Module 1: A Perspective on Entrepreneurship PDF

Republic of the Philippines UNIVERSITY OF EASTERN PHILIPPINES University Town, Northern Samar Web: http://uep.edu.ph; Email: [email protected] THE ENTREPRENEURIAL MIND MODULE 1: A PERSPECTIVE ON ENTREPRENEURSHIP MS. ARRAN JOYCE B. ROJERO...

Republic of the Philippines UNIVERSITY OF EASTERN PHILIPPINES University Town, Northern Samar Web: http://uep.edu.ph; Email: [email protected] THE ENTREPRENEURIAL MIND MODULE 1: A PERSPECTIVE ON ENTREPRENEURSHIP MS. ARRAN JOYCE B. ROJERO CBA PART-TIME LECTURER GEE Elective The Entrepreneurial Mind STUDY GUIDE FOR MODULE NO. 1 A PERSPECTIVE ON ENTREPRENEURSHIP MODULE OVERVIEW This module is an overview of what entrepreneurship is all about. It begins by defining entrepreneurship and entrepreneur and stating its importance especially in the different field in the industry. It also discusses the functions and tasks of an entrepreneur as an individual and contributor to the economy. It also introduces the concept of innovation as a specific tool for entrepreneurs. This part also includes the entrepreneurial process and the different rewards for having a successful entrepreneurship. MODULE LEARNING OBJECTIVES 1. Define entrepreneurship and entrepreneur 2. State the importance of entrepreneurship and entrepreneur 3. Describe and understand the tasks of entrepreneurs 4. Familiarize with the concept of innovation in entrepreneurship 5. Enumerate the entrepreneurial process 6. Know and appreciate the rewards for a successful entrepreneurship LEARNING CONTENTS (Define Entrepreneurship) Entrepreneurship came from the French word entreprendre which means to undertake. Entrepreneurship aims to bring about the cohesive integration of social, economic, institutional, and cultural environments, both at the individual level and the group level. Also, Entrepreneurship, as defined by Robert Hisrich, Ph.D., a professor of global entrepreneurship, is the process of creating something new with value by devoting, the necessary time and effort, assuming the accompanying financial psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence. People who are practitioners of entrepreneurship are called entrepreneurs. The said definition above emphasizes four concepts: First, entrepreneurship involves the process of creation. It is the capacity of an individual to utilize resources to create something unique or new, or improve something that already exists and make them available in the market. Second, entrepreneurship requires time and effort. An entrepreneur must devote his/her time to establish his/her business. He/she must exude passion, commitment and dedication in making his/her crafts. Third, entrepreneurship is a challenging task. Risks are inevitable in making a business. Entrepreneurs may face multiple risks such as financial risks, competitive risks, environment risks, strategic risks and many more. An entrepreneur must be prepared for these things. 1 GEE Elective The Entrepreneurial Mind Lastly, being an entrepreneur is a fulfilling endeavor because of its rewards and personal satisfaction. Aside from the profit that he/she gets, the feeling of starting up your own business and making it successful is different. The experience of the entrepreneur changes his/her personality and character especially in decision making and management. LEARNING CONTENTS (Define Entrepreneur) Like Entrepreneurship, Entrepreneur has no single definition. There are different perspective and thoughts towards the term “entrepreneurs”. Some of this are: An entrepreneur is a person who is action oriented, highly motivated, takes risks to achieve goals; An entrepreneur is a person who establishes his own business with the intention of making profits; An entrepreneur is a person who only provides capital without taking active part in the leading role in an enterprise; and An entrepreneur is a one who innovates, raise money, assemble input, choose managers and set the organization growing. Fortunately, we have a ton of entrepreneurs to look up to whenever we need the inspiration to work on our own ideas instead of others. Some of the famous entrepreneurs in the world are: Jeff Bezos is the founder of Amazon which is the largest eCommerce marketplace and is used by millions of customers worldwide. William Henry Gates (popularly known as Bill Gates) is an American business magnate, investor, author, and philanthropist. He is the founder of Microsoft, which he launched along with Paul Allen in 1975. Mark Elliot Zuckerberg is an American technology entrepreneur and he’s the founder of the widely popular social media platform Facebook. Facebook is undoubtedly the #1 social media platform used by everyone, from students to marketers to leaders from all over the world. 2 GEE Elective The Entrepreneurial Mind LEARNING ACTIVITY 1 ESSAY. Answer the following questions in paragraph form. 1. Observe the entrepreneurs in your community. Tell your own definition of an entrepreneur based on your observation. 2. Do you like to become an entrepreneur someday? Why? LEARNING CONTENTS (Differentiating Entrepreneur and Entrepreneurship) Although both term Entrepreneur and Entrepreneurship are understood similar, however, there are some key differences when it comes to the difference between entrepreneur and entrepreneurship. But how would you differentiate an entrepreneur from entrepreneurship? Entrepreneur (Person) + Entrepreneurship (Process) = Enterprise (Outcome) In short, the above formula states that “A person follows certain processes to set up and establish an enterprise, hence, that person will be an entrepreneur, the process is entrepreneurship and the outcome would be enterprise/ organization.” To dig down more on the key differences between entrepreneur and entrepreneurship, we should go through the following pointwise comparison on the basis of different angles and terms. An Entrepreneur is often the founder of the business enterprise whereas Entrepreneurship ranges from single projects to multiple projects to generate various employment opportunities in society. Entrepreneur innovates/develop some unique products or services or technology whereas the processes/ measures to innovate or discover that products or services are Entrepreneurship. Entrepreneurs typically not only initiates and operates a new venture but at the same time they are also accountable for risks associated in business whereas entrepreneurship is the procedure of starting new businesses or enterprises which is responsible for identifying opportunities. An entrepreneur is an administrator whereas entrepreneurship is administration. An entrepreneur is creator and entrepreneurship is creation. LEARNING CONTENTS (Importance of Entrepreneurship) Entrepreneurship is the dynamic process of creating incremental wealth and innovating things of value that have a bearing on the welfare of an entrepreneur as an individual and the growth of the economy as a whole. This means that the importance of entrepreneurship can be seen both in the micro and macro perspective. Importance of Entrepreneurship in the Macro Perspective: Generates Job Opportunities Entrepreneurship is not only important for the entrepreneur and business itself, but it also opens job opportunities for other people. If an entrepreneur plans to put up his own business, he gets to hire employees. This is also a chance for entry level jobs for unskilled workers to be trained and to gain experience. Entrepreneurship is a good way to end unemployment. 3 GEE Elective The Entrepreneurial Mind Enhances Economic Growth When an entrepreneur establishes his business, he produces goods and services. This adds up to the gross domestic product of an economy. If more individuals will start a business, more goods and services will be produced. This will enhance a country’s economic growth. Entrepreneurial ventures make a significant contribution to national income. Improves the Community Entrepreneurs are not just the big and rich ones. There are also many small and medium enterprises especially in the rural community. A lot of entrepreneurs began by selling in their barangay which greatly helps their families. Many individuals need not to work or migrate from other places because they can earn a living by becoming entrepreneurs of their own. Importance of Entrepreneurship in the Micro Perspective Develops the Character of the Individual When an individual engages in the practice of entrepreneurship, he/she undergoes many circumstances that would improve his character and personality. The duties and responsibilities drives an entrepreneur to become better in managing and decision making. Entrepreneurship is not just all about business, but also for character development. Improves the Economic Status of the Individual The main objective of many entrepreneurs is to make a living and earn profits. Entrepreneurship has become the source of income of many individuals which helps their families. It has also helped improve the standard of living of many people. Acquires a Sense of Fulfillment Many individuals prefer to have their own business than to become employees of other companies. They want to become leaders and bosses of their own businesses. This gives them a sense of fulfillment, much more if the business is a success. Also, as an entrepreneur, one is able to help others by employing them. Embracing this social responsibility gives fulfillment to the individual. Enhances Many Skills of the Individual Entrepreneurship enhances many skills such as critical thinking, problem-solving, decision- making, organizing and creating. These are necessary skills that one must possess in order to establish a successful business enterprise. LEARNING ACTIVITY 2 Reflection Time. Answer the following question. 1. Why do you think entrepreneurship is important in your course? 2. How will you relate your course to entrepreneurship? 3. Do you think there is a relevant relationship between your course and entrepreneurship? 4 GEE Elective The Entrepreneurial Mind LEARNING CONTENTS (The Entrepreneurial Tasks and Functions) An entrepreneur has to perform the following tasks and functions: 1. Risk Taking and Uncertainty Bearing An entrepreneur must be prepared for all the risks and adversities. He/she has to face these circumstances. For example, the business might suffer from loss and bankruptcy. The entrepreneur must be able to adjust and find ways to solve problems like this because success in entrepreneurship is uncertain and risks are inevitable. 2. Taking Business Decisions An entrepreneur must be able to formulate an action plan for all the decisions that he/she has to make. He/she has to decide on what goods and services to produce, how to produce, and how to promote and distribute them. He/she must be able to make good decisions for the success of the business. 3. Managerial Functions An entrepreneur performs various managerial functions. He/she must know how to manage the different operations in the business like financial and supply management. This is an important task that an entrepreneur must embrace. 4. Innovation This is the most important function of an entrepreneur. He initiates to introduce and craft new products. He thinks of many ways on how to improve the quality of these products and develop the business. 5. Maintain Good Relations An entrepreneur must be able to establish a good relationship with his employees and most especially with his clients and customers. Having good relations with employees makes the job easier. Communicating well with the clients is a very important task to maintain the progress of a business. 6. Planning and Organizational Function As an entrepreneur, planning and organizing are very vital tasks. These are the first things that an entrepreneur must do when starting up his/her own business. Planning is deciding in advance what is to be done, which is to be done, and how is to be done. This is a very important function because without planning, goals cannot be achieved. Also, an entrepreneur must learn how to organize his/her business like taking the right processes and system. Main Differences in Tasks between an Entrepreneur and a Manager Entrepreneur Manager An entrepreneur is involved with the A manager is with a running business over start-up process a long period of time An entrepreneur assumes financial, A manager does not have to bear risks material and psychological risks An entrepreneur is driven by A manager by the resources he currently perception of opportunity possess An entrepreneur initiates change A manager follows rules and procedure An entrepreneur is his own boss A manager is a hired employee An entrepreneur gets uncertain A manager gets fixed rewards and salary rewards Source: Essentials of Entrepreneurship 5 GEE Elective The Entrepreneurial Mind LEARNING ACTIVITY 3 TRUE OR FALSE. Write T if the statement is correct, F if false. _____ 1. A manager is the same as an entrepreneur in their tasks. _____ 2. An entrepreneur does not need to maintain a good relation with clients as long as his employees already do. _____ 3. A manager gets uncertain rewards same as entrepreneur. _____ 4. It is important for an entrepreneur to take business decisions. _____ 5. An entrepreneur must be open to changes for the well fair of the business. _____ 6. A manager is a hired employee. _____ 7. An entrepreneur performs various managerial functions. _____ 8. The entrepreneur sometimes can’t adjust and couldn’t find ways to solve problems. _____ 9. A manager follows rules and procedure as well as an entrepreneur. _____ 10. A manager is with a running business over a long period of time. LEARNING CONTENTS (The Entrepreneurial Tasks and Functions) What is Innovation? Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully fot the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they nees to know and to apply the principles of succesful innovation (Drucker, 1985). Innovation came from the Latin word Innovare which means to make new. Entrepreneurs create new value form existing things and processes. There would be no entrepreneurship without innovation because thinking of what to produce, how things should be done, and what to market are all parts of innovation. Main Types of Innovation 66 GEE Elective The Entrepreneurial Mind 1. Product Innovation – These are innovation of goods and services. This is a creation or improvement of new products. 2. Process Innovation – This refers to the creation or improvement of processes and methods. An entrepreneur must be able to innovate ways to conduct his operations in production and delivery. 3. Organizational Innovation – this is defined as doing this differently in the organization. It is the implementation of a new organizational method in a firm’s business practice, workplace or external relations. 7 GEE Elective The Entrepreneurial Mind 4. Marketing Innovation – This refers to the implementation of marketing strategies to promote the products. THE ENTREPRENEURIAL PROCESS The process of starting a new venture is embodied in the entrepreneurial process, which involves more than just problem solving in a typical management position. An entrepreneur must find, evaluate, and develop an opportunity by overcoming the forces that resist the creation of something new (Hisrich, 1985). The process has four phases: Determine Identify and Develop the the Manage the Evaluate the Business Resources Enterprise Opportunity Plan Required 1. Identify and Evaluate the Opportunity This is the first and most difficult part in the process. To be able to establish a business enterprise, an entrepreneur must be open to opportunities. This is the most important part because this is where the entrepreneur starts. This is the part where the generation of ideas to establish the business happens. A good entrepreneur does not only grab opportunities but takes time to evaluate them. He/she must establish mechanisms to identify potential opportunities. An entrepreneur must be able to weigh or calculate whether an opportunity gives more risks or rewards. This is what you call opportunity analysis or opportunity assessment. An opportunity assessment includes the description of the product or business and specifications of all activities and operations. Also, before an entrepreneur accepts an opportunity, he/she must see to it that there are resources available. 2. Develop the Business Plan If opportunities have been evaluated already, the next step is to make a good business plan. This is a document that serves as a guide or a roadmap that contains all the goals and details on how an entrepreneur plans to achieve those goals. The parts of the business plan will be discussed on a section in a different module. 8 GEE Elective The Entrepreneurial Mind 3. Resources Required To operate a business enterprise, resources are necessary. An entrepreneur must be able to determine the resources needed. These are human resources, financial resources, and physical resources. Human resources are the people or the employees. If the business is highly labor intensive, it means it needs more people. Another important resources is the financial capital. Without money, the business is dead. All businesses need money to start their operation. Lastly, the physical resources includes the land or location and the different equipment needed. These are also called factors of production because these are the necessary things to produce goods and services. 4. Manage the Enterprise How the business is managed depends on the second and third part of the process. This is the part where the entrepreneur must focus because mismanagement of enterprise could just put all the planning and resources into waste. The success of the business lies on this part. For aspiring entrepreneurs, they must undergo seminars and trainings on this matter so they would know what to do. LEARNING ACTIVITY 4 Essay. In more than five sentences, explain the entrepreneurial process. ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ LEARNING CONTENTS (Rewards for a Successful Entrepreneurship) The rewards for a successful entrepreneurship that an entrepreneur enjoys can be in the form of financial and non-financial. NON- FINANCIAL FINANCIAL Profits Satisfaction Dividends Contribution Capital Growth Character Development For the financial rewards, the entrepreneur gets profits. Profit is a financial gain obtained from an investment. It is calculated by subtracting the amount of expenses used in the production from the amount earned. Dividend, on the other hand, is the amount of money paid by a company to its shareholders out of its profits. An entrepreneur can be a shareholder of one company and can earn from it. Lastly, capital growth is the increase in the value of an asset or investment. 9 GEE Elective The Entrepreneurial Mind For the non-financial reward, the entrepreneur gets satisfaction from the endeavor. Establishing a business enterprise is personally satisfying because it takes a lot of effort to do such. Aside from that, the contribution to society is also personally rewarding. An entrepreneur is able to open job opportunities for people. Also, the most important reward is the transformation that entrepreneurship does to the entrepreneur’s character and personality. Becoming an entrepreneur makes one to become responsible, independent, risk-taker, and perseverant. SUMMARY This module introduces the concept of entrepreneurship, its importance, the tasks of an entrepreneur, the concept of innovation, the entrepreneurial process and the rewards of a successful entrepreneurship. Entrepreneurship is the process of innovating new venture that entails risks and rewards. A lot of people engage in this activity because of its major contribution to them and to the economy. Once an individual establishes his/her own business enterprise, he gets to open job opportunities for people. This is personally satisfying on the part of the entrepreneur because he does not only earn from the business, he is also able to help the economy. The entrepreneur must also be able to do his functions guided by the entrepreneurial process which begins at identifying and evaluating opportunities. Developing a business plan is also an important part of the process because this will serve as the guide of the entrepreneur in running his business. Then, the necessary resources must also be acquired in order to complete the establishment of the business. Managing the business is the last part of the process which is very crucial because this is the part where the different operations happen. Lastly, an entrepreneur gets rewards if the business enterprise becomes a success. It could be in the form of money like profits, dividends and capital growth. It could also be in the non-financial form like self-satisfaction, contribution to the economy and character development. REFERENCES Fajardo, F. (1994). Entrepreneurship. Mandaluyong: National Bookstore. Essentials of Entrepreneurship. 3G Elearning FZ LLC, 2016. Hisrich, R. & Peters, M. (1999). Entrepreneurship. Fourth Edition. Irwin/Mcgraw-Hill. Drucker, P. (1984). Innovation and Entrepreneurship. Available at: http://www.untag- smd.ac.id/files/Perpustakaan_Digital_1/ENTREPRENEURSHIP%20Innovation%20and%20entrepre neurship.PDF 10