
 to the US and, in 1939, he obtained American citizenship
 He was born in Moravia, and briefly served as Finance Minister
of German-Austria in 1919
 Born: 8 February 1883, Třešť, Czechia
 Died: 8 January 1950
Taconic, Salisbury, Connecticut, United States
 School or tradition: Historical school of economics; Lausanne
School Spouse: Elizabeth Boody Schumpeter
It comes the primary role of the entrepreneur to introduce
innovation in any of the following forms.
1. New Product
2. New Production Method
3. New Market
4. New Supplier
5. New Industry Structure
KEYNESIAN THEORY

 was developed by John Maynard Keynes, a British economist

 The key concepts of the theory were included in his book, The
General Theory of Employment, Interest and Money,
 published during the Great Depression in 1936.
JOHN MAYNARD KEYNES

 1st Baron Keynes CB FBA, was a British economist,

 ideas fundamentally changed the theory and practice of
macroeconomics and the economic policies of governments.
 Born: 5 June 1883, Cambridge, United Kingdom
 Died: 21 April 1946, Sussex, United Kingdom
 Influenced: Milton Friedman, Paul Samuelson, Paul Krugman
KEYNESIAN THEORY

 The theory put so much emphasis on the role of the

government in entrepreneurial and economic development,
most especially when the economy was experiencing
depression.
 History reveals that the entrepreneurial endeavor was hardly
felt during the Great Depression in the United States since
entrepreneurs were reluctant to invest for fear of having poor
returns on investment.
 It was the government that played a critical role.
ALFRED MARSHAL THEORY

 an English economist, was introduced in his book, Principles of

Economics.
 He strongly asserted that there are four factors in the
production
1. Land
2. Labor
3. Capital
4. Organization
of goods and services in the economy

 he considered organization as the coordinating element.

 Marshall further suggested that an entrepreneur must be able to
foresee possible changes in the future supply and demand
pattern.
 He / She must also possess the necessary skills to be an
entrepreneur.
 Marshall observed that though the skills and abilities required of
an entrepreneur are so numerous, only a few exhibited a high
degree of proficiency.
RISK AND UNCERTAINTY- BEARING THEORY

 Frank Hyneman Knight, an American Economist,

 conceptualized the risk and uncertainty- bearing theory of
Entrepreneurship in his book, Risk, Uncertainty and Profit.
 By adopting some concepts of the early economists, Knight
viewed an entrepreneur as an agent of the production process
where he/she connects the producers and the consumers.
 Knight considered uncertainty an important factor in the
production of goods and services.
 He believed that the entrepreneur must anticipate possible
random events to happen while shouldering the risk at the
same time.