Entrepreneurship

Entrepreneurial activities today have become very important and are keys to economic
development. Growth, industrial development, including employment generation, depend upon
the entrepreneurial behavior of a country.

Entrepreneurs are the reason for a large quantity of highly developed industries which result in
greater employment opportunities for unemployed youth, increase in per capita income, higher
standard of living and increased individual saving, revenues to the government in the form of
income tax, value added tax, export duties, import duties, and balanced regional development.

Relevance of Entrepreneurship to an Organization

Development of managerial capabilitiesThe greatest significance of entrepreneurship lies in the

fact that it helps in identifying and developing managerial capabilities of entrepreneurs. An
entrepreneur studies a problem, identifies its alternatives, compares the alternatives in terms of
cost and benefit implications, and finally chooses the best alternative.Studying a problem,
identifying its alternatives, comparing alternatives in terms of cost and benefit implication and
choosing the best alternative help in sharpening the decision making skills of an entrepreneur.
Besides these managerial capabilities are used by entrepreneurs in creating new technologies and
products in place of older technologies and products resulting in higher performance.

Creation of organizations.

Entrepreneurship results in the creation of organizations when entrepreneurs assemble and

coordinate physical, human and financial resources and direct them towards achievement of
objectives through managerial skills. 

Improving standard of living.

By creating productive organizations, entrepreneurship helps in making a wide variety of goods

and devices available to the society which results into higher standard of living for the people.

Possession of luxury cars, computers, mobile phones, rapid growth of shopping mails, etc. point
to the rising living standard of people. All these are due to the efforts of entrepreneurs.

Means of economic developmentEntrepreneurship involves creation and use of innovative ideas,

maximization of output from given resources, and development of managerial skills. All these
factors are essential to the economic development of a country.

1
 Concept of entrepreneurship

The word "entrepreneur" was derived from the French verb “entreprendre”, which means "to
undertake." This refers to those who "undertake" the risk of new enterprises.

An enterprise is created by an entrepreneur and the process of its creation is called

entrepreneurship.

Entrepreneurship is a process of actions of an entrepreneur who is always in search of something

new to exploit new ideas into gainful opportunities by accepting the risk and uncertainty of the
enterprise.

Entrepreneurs are innovators, willing to take risks and generate new ideas to create unique and
potentially profitable solutions to modern-day problems. Entrepreneurship is not so much a skill
as a habitual state of mind.

When entrepreneurship describes activities within a firm or large organization, it is referred to as

intrapreneurship. This may include corporate venturing, when large entities spin off
organizations.

Entrepreneurship employs what Schumpeter called the “gale of creative destruction” to replace
wholly or partly inferior innovations across markets and industries. This destruction
simultaneously creates new products and new business models.

Entrepreneurship ranges in scale from solo projects (even involving the part-time entrepreneur)
to major undertakings that create many job opportunities.

Entrepreneurial activities can be incremental or disruptive innovations are entirely new

approaches.

Entrepreneurial activities can be incremental or disruptive. Incremental innovations are a number

of small changes that transform process flow while disruptive innovations are entirely new
approaches.

FACTORS AFFECTING ENTREPRENEURSHIP

Factors Affecting Entrepreneurship

Entrepreneurship is a complex phenomenon which is influenced by the interplay of a wide

variety of factors that include personality and environmental factors.

1. Personality Factors

Personal factors, are an entrepreneur core competencies which include:

(a) initiative - does things before being asked

2
 (b) Proactive - identifies and utilize opportunities
(c) Perseverance works against all odds to overcome obstacles and is never complacent with
success
(d) Problem-solver - develops and maintain relationship with customers and financiers,
conceives now ideas and introduces innovative solutions
(e) Persuasion - convinces customers and financiers to patronize his business
(f) Self-confidence - makes decisions end sticks to his decisions
(g) Self-critical - learns from his mistakes and from experiences of others
(h) A planner - collects information, prepares a plan, and monitors performance)
(i) Risk-taker - is willing to take calculated risks

2. Environmental factors - These factors relate to the conditions in which an entrepreneur has
to work. Environmental factors such as political climate, legal system, economic and social
conditions and market situations, contribute significantly towards the growth of
entrepreneurship. For example, political stability in a country is absolutely essential for smooth
economic activity.

Frequent political protests, strikes, hinder economic activity and entrepreneurship. Unfair trade
practices, irrational monetary and fiscal policies, are a roadblock to the growth of
entrepreneurship. Higher income levels of people, desire for new products and sophisticated
technology, need for faster means of transport and communication, are factors that stimulate
entrepreneurship.

Thus, it is a combination of both personal and environmental factors that influences

entrepreneurship and brings in desired results for the individual, the organization and society.

Core Competencies in Entrepreneurship

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 scarce resources.This value creation activity is performed continuously in
the midst of uncertain business environment. Hence, entrepreneurship is regarded as a dynamic
force.

Innovation Entrepreneurship involves a continuous search for new ideas. It compels an

individual to continuously evaluate the existing modes of business operations so that more
efficient and effective systems can be evolved and adopted. In other words, entrepreneurship is a
continuous effort for synergy to ensure optimization of performance in organizations.

Profit potential Profit potential is the level of return or compensation to the entrepreneur for
taking on the risk of developing an idea into an actual business venture. Without profit potential,
the efforts of entrepreneurs will be merely an abstract and a theoretical leisure activity.

3
4. Risk bearing The essence of entrepreneurship is the willingness to assume risk arising from
the creation and implementation of new ideas. New ideas are always tentative and their results
may not be instantaneous and positive.

An entrepreneur has to have patience to see his/her efforts bear fruit. In the intervening period,
the time gap between the conception and implementation of an idea and its results, an
entrepreneur has to assume risk. If an entrepreneur does not have the willingness to assume risk,
he/she will never succeed.

Functions of an Entrepreneur

The following are important functions performed by an entrepreneur:

1. Innovation

An entrepreneur is basically an innovator who tries to develop new technology, products, and
markets. Innovation may involve doing new things or doing existing things differently. An
entrepreneur uses his/her creative faculties to do new things and exploits opportunities in the
market. He/she doesn't believe in the status quo and is always in search of change.

Emest L. Cu transformed a simple data entry service company into becoming one of the
country's largest outsourcing service providers. The core business sources of this company are
mostly contracts for generating projects, which involve customer service relationships and IT
services. The CRM (customer relationship management) services became quite successful, which
spurred the growth of telemarketing services.

2. Assumption of Risk

An entrepreneur, by definition, is a risk taker and not a risk shirker. He/She is always prepared
for assuming losses that may arise on account of new ideas and projects undertaken by him/her
This willingness to take risks allows an entrepreneur to take initiatives in doing new things and
marching ahead in his/her efforts.

Corazon D. Ong is a dietitian by profession who used her knowledge to create affordable
processed meat products that could compete with the already well known and established
processed meat brands. Initially, it was only a hobby where she could put to good use her
creativity and skin in culinary arts. She came up with corned beef, hotdogs, meatloaf, hamburger
patties and ham, an entity that she later sold as a home business.

She founded CDO Food sphere in 1975; as the product's reputation for affordable quality became
widespread, the demand for CDO products likewise increased. The creative homemaker
responded to every mother's mood for quick lunch fixes for their children for convenience. These

4
quick lunch fixes should also come in affordable packages. Corazon Ong likewise understood the
taste preferences of Filipino children but her knowledge of ingredients and their nutritional
values gave her product the advantage.

3. Research

An entrepreneur is a practical dreamer and does a lot of ground-work before taking a leap in
his/her ventures. In other words, an entrepreneur finalizes an idea only after considering a variety
of options, analyzing their strengths and weaknesses by applying analytical techniques, testing
their applicability, supplementing them with empirical findings, and then choosing the best
alternative. It is then that he/she applies his/her ideas in practice. The selection of an idea, thus,
involves the application of research methodology by an entrepreneur.

Gregorio G. Sanchez Jr. is a civil engineer by profession formerly engaged in civil construction
works. He went into research and performed experiments using only pots and pans and a small
tank as his equipment. His persistence finally led to the development of a food supplement that
would smother the bad bacteria in livestock, which he called "LactoPAFI Probiotic Bacteria."

4. Development of management skills

The work of an entrepreneur involves the use of managerial skills which he/she develops while
planning, organizing, staffing, directing, controlling and coordinating the activities of business.
His/Her managerial skills get further strengthened when he/she engages himself/herself in
establishing equilibrium between his/her organization and its environment.

However, when the size of business grows considerably, an entrepreneur can employ
professional managers for the effective management of business operations.

Socorro Ramos's hands-on approach in negotiating with local and foreign publishers as well as
suppliers gave the bookstore its low purchasing and low-selling power. She became acquainted
with writers, book lovers and other personalities who could provide her with information about
the changing times. After several decades, the National Book Store has become an institution
with 108 branches dispersed throughout the country.

5. Overcoming resistance to change

Now innovations are generally opposed by people because they make them change their existing
behavior patterns. An entrepreneur always first tries new ideas at his/her level.

It is only after the successful implementation of these ideas that an entrepreneur makes these
ideas available to others for their benefit. In this manner, an entrepreneur paves the way for the
acceptance of his/her ideas by others. This is a reflection of his/her will power, enthusiasm and
energy which helps him/her in overcoming the society's resistance to change.

Diosdado Banatao saw the opportunity of setting-up his own company by designing chip sets. In
no time, he was able to raise $500,000 as seed capital to put up Monstroni in 1305. His
company's determination paid off after tray successfully developed the first system logic chip set
that lowered the cost of building personal computers that were more powerful. He then went on

5
to build another company called Chips and Technologies, which created another chips set for
enhancing the so-called graphic adapter.

6. Catalyst of economic development

An entrepreneur plays an important role in accelerating the pace of economic development of a

country by discovering new uses of available resources and maximizing their utilization.

Mercury Drug created a reputation that every Filipino household could rely on; and there was a
store in nearly every town and city across the country. There are about 700 Mercury stores, some
of which are under franchise. All these fulfilled Mariano Que's goal of making safe medication
available and accessible to every Filipino community.