ENTREPRENEURIAL MANAGEMENT

R E V I E W E R
Module 1
ENTREPRENEURSHIP Characteristics Of a Good Team Members
• The process of running a business of one’s own. a. Commitment
• Entrepreneurs try to identify customer needs in ✓ they are committed to team goals and are
the marketplace. Then they provide a service or willing to work hard to achieve the goals.
product to meet those needs. b. Competency
Entrepreneurs ✓ they have the right set of skills needed to get
➢ People who own, operate, and take the risk of a the job done and to help accomplish the
business venture team’s goals.
Employee vs. Entrepreneurs c. Communication
✓ they have good communication skills and can
Entrepreneurs Employee share ideas with others in both oral and
• assume risk. • people who work for written form.
• Make decision someone else.
d. Cooperation
• directly affected by • Make decision ✓ they work well with others and know that
the consequences of • NOT directly affected they will not always get their way. They are
those decisions. by the consequences willing to accept the decision of the group for
of those decisions. the good of the group.
WHY DO PEOPLE BECOME ENTREPRENEURS? e. Creativity
• To leave the fast-paced corporate environment ✓ they are able to look at things from different
• Set their own schedules. perspectives and suggest new ways of doing
• To be at home but still earn an income. things.
• To pursue a personal dream. etc
Integrity and Ethical Behavior. To determine is entrepreneurship is right for you,
Ethical Business Practices you can first need to:
➢ ensure that the highest standards of conduct Self-assessment
are observed in their relationships with ➢ is an evaluation of your strengths and
everyone affected by the business’s activities. weaknesses.
Integrity 1. Assess Your Interests
➢ entrepreneurs behave consistently in actions, 2. Assess Your Aptitude
values, methods, measures, principles, ✓ APTITUDE is the ability to learn a particular
expectations, and outcomes. kind of job. Auto mechanics must possess an
aptitude for solving mechanical problems
TYPES OF ENTREPRENEURAL 3. Assess the Advantages of Entrepreneurship
BUSINESSESS Some of the biggest advantages include the
following:
• Entrepreneurs are their own bosses.
• Entrepreneurs can choose a business that
interests them.
• Entrepreneurs can be creative.
• Entrepreneurs can make large sums of
money.
4. Assess the Disadvantages of
Entrepreneurship
Disadvantages include the following:
• Entrepreneurship is risky.
• Entrepreneurs face uncertain and irregular
incomes.
• Entrepreneurs work long hours.
• Entrepreneurs must make all decisions by
Green Entrepreneurship themselves.
➢ entrepreneurs who have a passion toward
Exploring Ideas and Opportunities
being green have an advantage when
introducing their product or service on the a) Look for Ideas
market. • Ideas - are thoughts or concepts that come
Characteristics Of Successful from creative thinking.
Entrepreneurs
• Opportunities - are possibilities that arise
from existing condition
1. independent.
2. self-confident. Source of Ideas
3. have determination and perseverance. ✓ Hobbies and interest
4. goal-oriented. ✓ Past experiences
5. have a need to achieve and to set high standards ✓ Discovery or inventions
for themselves. b) Investigate Opportunities
6. creative. ➢ People often do research to determine what is
7. able to act quickly. missing in a particular market- what needs exist
8. keep up to date with technology. that are not being met. By conducting this
 research, they hope to find the perfect business ➢ Brainstorming is a creative problem-solving
opportunity. technique that involves generating a large
Small Business Administration (SBA) number of fresh ideas.
is an organization that exists to help small ➢ Brainstorming is often donein a group-setting,
businesses and their owners. It publishes but it is very useful activity for an individual as
information that may be helpful. well.
trade shows 3. Learning from Mistakes
special meetings where companies of the same or ➢ If you want to become an entrepreneur, you
related industry display their products, can also cannot be afraid to make mistakes. Mistakes are
be beneficial. likely to happen, but negative can be turned to
Compare Different Opportunities positive.
➢ Once you find appealing business Module 2
opportunities, you need to identify which ENTREPRENEURS IN A MARKET
ones have the best chance for success. Now ECONOMY
is the time to assess each business Entrepreneurs Satisfy Needs and Wants
opportunity by asking yourself the following 1. Needs
questions: ➢ Needs are things you must have to survive.
1) Is there a market in my community for this
kind of business? Will people buy my
product or service?
2) How much money would it take to start this
business? Will I be able to borrow that such
money?
3) How many hours a week is it likely to take
to run this business? Am I will to commit
that much time?
4) What are the particular risks associated
with this business? What is the rate of
business failure?
5) Does my background prepare me to run this 2. Wants
kind of business? Do most people who own Individuals have two different types of wants
this kind of business have more experience • Economic wants
than I do? ➢ involve a desire for material goods and services.
6) How much money could I make running this They are the basis of an economy.
business? • Non-economic wants
c). Setting of goals ➢ or the desire for nonmaterial things. These wants
➢ Goals help you stay on track and follow would include such things as sunshine, fresh air,
through with your plans. exercise, friendship, and happiness.
➢ The best goals are SMART. Needs and Wants Are Unlimited
Goals can be categorized as financial and
non- financial. Economic Resources
i. Financial Goals. ▪ are the means through which goods and services
Set specific financial goals before starting a are produced.
business. Financial goals can include how much Factors of Production
money you will earn and how quickly you will pay 1) NATURAL RESOURCES
off debts. o Raw materials supplied by nature are natural
ii. Non-Financial Goals resources.
Most people who owns their businesses do so o Conservation practices and the production of
for more than just monetary gain. They are more efficient products help to preserve and
looking for personal satisfaction. renew resources.
2) HUMAN RESOURCES
Problem Solving Process o The people who create goods and services
➢ A formal problem-solving model helps people o As an entrepreneur, you would also be a
solve problems in a logical manner. human resource. Entrepreneurs have creative
• Step 1: Define the Problem ideas and use these ideas to create a new goods
• Step 2: Gather information and services, which in turn give consumers
• Step 3: Identify various solutions more choices.
• Step 4: Evaluate Alternatives and Select the 3) CAPITAL RESOURCES
best option o The assets invested in the production of goods
• Step 5: Take Action and services.
• Step 6: Evaluate the Action o Capital resources include buildings, equipment,
and supplies. They also include the money
Problem-Solving Skills
needed to build a factory, buy a delivery truck,
1. Communicating and pay the employees needed to manufacture
➢ When trying to resolve problems and make and distribute goods and services.
decisions, you most likely will have to interact
with others. ]
2. Brainstorming
Limited Resources D. Mixed Economy
➢ All economic resources have a limited supply. o When elements of the command and
➢ Because there is a limited supply will command market economics are combined, it is
high prices. called a mixed economy.
➢ Because there is a limited amount of natural o A mixed economy often results when a
resources, there is also be a limit to the amount country shifts away from a command
of goods and services that can be produced. economy toward a market economy but
still has government involvement in the
Role of Entrepreneurs in the U.S. marketplace.
Economy The U.S. Economic System
➢ As business owners, entrepreneurs play an ➢ the U.S. system is best described as a market
important role in supplying goods and services to economy.
meet the demands of consumers. They look for ➢ Another term often associated with the U.S.
unmet needs or better ways to satisfy consumer economy is free enterprise, due to the freedom
needs and wants. They use resources and their of businesses and individuals to make
knowledge of markets and business to efficiently production and consumption decisions. This
produce goods and services that meet consumer individual freedom is vital to the success of the
needs and wants. U.S. economy.
Supply and Demand ➢ U.S market system is capitalism.
• entrepreneurs play an important role in Capitalism
supplying goods and services to meet the ➢ which is the private ownership of resources by
demands of consumers. They look for unmet individuals rather than by the government.
needs or better ways to satisfy consumer needs The U.S. economic system is based on four
and wants. They use resources and their principles:
knowledge of markets and business to 1. PRIVATE PROPERTY
efficiently produce goods and services that ➢ As a U.S. citizen, you can own, use, or dispose of
meet consumer needs and wants. things of value. You are free to own anything
Capital Investment and Job Creation you want, and you can decide what to do with it
• In order to start businesses, entrepreneurs as long as you operate within the law.
need money to finance their businesses 2. FREEDOM OF CHOICE
• entrepreneurs are investing in their ➢ You can make decisions independently and
communities by contributing to the local must accept the consequences of those
economy and providing jobs. decisions. Business owners are free to choose
Change Agents where to open a business, what to sell, and how
• Many entrepreneurs create products that to operate the company. AND VICE VERSA
change the way people live and conduct ➢ Only when individual decisions will bring hard
business. to others does the government regulate
freedom of choice.
How Economic Decisions are made? 3. PROFIT
Economic Systems ➢ The difference between revenues taken in by a
all economies must answer three basic questions. business and the costs of operating the
1. What goods and services will be produced? business
2. How will the goods and services be produced? ➢ The opportunity to earn a profit is at the heart
3. What needs and wants will be satisfied with the of the free-enterprise system.
goods and services produced? 4. COMPETITON
A. Command Economy ➢ The rivalry among businesses to sell their
o In a command economy, the government goods and services
determines what, how and for whom ➢ Competition forces businesses to improve
products and services are produced. products, keep costs low, provide good
o Because the government is making the customer service, and search for new ideas so
decisions, there is a little choice for that consumers will choose their products or
consumers in what is available. services.
B. Market Economy Economic Choices
o Market economy is about personal choice. In Economic Decision Making
a market economy, individuals and businesses ➢ is the process of choosing which needs and
decide what, how, and for whom goods and wants, among several, you will satisfy using the
services are produced. Entrepreneurship resources you have.
thrives in market economy. Two factors commonly enter into economic
C. Traditional Economy decision making
o In a traditional economy, goods and services 1. Scarcity
are produced the way they have always been ➢ occurs when people’s needs and wants are
produced. unlimited and the resource to produce the
o The traditional economy is used in countries goods and services to meet those needs and
that are less developed and are not yet wants are limited.
participating in the global economy. ➢ For example, land is a scarce resource. Land is
o Traditional economies lack the formal used for
structure usually have limited capital
resources
 ➢ many purposes, such as for growing crops or as • The change in price is small in relation to the
site for business or house. Land derives its value income of the consumer, so consumers will
from its scarcity. continue to buy the product if they want it
2. Opportunity cost • The product is a basic need for consumers,
➢ is the value of next-best alternative- the one rather than just a want
you pass up. When Supply and demand meet
➢ When examining all of your alternatives, you Equilibrium Price And Quantity
should consider the opportunity cost of each ➢ The point at which the supply and demand curves
one. meet. This is the price at which supply equals
demand.
Functions of Business ➢ Only at the equilibrium price does the amount
The activities or functions of business include the consumers want to buy exactly equal the amount
following: producers want to supply.
1. PRODUCTION Above the equilibrium price, fewer people are
➢ The primary reason a business exists in a interested in buying goods and services. suppliers
market economy is to provide products or will not be able to sell as much of their goods or
services to consumers and to mearn a profit. services as they would like because they have
2. MARKETING priced them too high.
➢ businesses in a market economy need to Below the equilibrium price, the price is too low.
complete marketing activities in order to make Consumers would be very happy to purchase many
their products and service available to of the goods or services at these prices, but the
consumers. These activities make up the suppliers would not be willing to produce enough to
marketing mix, which includes the following: meet their demand.
✓ product
✓ price Costs of Doing Business
✓ distribution Fixed and Variable Costs
✓ promotion Fixed costs
3. MANAGEMENT ➢ are costs that must be paid regardless of how
➢ It is necessary for all businesses in a market much of a good or service is produced. Fixed
economy to spend a great deal of time costs are also called sunk costs.
developing, implementing, and evaluating Variable Cost
plans and activities. ➢ Variable costs are costs that go up and down
➢ Management also solves problems, manages depending on the quantity of the good or
the work of employees, and evaluates the service produced.
activities of the business. Marginal Benefit and Marginal Cost
4. FINANCE. Marginal benefit
➢ One of the first responsibilities of finance is ➢ measures the advantages of producing one
determining the amount of capital needed for the additional unit of a good or service.
business and how the capital will be obtained. The Marginal cost
finance function also involves planning and
➢ measures the disadvantages of producing one
managing the financial records of the business.
additional unit of a good or service.
Market Structure and Prices
What affects price? ➢ Market structure is determined by the nature
Supply and Demand and degree of competition among businesses
1. Supply that operate in the same industry.
➢ is how much of a good or service a producer is four major market structures:
willing to produce at different prices. a) Perfect Competition
2. Demand ➢ consists of a very large number of businesses
➢ is an individual’s need or desire for a product or producing nearly identical products and has
service at a given price. many buyers.
As the price of the service or product decreases, ➢ Buyers are well-informed about the price,
consumers are willing to purchase more of the quality, and availability of products.
product or service. ➢ similar products, price is often the deciding
Demand rises as the price falls, as shown on the factor, making it difficult for a single business
demand curve graph. to raise prices. This gives consumers more
Demand Elasticity control of the market.
➢ When the demand of a product is affected by its ➢ Examples of industries in perfect competition
price, this is referred by its price include gasoline suppliers and producers of
Elastic Demand agricultural products such as wheat and corn.
➢ When a change in price creates a change in b) Monopolistic Competition
demand, ➢ A market with monopolistic competition has a
Inelastic Demand large number of independent businesses that
➢ When a change in price creates very little change produce goods and services that are somewhat
in demand, different.
Demand is usually inelastic when ➢ Each business has a very small portion of the
• There are no acceptable substitutes for a market share. This is also called a competitive
product that consumers need market.
 ➢ In a competitive market, many suppliers
compete for business, and buyers shop around
for the best deal they can find. In this kind of
market, prices are said to be determined
competitively.
➢ Products offered are not identical but very
similar, so differentiating products becomes
very important.
➢ Businesses can easily enter or leave a market
that has monopolistic competition. Businesses
in monopolistic completion include retail stores
and restaurants.
c) Oligopoly
➢ When a market is dominated by a small number
of businesses that gain the majority of total
sales revenue, it is called oligopoly.
➢ Businesses in this market sell similar goods and
services that are close substitutes, and they
have influence over the price charged.
➢ With the dominance of a few businesses, it is
not easy for new ones to enter the industry.
Examples of oligopolies include the automobile
and airline industries.
d) Monopoly
➢ Where there is only one provider of a product
or service, a monopoly exists. A company that
has a monopoly is able to charge whatever
price is wants, because consumers have
nowhere else to go to find a better price.
➢ This is the opposite of a competitive market
where consumers can simply switch to a lower-
priced good or service offered by a competitor.
➢ The one provider can raise prices up to the
point where consumers will choose to simply
do without the product or service. Monopolies
usually exist because of barriers that make it
difficult for new businesses to enter the
market. Examples of monopolies include local
water and electric utility companies.