Nature of Entrepreneurship PDF

Republic of the Philippines CENTRAL BICOL STATE UNIVERSITY OF AGRICULTURE Calabanga | Pasacao | Pili | Sipocot NATURE OF ENTREPRENEURSHIP GEC 11 – The Entrepreneurial Mind ABEGAIL M. VERGARA GEC 11 Instructor At the end of the unit the students are expecte...

Republic of the Philippines CENTRAL BICOL STATE UNIVERSITY OF AGRICULTURE Calabanga | Pasacao | Pili | Sipocot NATURE OF ENTREPRENEURSHIP GEC 11 – The Entrepreneurial Mind ABEGAIL M. VERGARA GEC 11 Instructor At the end of the unit the students are expected to: Discuss the nature, origin, and concepts of entrepreneurship. Determine the types of entrepreneurs and explain their importance in economic development. Explain the importance of personal financial planning to achieve a sound financial life. TOPICS A. Origin, Nature and Concepts of Entrepreneurship B. Characteristics of Entrepreneurship C.Personal Entrepreneurial Competencies D.Entrepreneur or Employee? ORIGIN, NATURE AND CONCEPTS OF ENTREPRENEURSHIP ENTREPRENEURSHIP: Economist and Management According to Economist – an entrepreneur is the one who brings resources, labor, material and other assets into combination to produce a socially viable product, and one who introduces changes, innovation and new order. According to Management – a person with a vision and action plan to achieve it is an entrepreneur. ORIGIN OF ENTREPRENEURSHIP The word “entrepreneur” originates from a thirteenth-century French verb, “entreprendre”, meaning “to do something” or “to undertake.” By the sixteenth century, the noun form, entrepreneur, was being used to refer to “someone who undertakes a business venture”. The first academic use of the word by an economist was in 1730 by Richard Cantillon, who identified entrepreneurship as “the willingness to bear the personal financial risk of a business venture.”  In 1800s, Jean-Baptiste Say stressed the role of the entrepreneur in creating value by moving resources out of less productive areas and into more productive ones. John Stuart Mill used the term “entrepreneur” in his popular 1848 book, Principles of Political Economy, to refer to a person who assumes both the risk and the management of a business. In this manner, he provided a clearer distinction between an entrepreneur and other business owners (such as shareholders or partners) who assume financial risk but do not actively participate in the day-to-day activities.  Joseph Schumpeter, (20th century economist) stressed the role of the entrepreneur as an innovator who implements change in an economy by introducing new goods or new methods of production (innovation). Entrepreneurship as a force of “creative destruction”. Israel Kirzner, another 20th century economist, focused on the entrepreneur as a person who discovers previously unnoticed profit opportunities. The entrepreneur’s discovery initiates a process in which these newly discovered profit opportunities are then acted on in the marketplace until market competition eliminates the profit opportunity. Example, an increase in college enrolment in a place signifies an increase in opportunities to add food houses, dormitories, etc. ❑It is also believed that the Frenchman J.B. Say (1824) first used the term ‘entrepreneur’ as an economic agent who brought together the factors of production in such a way that new wealth can be created. NATURE OF ENTREPRENEURSHIP ❑ Creation of an enterprise – it involves and operation of an enterprise. ❑ Organizing function – it brings together various factors of production for economic use. ❑ Innovation – it is an automatic, spontaneous and creative response to changes in the environment. ❑ Risk bearing capacity – it assumes uncertainty of future. NATURE OF ENTREPRENEURSHIP ❑ Managerial and leadership function – it is responsible for controlling and coordinating the human resource and giving direction to an enterprise. ❑ Gap Filling – it fills the gap between human needs and available products and services. The Entrepreneurial Process 1. Identify and evaluate opportunities present (the process by which the entrepreneur produces the idea and opportunity for a new business venture) 2. Develop a business plan (to determine the direction of the future business) 3. Identify the resources required (to evaluate whether the business is doable or not) 4. Manage the business (to experience the day-to-day operation and realize the goals stated in the business plan)  Concepts and Characteristics of Entrepreneurship 1. Interest and Vision - an entrepreneur must work in an area that interests him/ her. Otherwise, he/she will not be able to maintain a high level of work ethic and will most likely fail. Then, this interest should be turned into a vision of growth and expansion. Concepts and Characteristics of Entrepreneurship 2. Many Skills - An entrepreneur must be able to wear many hats and do so effectively. He should be knowledgeable enough in the four areas of entrepreneurship (marketing, production, organization & management, and financial). Concepts and Characteristics of Entrepreneurship 3. Financial and Emotional Investment - An entrepreneur’s investment may be something less tangible, such as the time she spends or the skills or reputation she brings with it. - It also tends to involve a significant investment of assets with a clear value, whether they be cash, real estate or intellectual property. An entrepreneur who will not or cannot invest in her company cannot expect others to do so and cannot expect it to succeed. Concepts and Characteristics of Entrepreneurship 4. Organization & Delegation - successful entrepreneurship is characterized by quick and stable growth. This means hiring other people to do specialized jobs. An entrepreneur needs to know how to organize & multi-task. Concepts and Characteristics of Entrepreneurship 5. Risk & Rewards - The measurement of risk in business equates to the amount of time and money invested into the business. However, this risk also tends to relate directly to the rewards involved. The higher the risk, the bigger the reward.  PERSONAL ENTREPRENEURIAL COMPETENCIES (PEC) 10 Characteristics of Competencies of Entrepreneur 1. Opportunity Seeking and Initiative ❑ Does things before asked or forced to by events. ❑ Acts to extend the business into new areas, products or services ❑ Seizes unusual opportunities to start a new business, obtain financing, equipment, land workspace of assistance. 2. Risk Taking ❑ Deliberately calculates risks and evaluates alternatives. ❑ Takes action to reduce risk or control outcomes ❑ Places self in situation involving a challenge or moderate risk. 3. Demand for Efficiency and Quality ❑ Find ways to do things better, faster, or cheaper. ❑ Acts to do things that met or exceed standards of excellence. ❑ Develops or uses procedures to ensure work is completed on time or that work meets agreed upon standards of quality. 4. Persistence ❑ Acts in the face of a significant obstacle. ❑ Takes repeated actions or switches to an alternative strategy to meet a challenge or overcome an obstacle. ❑ Takes personal responsibility for the performance necessary to achieve goals and objectives 5. Commitment to the Work Contract ❑ Makes a personal sacrifice or expend ordinary effort to complete a job. ❑ Pitches in workers or in their place to get a job done. ❑ Strives to keep customers satisfied and places long term good will over short- term gain 6. Information Seeking ❑ Personally, seeks information from clients, supplier, or competitors. ❑ Does personal research on how to provide a product or service. ❑ Consult experts for business or technical advice 7. Goal Setting ❑Set goals and objectives that are personally meaningful and challenging ❑articulates clear and specific long-range goals ❑Sets measurable short-term objectives 8. Systematic Planning and Monitoring ❑ Plans by breaking large tasks down into time-con-strained sub-tasks. ❑ Revises plans considering feedback on performance or changing circumstances. ❑ Keeps financial records and uses them to make business decisions. 9. Persuasion and Networking ❑Uses deliberate strategies to influence or persuade others ❑ Uses key people as agents to accomplish own objectives ❑ Acts to develop and maintain business contracts 10. Independence and Self-confidence ❑ Seeks autonomy from the rules or control of others ❑ Sticks with own judgement in the face of opposition or early lack of success ❑ Expresses confidence in own ability to complete a difficult task or meet a challenge. ENTREPRENEUR VS. EMPLOYEE  ENTREPRENEUR VS. EMPLOYEE EMPLOYEE ENTREPRENEUR ❑ Employees try to shore up their ❑ Entrepreneurs accept their weaknesses weaknesses and concentrate on their ❑ Employees strive to do their best work strengths. ❑ Employees advance by assuming as ❑ Entrepreneurs don't have to answer much responsibility as possible, to anyone else, so they may be willing continually expanding their skill sets to take a chance on producing ❑ Some employees are intimidated by substandard work. people who are smarter than they are. ❑ Entrepreneurs delegate, turn down some opportunities and focus on the parts of the job only they can do. ❑ Entrepreneurs can hire them. 6 Reasons Why Being and Entrepreneur is Better than Employment 1. You own your time and make your own decisions for your business - You don’t even have to worry about getting fired because you are the one who fires people. Owning a business will also give you freedom when it comes to making choices. 2. Unlimited opportunity for income When you own a business, your income will not be limited to a fixed amount. Building a business is hard and takes time, but the opportunity to earn more money is a good benefit to consider when thinking about building a business. 3. Entrepreneurs are happier and healthier than employed people According to Forbes, people who are managing their own businesses are happier than those who are employed. There is more work-life balance and in a way, using your creativity to build something is taking the stress of working for a living. 4. Building a business is more satisfying - Owning a business will need more effort than being an employee, but you also got a chance to create something that you will be proud of in years to come. 5. You feel more motivated -When you manage your business, it is either you succeed or you fail. Either you fail or succeed, you’ve learned something and that’s one of the most motivating features of owning a business. It would be easier for you to express your ideas and boost your confidence if you’re motivated to do something 6. You can live the lifestyle you like -This is the reason why some of the ex-employees took the shift and become entrepreneurs. You can live your life the way you like it, especially if your business is doing pretty well. You wouldn’t need to write a letter when you want to go on vacation. It doesn’t even matter if you came up to work not wearing your uniform.  Assignment PECs (Personal Entrepreneurial Competencies) Self Rating “APPRAISING YOURSELF FOR AN ENTREPRENEURIAL CAREER” Thank you!