Unit 1 Entrepreneur and Entrepreneurship PDF

UNIT I. INTRODUCTION: ENTREPRENEUR AND ENTREPRENEURSHIP Overview This unit gives an idea on entrepreneurship and its relationship to economic development. Further, insights on how evolution of entrepreneurship started wherein the different perspective were developed. Learning Objectives...

UNIT I. INTRODUCTION: ENTREPRENEUR AND ENTREPRENEURSHIP Overview This unit gives an idea on entrepreneurship and its relationship to economic development. Further, insights on how evolution of entrepreneurship started wherein the different perspective were developed. Learning Objectives At the end of the unit, I am able to: 1. define entrepreneurship; 2. discuss the relationship to the economic development; 3. appreciate the importance of entrepreneurship in the society; 4. state the evolution of entrepreneurship; and 5. discuss entrepreneurship in different perspective. Setting Up Name: ______________________________ Date: __________________________ Course/Year/Section: _____________ Directions: Look at the pictures below. Answer the following questions below. 1. What do you think about the picture? 2. Is there a relationship among them? 3. Explain briefly their relationship. 1 Lesson Proper Introduction Entrepreneurship plays a vital role in a capitalist economy. Products that being produced by entrepreneur benefit not only themselves by everyone around them. Being the “backbone of economy”, entrepreneurship is indispensable in economic development of a capitalist country like the Philippines. Entrepreneurship and Economic Development Entrepreneurship play a vital role in economic development of a capitalist country like the Philippines. According to the DTI, most of the business registered was composed of SME’s with 517,788 or 68% in Luzon, 106,930 or 14% in Visayas, 137,718 or 18% in Mindanao, and according to National Statistics Office in 2009 Micro Enterprises generated to employment of 91.77%. Economy development is a scheme aimed at improving the living standards of national 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 (machines, factories, roads); and 4. Technology(science, engineering, management, entrepreneurship) Theories of Economic Growth Characteristics Theories Theory of Mercantilism The first major economy theory known in the world which drove the economic system during the 16th to 18th centuries in the “known” world. It was based on the idea that nation’s wealth will increase on if the government regulated all the nation’s commercial interests. The government, according to mercantilism, should take care of all the economic activities of the country. The theory of Mercantilism holds that the wealth of a nation can be measured by its ready supply of capital, generally held in the concrete from of gold and silver. Mercantilism states that the global supply https://www.thebalance.com/mercanti of wealth is fixed amount, and that therefore any lism-definition-examples-significance- gain of wealth by one nation must necessarily today-4163347 ) represents a loss by another. National strength 2  was based on limiting import through high tariffs and exporting as many goods as possible. Due to its system of “me first” and “’ no to import” mercantilism could not be maintained forever, because the reality was that it led to a stagnant global economy. Each country wanted to export and no one wanted to import Toward the 18th century, Adam Smith wrote “An inquiry into the Nature and Causes of the Wealth of Nations” where documented industrial development in Europe. He expounded the need to minimize the role of government intervention and taxation in the free markets, saying that an “invisible hand” guide and supply and demand reflecting the concept that each person, by looking out for herself, creates the best outcomes for all. Smith called this the laissez-faire theory, which along with other philosopher, claimed “It is not from the benevolence of the butcher, the Laissez-Faire Economy Theory brewer or the baker, that we expect our dinner but from their regard for their own interest” Socialism Meanwhile, Karl Marx disagreed with Adam Smith and the laissez-faire theorists. He interpreted human history as a class struggle between workers and employers. He declared that free enterprises (laissez-faire) would lead to increasingly severe losses and would be eventually bring about revolution by the workers. They called for an economy where the government owned all the property and distributed everything equally among the people through socialism. Entrepreneurship theory Today, experts realized that there is not only single theory that can explain economic growth. In 1934, an economist named Joseph Schumpeter explained that economic growth is started by people (whom he called entrepreneurs) not produces goods, not only for personal profit but also for the good of everyone around them. He called the entrepreneurs the backbone of the economy. Entrepreneurs, according to him, are people who find joy in creating or producing good; who find self-fulfilment in getting things done; and who have a strong need for achievement. This entrepreneur centered theory is widely used to answer the need for social- economic development. 3 Definition of Entrepreneurship and Entrepreneur Entrepreneurship refers to the economic activity of a person who starts, manages and assumes the risk of business enterprises. The people who undertake entrepreneurial activities is called an entrepreneur (Medina , R. , 2014). Derived from the French word entreprendre which means “to undertake or trying”. Ability which includes effort, activity, action and others to accomplish a task (Dewan, Kumus). And entrepreneurial mind of an entrepreneurs will able to identify the need of the consumer, consider offering the business as a solution, assembles the resources required for the business, and assumes the risk of either succeeding or failing. Entrepreneurs Concern Problem on Hand Entrepreneur’s Action Identify the economic need High income families are not Established a high school satisfied with the services education which higher provided by high schools in standard than current high their area. school are providing. Assembling the resources Resources must be made Acquire fund, hire people, required available and construct building and the like. Assuming the risk Ventures must be made Prepare a project study, advertise, maintain good relationship with employees and customers among others Source : (Medina, R. 2014) Why Society Needs Entrepreneurs  To utilize the factors of production such as land, capital, technology, information and human resources in producing effective tasks.  To identify opportunities in the environment by increasing activity that will be beneficial to everyone.  To select the best approach to utilize all the factors of production in order minimize wastage in entrepreneurial activities.  For the benefit of the future generation. The Entrepreneurs’ Task The entrepreneur can only do his assigned task in doing business if apply all the requirement in capitalist economy are in place. There is no business who started as big or small without passing through the hands of an entrepreneurs. Even if many of these businesses failed to survive, still there are some business who will survive and these are responsible for providing the following. 1. Products and services for customers and producers. 2. Employment; 3. Taxes; 4. Demand for suppliers’ product and services and 5. Training facilities for future requirements. 4  Creation of products begins with the needs and wants of customers. For example, many brand of shampoo are available in the leading supermarket to choose from. But once the products meets its decline stage sooner or later the choices in the market will be lesser, until such time that the product which is available in the market do not suited their need. This is the time consumers has to produce his own requirement. This scenario brought the consumer to a situation where he has luxury of choosing from many options. And this does not refer to soap alone but other product as well. Services which were not previously available are now at the beck and call of the consumer. The fastfood canteen at the corner, parcel delivery, communication through cellphones, cable television, short term credit through credit cards, money remittance, and the like are among the services made possible by entrepreneurs. From the statistical reports made by the different government agencies it showed that entrepreneurs employs millions of people. The collection of taxes of the government in the form of business permits, licenses, income tax applicable to business and employees is a great contribution to our economic development. The tax collection by the government are used in different government projects like infrastructure, additional fund for SME’s and the like. The entrepreneurs also make sure that suppliers will have a ready market for their products and services. The retailers, for instance, assure the viability of big companies like San Miguel Corporation and Purefoods Company. Hollow blocks manufactures utilize the output of big cement factories. VCD and DVD shops provide the necessary linkages between consumers and producers of movies and the recorded music. Lastly, business enterprises provided a training ground for future entrepreneurs. A number of entrepreneurs were former employees of enterprising persons. Many of them used their acquired skills in starting new business. Some even improves the entrepreneurial skills passed on them. Evolution of Entrepreneurship Entrepreneurship started at early age where entrepreneurs travelled from place to place. Merchants would looked for a lender who will provide them loans in order to trade their goods. In this situation the lender gain more profit than the merchant himself. In Middle age, during this time, the entrepreneurial concept was based on how an individual manage the large production project but was not liable to any risk from the project. Thus, entrepreneur was only responsible for activities 5 like, construction of the building, completing the building and building fort to protect the city; and lastly building places of worship. In 17th century, a relationship between entrepreneurs and risk taking behaviour existed. They started to make contracts and profits will be divided base on the effort exerted by an entrepreneur. It was in 1725 when the word “entrepreneur” was used by Richard Cantillon. He looked upon entrepreneurs as a risk takers that is to buy at a certain price and sell it at an uncertain price. In 18th century, entrepreneurs distinguished between individuals who had capital and individual who need capital. They differ themselves from venture capital who invest money and expecting higher return. The growth of industrialization sector had forced entrepreneurs to go after opportunities to improve themselves and their countries. In 20th century, entrepreneurs had been assumed as agents to bring about changes. They were responsible for implementing the creation of products process of new systems. The ability of entrepreneurs to innovate products become their advantage. While in the 21st century complexities and diversities challenges are present in entrepreneurship. Because of increasing number of workforce and the heterogeneity of the workforce will have effect on the ability of entrepreneurs to manage them. Managing the culture related issues will determine the pattern of management, personality development and communication approached. Therefore, in a global business, entrepreneurs have to considered issues that are related to complexity and diversity. Therefore, entrepreneurship is more competitive because of technological innovation, competitiveness and demands and problems from employees. Bases of Entrepreneurship 1. Entrepreneurship is a process Generally, the characteristics of entrepreneurs are not innate traits one must be born with it. In fact it can be taught and learned when the go through various levels of the entrepreneurial development process. This development process will be influenced by the internal drive in an individual or group, planned or unplanned. The internal drive needs physical, emotional and spiritual strength to develop changes in attitude, personality and willingness to seize entrepreneurship opportunities. 2. Emphasis on creativity in consolidating company’s resources. Every entrepreneur has his personal creativity that has been developed through very imaginative power, experience and exposure to the environment. Creativity can be considered the essence of the entrepreneur’s success, because it helps them to view every problem in the different perspective. With this trait, entrepreneurs’ work hard to optimized limited resources in the way that benefits the company. Entrepreneurs have to maximize the use of their company’s resources such as finances, human, time, information, reputation and network, by identifying alternatives for each problem. 3. Wanting to improve the well-being of the environment Entrepreneurs need to be aware that their activities will be determine that well-being or destruction of the world. They have to bear in mind that world does 6  not belong to them but rather it is on loan to them to be used properly for the future generation. They have to prove that whatever entrepreneurial activities they undertake, will be beneficial short term and long term. Among the various parties affected by this activities would be: a. Personally – not compromising on their health and personal values. b. Family- not neglecting their responsibilities as the head of the family. c. Society- not ignoring the social needs of society. d. Constitution- by working on returns of investment without any dishonest gains e. Country- improving the well-being and peace f. Humanity Perspectives of Entrepreneurship There are eight perspectives relating to the field of entrepreneurship. They are: 1. To increase wealth through profit form business 2. To develop the business by combining their strength 3. To develop innovation through creating new products or ideas through confidence and determination. 4. To develop changes by adapting human wants, situation and environment 5. To develop jobs by creating job opportunities thorough entrepreneurial activities 6. To develop growth through sales and income growth 7. To develop values by concentrating on social responsibilities. 8. To submit to God prayers and religious norms and rules. References Books: Medina, Roberto G. (2014). Entrepreneurship and Small Business Management, 3rd edition, Rex Publishing Small Enterprise Research and Development (2013). Window to Entrepreneurship Guide: A Teaching Guide. Websites: https://images.search.yahoo.com/search/images;_ylt=Awr47UlLsw1fxxwAyyRXNyoA;_ylu= X3oDMTE0a2doMjJqBGNvbG8DZ3ExBHBvcwMxBHZ0aWQDQzAxNjJfMQRzZWMDcGl2cw-- ?p=perspective+of+entrepreneurship&fr2=piv- web&fr=mcafee#id=4&iurl=https%3A%2F%2Fimage.slidesharecdn.com%2Fchap1hele-1- 160714015327%2F95%2Fa-perspective-on-entrepreneurship-4- 638.jpg%3Fcb%3D1468461247&action=click https://images.search.yahoo.com/search/images;_ylt=Awr47UlLsw1fxxwAyyRXNyoA;_ylu= X3oDMTE0a2doMjJqBGNvbG8DZ3ExBHBvcwMxBHZ0aWQDQzAxNjJfMQRzZWMDcGl2cw-- ?p=perspective+of+entrepreneurship&fr2=piv- web&fr=mcafee#id=77&iurl=https%3A%2F%2Fimage.slidesharecdn.com%2F1- 130806064604-phpapp01%2F95%2F1-entrepreneurial-perspective-4- 638.jpg%3Fcb%3D1375771596&action=click 7 Assessing Learning Activity 1 Name: ______________________________ Score:_________________________ Course/Year/Section:_____________ Date:__________________________ Direction: Identify the word or group of word that best described the statement below. Write the answer on the space provided before the number. _________________1. Refers to individual who is creative, dynamic and innovative. _________________2. The term is based on the idea that nation’s wealth will increase on if the government regulated the entire nation’s commercial interest. _________________3. He interpreted the human history as a class struggle between the workers and employers. _________________4. He expounded the need to minimize the role of the government intervention and taxation in the free markets. _________________5. Smith along with the other philosopher, claimed “ït is not form the benevolence of the butcher, the brewer, or the breaker, that can expect our dinner but from their regard for their own interest”. What theory of economy is this? _________________6. He explained that economic growth is started by people (whom he called entrepreneurs) not producers goods not only for personal profit but also for the good of everyone around them. _________________7. This term holds that the wealth of the nation can be measured by its ready supply of capital, generally held in the concrete from gold or silver. _________________8. According to him, this creates wealth not only for the people in the business, but also for the whole country where the citizen work to provide themselves and other where they take care of their own financial needs. _________________9. The French word, meaning “to undertake or trying” _________________10. According to Schumpeter, it is firm that operates and implements a combination of new activities such as product development, marketing, resources for raw materials, manufacturing approach and new organization structure. 8 Assessing Learning Activity 2 Name: ______________________________ Score: _________________________ Course/Year/Section: _____________ Date: __________________________ Directions: Write the word or group of words that best describe the statement below. Write the answer on the space provided before the number. ________________1. French word that means “to understand or trying”. ________________2. Any natural resources used to produce goods and services. ________________3. An effort that proper contribute to the production of goods and services. ________________4. Machinery, tools, and building. ________________5. The one who combined the other factors of production to earn profit. 6. This term is based on the idea that a nation’s wealth will increase only if the government regulated the entire nation’s commercial interest. 7. The backbone of the economy. 8. A theory which states that a need to minimize the role of the government intervention and taxation in the free markets. 9. An economy where the government owned all the property and distributed everything equally. 10. The one who believes that economic growth begins with people. 9 Assessing Learning Activity 3 Name: ______________________________ Score: _________________________ Course/Year/Section:_____________ Date:__________________________ Directions: The class will be grouped into 4, and once you have group mates, you will be assigned to one theory of economic development in which your group will prepare points in favour of the theory. After your group have prepared their points, you will be given 15 minutes to present in the class the pros and cons of the theory given to you and your group’s conclusion. Use this paper to write-down your personal insights which you will share to your group. My insights: 10 Assessing Learning Activity 4 Name: ______________________________ Score: _________________________ Course/Year/Section: _____________ Date: __________________________ Directions: Based on what you have learned so far about entrepreneurship; discuss why entrepreneurs are called “the backbone of the economy.” In addition, try to imagine what a business enterprise needs in order to survive. My Answer: 11