Entrepreneurial

Management
Module 1

University of St. La Salle Bacolod

College of Business and Accountancy
1st Semester
A.Y. 2020-2021
MK204
Entrepreneurial Management
MK204 Entrepreneurial Management
This course introduces marketing management students to the
basics of Entrepreneurship and the managerial function of an
entrepreneur. This course evaluates the risks, rewards and benefits of
doing business versus seeking employment. It helps students recognize
and determine the steps necessary to design and develop a startup
for-profit business and to open and operate a small business
enterprise.
It describes the basic forms of small business ownership and
identifies the necessary financial competencies needed by the
entrepreneur. This course will further allow students to explores the
creation and management of start-up businesses. It concentrates on
initial strategy, location, financing, staffing, daily activities, controls
and documentation.
The Concept of Entrepreneurship
 Entrepreneurship started in France after the French Revolution. It was the
start of capitalism and feudalism (20th century)
 The word entrepreneur was coined by Jean Baptiste Say – a renowned
French economist
 It promotes doing something different (new) rather than making the
existing better.
 Joseph Schumpeter believed that entrepreneurship provides a dynamic
disquilibria brought about by the innovative entrepreneur that brings a
healthy economy.
Entrepreneurship

 By definition:
 Economists –
 “...consists in doing things that are not generally done in the
ordinary course of business routine; it is essentially a
phenomenon that comes under a wider aspect of leadership.
--Cantillon, 1725
 “entrepreneurship, rigorously defined, refers to the creation
of a new economic entity centered on a novel product or
service or, at the very least, one which differs significantly
from products or services offered to elsewhere in the market”
--Joseph schumpeter,1934
The Evolution of Entrepreneurship
Contributor and Contribution to Entrepreneurship and/or The
Year of Entrepreneurship Thought Contributed
Contribution
Jean Baptiste Say Refers to the shifting of economic resources out of an area of
1800 lower and into higher productivity and greater yield.
Carl Menger Involves in obtaining information, calculation, an act of will and
1871 supervision.
Joseph Schumpeter The finding and promoting new combinations of productive
1910 factors.

Harvey Liebenstein The reduction of organizational inefficiency.

1970
Israel Kirzner The identification of market arbitrage opportunities.
1975
Albert Shapiro Involves a kind of behavior that includes initiative taking,
1975 organizing, and recognizing social mechanism to turn
rowena ginafe p. vargas, mba
resources and situations to practical account and the
acceptance of risks and failures.
The Evolution of Entrepreneurship
Contributor and Contribution to Entrepreneurship and/or The
Year of Entrepreneurship Thought Contributed
Contribution
W. Ed Mc Mullan and The building of new growth for organizations.
Wayne A. Long
1990
Howard Stevenson The pursuit of opportunity beyond the resources currently
1992 under one's control.
Jeffrey Timmons The ability to create and build a vision from practically nothing.
1994
Peter Drucker The process of starting one's own, new and small business. It
1998 is also the process of innovation and new venture creation
through four major dimensions - individual, organizational,
environmental, process - aided by the collaborative networks
in government, education and institutions.
Robert Hisrich Involves the creation process, requires the devotion of the
2001 necessary time and effort, assumes the accompanying
financial, psychic and social risks and receives the resulting
rowena ginafe p. vargas, mba rewards of monetary and personal satisfaction and
independence.
The Role of Entrepreneurship in
Economic Growth

Economic Growth
 Is the increase in value of goods and services produced
by an economy.
 It is measured as the percent rate of increase in real
gross domestic product or GDP.
 In economics, economic growth refers to growth of
potential output (production) at full employment, which
is caused by growth in demand, or output.
I. Contributions of Entrepreneurship
to the Economy
 Entrepreneurship employs the various resources present in the
economy.
 Entrepreneurs need manpower for the business operations.
 It is said that Entrepreneurship is the backbone of the economy.
 An entrepreneur is in their ability to innovate goods and
services.
 An entrepreneur is their ability to gain international popularity
and prestige for their country.
 Their willingness to take risk, risk that society will otherwise be
hesitant to take.
 Although many people do not recognize it, entrepreneurs also
profoundly inspire budding and potential entrepreneurs.
Theories that Explain how
Economies Grow
 Theories of economic growth maybe classify into three
broad groups:
 Consists of theories viewing economic growth as a natural and
inevitable process.
 Explains economic development as a rational process brought
about when men respond to opportunities in the environment
to promote their own self-interest or material welfare.
 Views economic development as a result of economically
irrational yet psychologically and sociologically satisfying
activities of enterprising men.
GENERAL EXPLANATIONS
1. Law of nature - in 1932, Spengler explained economic
development by likening a culture or society to a living
organism that grows, lives, and dies; it is a part of life and is
something to be expected.

2. Invisible Hand – 18th century, Adam Smith advanced the

principle. According to Smith, any society including a very
under developed one can be made to prosper with little or no
intervention from government because economic is brought
about as a natural course of things.

3. Cultural Diffusion – Anthropologist introduced the idea that

over the ages and across the years, societies have been
involved in different social experiments in various economic,
political, religious or social aspects of life.
GENERAL EXPLANATIONS

4. Racial Heritage – The belief that one race is superior to

another on the basis of color, build and other genetic
heritage has been around for a long time.
5. Climate conditions – Ellsworth Huntington, wrote the
most of the great civilizations flourished in the
tropics or the far north. He maintained that the most
stimulating climate for man involves an average
temperature range between winter and summer of 40
to 60 F with moderate rainfalls and frequent mild
storms.
6. Challenge of the natural environment – advanced by
A,J. Toynbee, it traces economic and cultural
changes to a combination of natural (geographic)
phenomena and socio-psychological pressure of
stimuli.
ECONOMIC EXPLANATIONS:

1. Technology improvements and division of labor –

Adam Smith, believed that the intervention of better
machines and equipment brought about increased
productivity, which together with specialization or
division of labor made economic growth possible.
2. Neo-classical growth model – develop by Robert Solo
and Paul Samuelson in the 1950’s, this model assumes
that countries use their resources efficiently and that
there are diminishing returns to capital and labor
increases.
3. Endogenous Growth Theory – included a theory of
technological advancement. These models also
incorporated a new concept of human capital, the
skills and knowledge that make workers productive.
ECONOMIC EXPLANATIONS:

4. Big Push Theory – one popular theory in the 70’s was that
of the “Big Push” which suggested that countries
needed to jump from one stage to another through a
virtuous cycle in which large investments in
infrastructure and education coupled to private
investment would move the economy to a more
productive stage.
5. Population Changes – according to David Ricardo,
population increases eventually lead to stagnation or a
final stationary state o the economy. However,
according to John Maynard Keynes, the capitalist or
entrepreneurs are most likely to invest their resources
when there is demand for the commodity.
6. Entrepreneurship – economist recognized that for
production to take place, someone had to mobilize all
resources ( land, labor and capital ).
SOCIO - PSYCHOLOGICAL
EXPLANATIONS:

1. Sociological Factors – sociologist explain economic growth in

terms of social or cultural values, norms and other structures
that differentiate modern and traditional economies.
Modern Societies Traditional Societies
a. Unemotional a. Emotional
b. Interested in themselves b. Interested in the
general welfare of the
community
c. Able to relate to others c. Relate to others in
(social roles as buyers, in terms of unique
sellers, qualities qualities
middlemen, etc.)
SOCIO - PSYCHOLOGICAL
EXPLANATIONS:
d. Known for accomplishments d. Known for who
they are (status, position in the
organization, etc. )
e. Able to relate to others e. Tie-up economic relationship
(such as specific employer – employee,
economic terms, defined manufacturer and limited by a
labor contract) customer, etc. ) and
with all sorts of other
relationship involving
kinship, political,
religious and other
social structures.

2. Psychological Factors – identified positively as one, which enterprising

individuals seek to fulfill in the need to achieve. As a product of individual
human behavior, that is, of a person’s decision thoughts and actions.
What is Entrepreneurship?

 Theact of building and creating a business

enterprise.
A process of doing something new (CREATIVE)
and something different (INNOVATIVE) for
the purpose of creating wealth for the
individual and adding value to society.

rowena ginafe p. vargas, mba

 CATEGORIES OF ENTERPRISES
Micro-Enterprise
Asset Size: less than P3 Million
Small Enterprise
Asset Size: Over P3M to P15M
Medium Enterprise
Asset Size: Over P15M to P100M
Large Enterprise
Asset Size: Over P100M
ASSET SIZE EXCLUDES THE VALUE OF LAND

rowena ginafe p. vargas, mba

Benefits of Entrepreneurship
 Creates employment

 Improves quality of life

 Contributes to more equitable distribution of income and therefore eases

social unrest

X
Risks of Entrepreneurship

 Risk of failure

 Unpredictable business conditions

 Long hours of work

 Unwanted or unexpected responsibilities

Rewards of Entrepreneurship
 Have unlimited opportunity to make money

 Be your own boss

 Tap your creativity

 Overcome challenges and feel fulfilled

Entrepreneurs may be
categorized into the following:
1. The intrapreneur - an entrepreneur with an existing
organization referred to as the corporate entrepreneur.
2. The solo self-employed individual - includes all agents,
repairmen, brokers, accountants, physicians who operate
alone or only with a few employees and perform works
personally.
3. The dealer to dealers – include highly knowledgeable
businessmen engaged in various forms of trades
frequently, directly or indirectly related to their line of
work.
4. The team builders – individuals who go on building larger
companies using hiring and delegation.
5. The independent innovators – include person who hit upon
ideas for better products or services and the create
companies to develop, produce and sell.
6. The pattern multipliers – who spot an effective business
pattern
7. The economy scale exploiters - entrepreneurs who
locate their business in lower rent and tax areas.
8. The capital aggregators – smart entrepreneurs who
use their experience and expertise in pooling a
group of financiers to engage in a business.
9. The acquirers - entrepreneurs who acquires
business.
10. The independent investors- include pure inventors
who develop their new product or inventions and
take care of marketing them.
11. The buy and sell artists - they include the wise
guys referred to as corporate raiders and brokers
who turn around sell and liquidate.
Entrepreneurial Process
Opportunity

Decide to Start a New Define and Analyze Economics of New

business New Ventures Businesses

LAUNCH
Attracting Legal form of
Business
Stakeholders and Org. & taxation Financing
Resources Planning issues

GROWTH

Grow and Operate the

business

HARVEST

Become Cash Sell the

Go Public Liquidate
Cow Business