Entrepreneurship is a very important component of a capitalist economy like the Philippines. It thrives in the economic systems that support innovation and hard work. When entrepreneurs become successful, the nation is immensely benefitted.
What is entrepreneurship and how does it affect the economic well-being of many people? What is the task of entrepreneur regarding economic development? This module will answer all the concerns stated above.
Entrepreneurship and Economic Development
Economic Development is a scheme aimed at improving the living standards of the
nation’s citizenry. To achieve economic development goals, 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 (machine, factories, roads); and
4. technology (science, engineering, management, entrepreneurship).
The effective and efficient utilization of the various resource elements contribute to the economic growth. This happens when the element of entrepreneurship is performed well. The abundance of natural resources like fertile land, minerals, fuels, and good climate are plus factors. There is a need for entrepreneurs to perform the function of harnessing the potentials of any of any or all of the various elements, determining the right quantity of resources needed, and applying elements at the right time.
Entrepreneurship refers to the economic activity of a person who starts, manages, and assumes the risk of a business enterprise.
The entrepreneur identifies an economic need, considers offering a business solution, proceeds to assemble the resources required, and assumes the risk of either succeeding or failing. An example of these activities is properly shown on Table 1.
Entrepreneur’s Concern Problem at hand Entrepreneur’s Action
1. Identifying an economic need
2. Assembling resources required
3. Assuming risk
1. High income families are not satisfied with the services provided by tourism destination in their area.
2. Resources must be made available
3. Venture must be made
1. Establish a tourism destination with higher standards than the current tourism destination is providing.
2. Acquire funds, hire people, constructing buildings, and the like.
3. Prepare project study, advertise, maintain good relationship with employees and customers, among others.
Table 1. An Example of Entrepreneurship Activity
The Entrepreneur’s task
If all the requirements in a capitalist economy are in place, the entrepreneur can assume his assigned role in the development of the economy. A review of the contributions of entrepreneurs will reveal that no business, big or small, started without the hand of the entrepreneur. This is made possible because the surviving enterprises are responsible for providing the following:
1. products and services for customers and producers; 2. employment;
3. taxes;
4. demand for supplier’s products and services; and
5. training facilities for future entrepreneurs.
Land Labor Capital
(Natural Resources) (Human Resources) (Financial Resources)
Entrepreneur
Entrepreneur
Entrepreneur
Figure 2. The Entrepreneur’s Task
In the attempt to make profits, the entrepreneur performs the following specific functions: 1. to supply the necessary capital;
2. to organize production by buying and combining inputs like materials and labor;
3. to decide on the rate of output, in the light of his expectation about demand; and
4. to bear the risk inherent to the venture.
Entrepreneurship and Innovation
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 of commodities have a tendency to patronize innovative offerings of any kind and if one wants patronage, he must remember this motivation.
Innovation may be defined as the introduction of a new method, procedure, custom, device, among others. Innovation could be any of the following;
1. new product;
2. new process of production;
3. substitution of a cheaper material in an unaltered product;
4. reorganization of production internal function, or distribution arrangement leading to
increased efficiency, better support for a given product, or lower cost; or
5. improvement in instruments or methods of doing innovation. Innovation may also be
viewed as the last stage in an important process consisting of the following:
a. Invention- which refers to the discovery of devising of new products and processes;
b. Development- which refers to the process by which the ideas and principles
generated from the stage of invention are embodied in concrete products and techniques; and c. Innovation- which refers to the actual introduction of a new product or process. Innovation, if it must be made successful, must provide value to the buyers over and
above those offered by competitors. To achieve this, innovation must reduce costs or improve the quality of products or services offered for sale.
Examples of successful innovations are the following:
1. cordless microphone;
2. microwave oven;
3. cellular phone;
4. kung fu fight scenes developed by Bruce Lee in the movies;
5. karaoke music appliance;
6. use of Laser in the treatment of eye conditions; and
7. use of computers by engineers and architects in the design of buildings.
New Ventures and Long-term Enterprises
A new venture cannot remain as such forever. The entrepreneur must develop it into a small business or make it grow into a mature and bigger company if he is to recoup the cost of opening a new venture and take advantage of the opportunities presented by a mature business.
The transition from a new venture to a successful long-term enterprise consist of four major stages:
1. pre-start-up stage- happens when the entrepreneur starts to question the feasibility of an idea, product or service. He seeks answers to questions regarding potential markets, production, and financing. This is the very important stage that the entrepreneur must consider.
2. start-up stage- includes the activities such as formation of the business, generation of necessary capital, purchase of facilities and equipment, constructing prototype products, and testing market. No full scale activity must be undertaken at this stage for the simple reason that feasibility must be established and verified.
3. early growth stage- follows after establishing feasibility. Activities will be on a small scale. If losses occur, it will naturally be limited also. If the enterprise is successful at this stage can be exercised.
4. late growth stage- is the final stage before the new venture matures into a stable enterprise. This is when management is structured, long-term financing is established and facilities planning are undertaken. This is also the stage where the skills of the entrepreneurs are less needed. Instead the skilled manager begins to take over.
The Entrepreneur’s Predicament
In the race for winning the all-important consumer’s pesos, the business will have to offer products or services that have certain advantages over the competition wares. In the creation of a new venture, the entrepreneur may be successful in offering innovative products or services. At this stage, he will reap the profits for being ahead of the competitors. This situation may be temporary because the competitor may attempt to improve his position by making moves to outpace the entrepreneurs in the race. The competitor may either imitate or offer better innovations. If the competitor is successful, the profits of the entrepreneur will decline. To be ahead again, the entrepreneur will consider offering newer and better innovations.
Entrepreneurship and Business Size
To many people, entrepreneurship means running a small business. New business ventures, however, can also be undertaken on a larger scale. Both small and large business are confronted by problems that are entrepreneurial in nature. The examples of innovations are following:
1. offering business services during Sundays and holidays;
2. manufacture and sale of new products; and
3. selling on a deferred payment scheme
Although entrepreneurship is generally regarded as a useful means of running a small
business, it is also conducive in maintaining the growth of large corporations.
ANSWER THE FOLLOWING:
1. Briefly discuss 10 new ideas and/or concepts that can be learned in this chapter. Write in TWO PARAGRAPH FORMS ONLY(Introduction and body)explaining each new idea and/or concept. Don’t use numbers or bullets. Just a paragraph form
2. Write your reflection about a specific topic discussed in this chapter. The reflection can include the reasons why are interested in the subject matter and the prior knowledge about the topic.
What is entrepreneurship and how does it affect the economic well-being of many people? What is the task of entrepreneur regarding economic development? This module will answer all the concerns stated above.
Entrepreneurship and Economic Development
Economic Development is a scheme aimed at improving the living standards of the
nation’s citizenry. To achieve economic development goals, 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 (machine, factories, roads); and
4. technology (science, engineering, management, entrepreneurship).
The effective and efficient utilization of the various resource elements contribute to the economic growth. This happens when the element of entrepreneurship is performed well. The abundance of natural resources like fertile land, minerals, fuels, and good climate are plus factors. There is a need for entrepreneurs to perform the function of harnessing the potentials of any of any or all of the various elements, determining the right quantity of resources needed, and applying elements at the right time.
Entrepreneurship refers to the economic activity of a person who starts, manages, and assumes the risk of a business enterprise.
The entrepreneur identifies an economic need, considers offering a business solution, proceeds to assemble the resources required, and assumes the risk of either succeeding or failing. An example of these activities is properly shown on Table 1.
Entrepreneur’s Concern Problem at hand Entrepreneur’s Action
1. Identifying an economic need
2. Assembling resources required
3. Assuming risk
1. High income families are not satisfied with the services provided by tourism destination in their area.
2. Resources must be made available
3. Venture must be made
1. Establish a tourism destination with higher standards than the current tourism destination is providing.
2. Acquire funds, hire people, constructing buildings, and the like.
3. Prepare project study, advertise, maintain good relationship with employees and customers, among others.
Table 1. An Example of Entrepreneurship Activity
The Entrepreneur’s task
If all the requirements in a capitalist economy are in place, the entrepreneur can assume his assigned role in the development of the economy. A review of the contributions of entrepreneurs will reveal that no business, big or small, started without the hand of the entrepreneur. This is made possible because the surviving enterprises are responsible for providing the following:
1. products and services for customers and producers; 2. employment;
3. taxes;
4. demand for supplier’s products and services; and
5. training facilities for future entrepreneurs.
Land Labor Capital
(Natural Resources) (Human Resources) (Financial Resources)
Entrepreneur
Entrepreneur
Entrepreneur
Figure 2. The Entrepreneur’s Task
In the attempt to make profits, the entrepreneur performs the following specific functions: 1. to supply the necessary capital;
2. to organize production by buying and combining inputs like materials and labor;
3. to decide on the rate of output, in the light of his expectation about demand; and
4. to bear the risk inherent to the venture.
Entrepreneurship and Innovation
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 of commodities have a tendency to patronize innovative offerings of any kind and if one wants patronage, he must remember this motivation.
Innovation may be defined as the introduction of a new method, procedure, custom, device, among others. Innovation could be any of the following;
1. new product;
2. new process of production;
3. substitution of a cheaper material in an unaltered product;
4. reorganization of production internal function, or distribution arrangement leading to
increased efficiency, better support for a given product, or lower cost; or
5. improvement in instruments or methods of doing innovation. Innovation may also be
viewed as the last stage in an important process consisting of the following:
a. Invention- which refers to the discovery of devising of new products and processes;
b. Development- which refers to the process by which the ideas and principles
generated from the stage of invention are embodied in concrete products and techniques; and c. Innovation- which refers to the actual introduction of a new product or process. Innovation, if it must be made successful, must provide value to the buyers over and
above those offered by competitors. To achieve this, innovation must reduce costs or improve the quality of products or services offered for sale.
Examples of successful innovations are the following:
1. cordless microphone;
2. microwave oven;
3. cellular phone;
4. kung fu fight scenes developed by Bruce Lee in the movies;
5. karaoke music appliance;
6. use of Laser in the treatment of eye conditions; and
7. use of computers by engineers and architects in the design of buildings.
New Ventures and Long-term Enterprises
A new venture cannot remain as such forever. The entrepreneur must develop it into a small business or make it grow into a mature and bigger company if he is to recoup the cost of opening a new venture and take advantage of the opportunities presented by a mature business.
The transition from a new venture to a successful long-term enterprise consist of four major stages:
1. pre-start-up stage- happens when the entrepreneur starts to question the feasibility of an idea, product or service. He seeks answers to questions regarding potential markets, production, and financing. This is the very important stage that the entrepreneur must consider.
2. start-up stage- includes the activities such as formation of the business, generation of necessary capital, purchase of facilities and equipment, constructing prototype products, and testing market. No full scale activity must be undertaken at this stage for the simple reason that feasibility must be established and verified.
3. early growth stage- follows after establishing feasibility. Activities will be on a small scale. If losses occur, it will naturally be limited also. If the enterprise is successful at this stage can be exercised.
4. late growth stage- is the final stage before the new venture matures into a stable enterprise. This is when management is structured, long-term financing is established and facilities planning are undertaken. This is also the stage where the skills of the entrepreneurs are less needed. Instead the skilled manager begins to take over.
The Entrepreneur’s Predicament
In the race for winning the all-important consumer’s pesos, the business will have to offer products or services that have certain advantages over the competition wares. In the creation of a new venture, the entrepreneur may be successful in offering innovative products or services. At this stage, he will reap the profits for being ahead of the competitors. This situation may be temporary because the competitor may attempt to improve his position by making moves to outpace the entrepreneurs in the race. The competitor may either imitate or offer better innovations. If the competitor is successful, the profits of the entrepreneur will decline. To be ahead again, the entrepreneur will consider offering newer and better innovations.
Entrepreneurship and Business Size
To many people, entrepreneurship means running a small business. New business ventures, however, can also be undertaken on a larger scale. Both small and large business are confronted by problems that are entrepreneurial in nature. The examples of innovations are following:
1. offering business services during Sundays and holidays;
2. manufacture and sale of new products; and
3. selling on a deferred payment scheme
Although entrepreneurship is generally regarded as a useful means of running a small
business, it is also conducive in maintaining the growth of large corporations.
ANSWER THE FOLLOWING:
1. Briefly discuss 10 new ideas and/or concepts that can be learned in this chapter. Write in TWO PARAGRAPH FORMS ONLY(Introduction and body)explaining each new idea and/or concept. Don’t use numbers or bullets. Just a paragraph form
2. Write your reflection about a specific topic discussed in this chapter. The reflection can include the reasons why are interested in the subject matter and the prior knowledge about the topic.