INTRODUCTION TO ENTREPRENEUSHIP

Coined the term entrepreneur -Richard Cantillon and Jean Baptiste Say.

Father of Entrepreneurship-Joseph Schumpeter

Relevance of Entrepreneurship to an organization

1. Development of Managerial capabilities- this means that one of the benefits

an entrepreneur gets is to develop his managerial skills.
2. Creation of Organizations- which means that because of entrepreneurships
many organizations will exist.
3. Improving standard of living- this means that entrepreneurship can lift up the
economic status of an individual.
4. Means of economic development- this means that not only the life of the
entrepreneur is improved but also the society where the business is located.

Concept of Entrepreneurship
The word “entrepreneur” was derived from the French verb enterprendre,
which means “ to undertake” This is pinpointing to those who ”undertake” the risk of
enterprise. The enterprise is created by an entrepreneur and the process is called
“Entrepreneurship”
Entrepreneurs are innovators, willing to take risks and generate new ideas to
make it unique and profitable solutions to the present-day problems.

Factors Affecting Entrepreneurship

1. Personality Factors which includes:

a. Initiative- which means doing things even before being told
b. Proactive-which means he can classify opportunities and seize it.
c. Problem Solver- which means he can retain good relations with other
people
 d. Perseverance-meaning he will pursue things to get done regardless of
challenges
e. Persuasion- means that he can entice people to buy even if they don’t.
f. A Planner- meaning he makes plan before doing things and do not fail to
monitor it.
g. Risk-taker which means that he is willing to gamble but he will calculate it
first.
2. Environmental Factors which include political, climate, legal system, economic
and social conditions and market situations.

Common Competencies in Entrepreneurship

1. Decisive- an entrepreneur must be firm in making decisions.

2. Communicator- an entrepreneur must have a convincing power.
3. Leader-an entrepreneur an entrepreneur must have the charisma to be
obeyed by his employees
4. Opportunity seeker- an entrepreneur must have the ability to be the first to see
business chances.
5. Proactive- controlling a situation by making things to happen or by preparing
for possible future problems.
6. Risk Taker- they have the courage to pursue what is their business ideas.
7. Innovative- the entrepreneurs have big business ideas and they do not stop
improving and thinking of new worthwhile ideas for their business.

Core Competencies in Entrepreneurship

1. Economic and dynamic activity- Entrepreneurship is an economic activity

because it involves the creation and operation of an enterprise with a view to
creating value or wealth by ensuring optimum utilization of limited resources.
2. Innovative- Entrepreneurs constantly look for new ideas, thus he needs to be
creative.
3. Profit Potential- meaning the entrepreneur can be compensated by his profit
coming from the operation.
 4. Risk bearing –meaning the entrepreneur needs to gamble but wise enough to
offset the risk.

Types of entrepreneurs

1. Innovative entrepreneur- they are those who always make new things by
thinking of new ideas.
2. Imitating entrepreneurs- they are those who don’t create new things but only
follow the ideas of other entrepreneurs.
3. Fabian entrepreneurs- they are those skeptical. They don’t initiate but follow
only after they are satisfied.
4. Drone entrepreneur- they are those who lives on the labor of others. They are
die-hard conservatives even ready to suffer the loss of business.
5. Social entrepreneurs-they are those who initiate changes in the various fields
such as education, health, human rights, environment and enterprise
development.

Career Opportunities of Entrepreneurship

1. Business Consultant- with the expertise of the entrepreneur he can be a very

good source of advices to other entrepreneurs and would be business man.
2. Teacher- a graduate of an entrepreneurship can be use his knowledge in
teaching
3. Researcher- the entrepreneur can be employed as researcher by an
enterprise.
4. Sales- the entrepreneurship graduate can apply as salesman
5. Business Reporter- the entrepreneur being expert in the field, he can be
employed as business reporter.
Entrepreneurial Ideas

The creation of an entrepreneurial ideas leads to the identification of entrepreneurial

opportunities, which in turn results in the opening of an entrepreneurial venture.
The entrepreneurial process of creating a new venture is presented in the diagram
below. (Aduana, 2017)

Creation of Identification of Opening of

entrepreneurial entrepreneurial entrepreneurial
Ideas Opportunities Venture

Figure 1. The Entrepreneurial Process of Creating New Venture

Essentials in Entrepreneur’s Opportunity Seeking

These are the basic foundation that the entrepreneur must have in seeking
opportunities:
Entrepreneurial mind frame. This allows the entrepreneur to see things in a
very positive and optimistic way in the midst of difficult situation. Being a risk - taker, an
entrepreneur can find solution when problems arise.
Entrepreneurial heart flame. Entrepreneur's driven passion, they are attracted
to discover satisfaction in the act and process of discovery. Passion is the great desire
of an entrepreneur to achieve his/her goals.

Entrepreneurial gut game. This refers to the ability of the entrepreneur of being
intuitive. This also known as intuition. The gut game also means confidence in one’s self
and the firm believes that everything you aspire can be reached.
Sources of Opportunities

There are many ways to discover opportunities. Looking at the big picture some have
noticed the emerging trends and patterns for business opportunities. While others are
trying to find out their target market. Some are the following sources of opportunities:

1. Changes in the environment

Entrepreneurial ideas arise when changes happen in the external environment. A
person with an entrepreneurial drive views these changes positively. External
environment refers to the physical environment, societal environment, and industry
environment where the business operates.
1.1 The physical environment includes
a. Climate- the weather conditions.
b. Natural resources- such as minerals, forests, water, and fertile land
that occur in nature and can be used for economic gain.
c. Wildlife- includes all mammals, birds, reptiles, fish, etc., that live in the
wild.
1.2 The Societal environment includes the various forces like
a. Political forces- includes all the laws, rules, and regulations that
govern business practices as well as the permits, approvals, and
licenses necessary to operate the business.
b. Economic forces- such as income level and employment rate.
c. Sociocultural forces- customs, lifestyles and values that characterize
a society.
d. Technological environment- New inventions and technology
innovations.
1.3 The industry environment of the business includes:
a. Competitors
b. Customers
c. Creditors
d. Employees
e. Government
 f. Suppliers
For example, one factor in the physical environment that can easily change is
the climate. The temperature is very high during summer but very low during the
rainy season. An individual with entrepreneurial drive can be extremely imaginative
and inventive in identifying opportunities. He/she can venture a business that
responds to the needs of the people during summer and rainy season.

2. Technological discovery and advancement

A person with entrepreneurial interest sees possibility of business opportunities in

any new discovery or because of the use of latest technology.
For example, an individual with knowledge in repair and installation of a machine
engine discovers that additional engine parts that considerably reduce fuel
consumption.

3. Government’s thrust, programs, and policies

The priorities, projects, programs, and policies of the government are also good
sources of ideas.
For example, the use of firecrackers to celebrate New Year’s Eve is strictly
prohibited. People without entrepreneurial interest will view the ordinance as a plain
restriction. However, for an entrepreneur, it is a business opportunity to come up with a
new product that will serve as a substitute for firecrackers.

4. People’s interest
The interest, hobbies, and preferences of people are rich source of
entrepreneurial ideas. Like the increasing number of Internet Café at present could be
lead to the strong attachment of young people to computers.

5. Past experiences

The expertise and skills developed by a person who has worked in a particular
field may lead to the opening of related business enterprise.
 For example an accountant who has learned the appropriate accounting and
management skills and techniques in a prominent accounting firm can start his/her
business venture by opening his/her own accounting firm.

Forces of Competition Model

It is also known as the “five forces of competition,” An industry environment is a
competitive environment. Regardless of what product or services you have, competition
is always present.

Competition – it is the act or process of trying to get or win something.

For example, the prices are lower when there is a competition among the stores.

These are the five forces competing within the industry:

• Buyers
• Potential new entrants
• Rivalry among existing firms
• Substitute products
• Supplier

1. Buyers
The buyers are the one that pays cash in exchange to your goods and services.
For example, the influenced of the price or in the bargaining strategy. The buyer has a
strong and magnified bargaining power. The threat of its bargaining power will be less if
the following factors notice:
a. There are several suppliers available in the market.
b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
e. The buyer purchases large portions of the seller’s product or services.
2. Potential New Entrants
A new entrant is defined as the one who enters something. For example, the
level of capital requirements, if the business requires huge capital, new entrants should
decline to join the business. This gives a threat to the business. This can be notice if
there is the presence of the following factors:
a. Substantial capital requirement.
b. Strict government policy.
c. Difficulty in accessing distribution channels.
d. Economies of scale.
e. High cost of product differentiation.
f. High switching cost

3. Rivalry among Existing Firms

Rivalry is a state or situation in which people or groups are competing with each
other. For example it depends on the Marketing strategy of your competitor, like giving
freebies and special offers. The intensity of rivalry among existing firms is characterized
to the following factors:
a. Diversity of rivals.
b. Number of competing firms.
c. Characteristics of the products or services.
d. Increased capacity.
e. Amount of fixed costs.
f. Rate of industry growth.

4. Substitute Products
Substitute means anything that takes the place or function of another. For
example the consumers decide to use margarine as a substitute for butter. In case the
price of butter increases, preferably the consumer will gradually switch to margarine.
A substitute product can give a big threat in the industry environment if the following
factors are notice:

a. Switching cost is low.

b. Preferences and tastes of the customers easily change.
c. Product differentiation is highly noticeable
d. The quality of substitute products dramatically improves.
e. The price of substitute product is substantially lower.

5. Suppliers
The Suppliers are the one that provide something that is needed or wanted. For
example if the supply and services being offered is unstable or keep. The intensity of
the threat is strong in this kind of the competitive force in the industry. This can be
notice if there is the presence of the following factors:
a. The supplier has the ability for forward integration.
b. Suppliers in the industry are few, but the sales volume is high.
c. Substitute products are not readily available in the market
d. The switching cost is very high.
e. The product or service is unique.