CHAPTER 1- PERSPECTIVE OF
ENTREPRENEURSHIP
LEARNING OBJECTIVES
At the end of the chapter the student must be able to:
1. Define and understand the meaning of Entrepreneurship;
2. How does it affect the economic well being of many people;
3. The task of an entrepreneur
4. Rewards for successful entrepreneurship
DEFINITION OF ENTREPRENEURSHIP
► Entrepreneurship refers to the economic activity of a person who starts, manages, and assumes
the risk of a business enterprise. The person who undertakes entrepreneurial activities is called
an entrepreneur.. The entrepreneur identifies economic needs, considers offering a business
solution, proceeds to assemble the resources required and assumes the risks of either
succeeding or failing.
ENTREPRENEUR’S CONCERN PROBLEM AT HAND ENTREPRENEUR’S ACTION
1. Identifying an economic need 1. High income families are not 1. Establish high standard
satisfied with the services school for high school students
provided by high schools in the
area
2. Assembling Resources 2. Resources must be made 2. Acquire funds, hire people,
available construct building , and the like.
3. Assume risk 3. Venture must be made 3. Prepare projects study,
advertise, and maintain good
relationship with employees and
customers, etc.
ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT
► What is Economic Development?-It is the scheme aimed at improving the stanards of the
nation’s citizenry. To achieve economic development goals, proper management of the
following elements is necessary:
► A.Human Resources (labor supply, education, discipline motivation)
► B. Natural Resources- (land, minerals, fuel, climate)
► C. Capital Formation (machines, factories, roads) and
► D. Technology (engineering, management, and 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 by the
players. The abundance of natural resources like fertile land, minerals, fuels and good climate
are plus factors but they are not guarantees for positive economic development. There is a need
for entrepreneurs to perform the function of harnessing the potentials of any or all the various
elements, determining the right quantity of resources needed, and applying the elements at the
right time.
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 the
entrepreneurs will reveal that no business, big or small, started without the hand of the
entrepreneur. Even if many of these businesses failed to survive, still a sizeable number of
developed and proceeded to make the capitalist economy viable concern. This is made possible
because the surviving enterprises are responsible for providing the following:
► a.Products and services for customers and producers;
► b.Employment’
► c.Taxes
► d.Demand for suppliers, products and services; and
► e.Training facilities for future entrepreneurs.
ENTRPRENEURIAL TASK ….CONTINUATION
LAND (Natural Resources) LABOR (Human Resources) CAPITAL (Financial
Resources)
Entrepreneur
Production Process
Finished Goods and
Services
NOTE : IN AN ATTEMPT TO
MAKE PROFITS, THE
EDNTREPRENEUR
PERFORMS THE FOLLOWING
FUNCTIONS:
1. Supply the necessary capital
2. Organize production by
buying and combining inputs
like materials and labor.
3. Decide on the rate of output,
in the light of his expectation
about demand; and
ENTREPRENEURSHIP AND INNOVATION
► What is Innovation? It is the introduction of new method, procedure, custom, device among
others. Innovation could be any of the following:
► 1. A new product;
► 2. A new production process; the substitution of a cheaper material in an unaltered product;
► 3. The reorganization of production, internal function, or distribution arrangement leading to
increased efficiency, better support for a given product or lower costs; or
► An improvement in instruments or methods of doing innovation. Innovation may also be viewed
as the last stage in important process consisting of the following:
► a. invention-refers to the discovery or devising of new products and processes;
► b.development-the process by which the ideas, principles generated from the stage of invention
are embodied in concrete products and techniques.
► Innovation-the actual introduction of new products pr processes.
EXAMPLES OF SUCCESFUL INNOVATIONS
► 1. The cordless microphone;
► 2. The microwave oven;
► 3. The cellular phone;
► 4. The karaoke music machine;
► 5. The use of laser in the treatment of eye conditions; and
► 6. The 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 small business
or make grow into 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 new
venture to a successful long-term enterprise consists of at least four major stages as follows:
1. The prestart stage- this happens when the entrepreneur start to question the feasibility of the
idea, product or service. He seeks answers to questions regarding potential markets, production,
and financing. This is very interesting stage that the entrepreneur must consider.
Continuation of the different stages…….
2. The start-up stage- in this stage the following are undertaken:
► Formation of the business
► Generation of the necessary capital
► Purchase of facilities and equipment
► Constructing prototype products; and
► Testing the market.
3. The early growth stage-this follows after establishing feasibility. Activities will be on a small
scale, (selling to limited markets with limited resources.) It losses occur, it will naturally be limited
also.
4. The late growth stage- this is the final stage before the new venture matures intro a stable
enterprise. This is when the management is structured, long-term financing is established, and
facilities planning are undertake.
REWARDS FOR SUCCESFUL ENTREPRENEURSHIP
► The use of any of the factors of production deserves to receive some forms of compensation
such as:
FACTORS OF PRODUCTION ECONOMIC REWARD LIMITING FACTOR FOR REWARD
RECEIVED
LAND Rent Supply and demand
LABOR Wages/Salary Supply and demand legislation
CAPITAL Interest Industry rates, government mandated
rates
ENTREPRENEUR/ Profits Skill of entrepreneur
ENTREPRENEURIAL ABILITY
ENTREPRENEUR AND THE BUSINESS SIZE
► To many people, entrepreneurship means running a small business, New business ventures,
however, can also be undertaken on a large scale. Both small and large businesses are
confronted by problems that are entrepreneurial in nature.
► To effectively compete, business of whatever size must adapt, innovative approaches to its
activities, Examples of innovations are the following:
► 1. Offering business services during Sundays and holidays;
► 2. Manufacture and sale of new products; and
► Selling on a deferred payment scheme.
►
THE END FOLKS
