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Perspective on Entrepreneurship

Essay by   •  August 29, 2019  •  Course Note  •  2,002 Words (9 Pages)  •  84 Views

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CHAPTER 1: PERSPECTIVE ON ENTREPRENEURSHIP

Entrepreneurship is a very important component of a capitalist economy like the Philippines. It thrives in economic systems that support innovation and hard work.

Entrepreneurship and Economic Development

        Economic development is a scheme aimed at improving the living standards of the nation’s 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);
  3. Capital resources (machines, factories, roads); and
  4. Technology (science, engineering, management, entrepreneurship).

What is Entrepreneurship?

        Entrepreneurship refers to the economic activity of a person who starts, manages, and assumes the risk of a business enterprise. The person who undertakes entrepreneurial activities is called an entrepreneur.

The Entrepreneur’s Task

  1. Products and services for customers and producers;
  2. Employment;
  3. Taxes;
  4. Demand for suppliers’ products and services; and
  5. Training facilities for future entrepreneurs.

Entrepreneurship and Innovation

        The freedom of competition afforded by the capitalist economy serves to drive the entrepreneur to innovate and get ahead of his competitors lest he is driven out of the market.

        Innovation may be defined as the introduction of a new method, procedure, custom, device, among others.

 Innovation could be any of the following:

  1. A new products;
  2. A new process of production;
  3. The substitution of a cheaper material in an unaltered product;
  4. The reorganization of production, internal function, or distribution arrangement leading to increased efficiency, better support for a given product, or lower costs; or
  5. An improvement in instruments or methods of doing innovation. Innovation may also leading be viewed as the stage in an important process consisting of the following:

  1. Invention – which refers to the discovery or devising of new products and process;
  2. Development – which refers to the process by which the ideas and principles generated from the stage of invention are embodied in concrete products and techniques; and
  3. Innovation – This refers to the actual introduction of a new product or process.

Innovation, if it must be successful, must provide value to the buyers over and above those offered by competitors. To achieve this, innovation must reduce costs or improve the quality of products or services offered for sale.

Examples of successful innovations:

  1. The cordless microphone;
  2. The microwave oven;
  3. The cellular phone;
  4. The karaoke music appliances; and
  5. The use of laser in the treatment of eye conditions.

New Ventures and Long-Term Enterprises

        A new venture cannot remain as such forever. The entrepreneur must develop it into a small business or make it grow into a mature and bigger company if he is to recoup/regain the cost of opening a new venture and take advantage of the opportunities presented by a mature business/ trends.

        The transition from a new venture to a successful long-term enterprise consists of at least four major stages.

  1. The prestart-up stage
  2. The start- up stage
  3. The early growth stage
  4. The late growth stage.

The prestart-up stage happens when the entrepreneur starts to question the feasibility of an idea, product, or service. He seeks answers to questions regarding potential markets, production, and financing. This is a very important stage that the entrepreneur must consider. If he errs in his evaluation, he will fail before considerable growth is attained.

In the start-up stage, the following activities are undertaken:

  1. Formation of the business;
  2. Generation of necessary capital;
  3. Purchase of facilities and equipment;
  4. Constructing prototype products; and
  5. Testing the market.

Rewards for Successful Entrepreneurship

        The use of any of the factors of production deserves to receive some form of compensation. The factors referred to as “things required for making a commodity” consist of land, labor, and capital. To make them work, however, a fourth factor becomes necessary and this is the entrepreneur.

        When land is used in production activities, the owners of land are paid a compensation called rent. The term “rent” refers specifically to the price paid per unit of time for the services of a durable good, which, most often, refers to land or building.

        For the effort of laborers, they are paid wages or salaries. Wages may be determined on a piece-rate basis, while salary is based on time-rate.

        Interest is the compensation paid to owners of invested capital.

        When all the factors of production are properly compensated, whatever is left as profits are regarded as income and they accrue to the account of the entrepreneur?

Chapter 2: The Nature of Small Business

        Business size is one factor that does not prevent one from engaging in entrepreneurship. Since only a small number of people have capital large enough to start a large enterprise, the bigger number of people with minimal resources are forced to operate on a small-scale basis, if they decide on becoming entrepreneurs.

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