CABARRUBIAS, DIMPLE D.

BSHM 4-D3

MODULE 3 Nature of Small Business

LEARNING ACTIVITIES
1. Why is entrepreneurship identified with small business?
2. How important are small businesses to our economy?
3. What are the benefits afforded by the entrepreneurship to the small business operator?
4. What are the advantages and disadvantages of operating a small business.
5. What are the types of small business? What examples may be cited?

ASSESSMENT
Case Study 1: Angel Ball Construction Supply: Pretend

Miss Angelita Ballesteros is currently trying hard to make a decision on whether or not she should continue
operating her construction supply business.
Angelita was raised by her parents as a God- fearing decent person. She does not fail to go to mass
every Sunday. She graduated valedictorian at the La Salette High School. The University of Santo Tomas
awarded her a diploma in Business Administration with highest honors. It was while studying at UST when
she met Hamilcar, a towns mate who was also enrolled in the College of Engineering of the same
university. He courted her and after some time she agreed to marry him one year after graduation. On the
day the nuptial, Hamilcar did not appear. Angelita felt humiliated, but after few months of desperation, she
bounced back and got a job in a commercial bank. Two years later, was promoted supervisor and after a
year she became the manager of the branch. She began to think that a job in a bank does not provide her
with enough opportunities to prove her real worth. She entertained thoughts about operating a small
business. She resigned from the bank and started to make moves to effectively operate a construction
supply chain. Angelita’s parents own a vacant 1,000 square meter lot at the edge of the town’s business
district. Directly in front of the lot is the national highway and at its back is the city road. The place is an
ideal site for a construction supply business. Her parents agreed to construct a building to house her
business on the condition that she would pay rent. Just a month after she started operating, her assistant
informed her if the need to convince a top-rated contractor to buy from them. Angelita agreed to meet him.
A few days later, when Angelita was in her office, her assistant came rushing to inform her the prospect has
arrived to meet her. Angelita was shocked when she saw that the potential customer was her former
boyfriend. Hamilcar shook her hand and asked how she was. She tried hard to hide displeasure and said
she’s fine. They talked for a few minutes and then he left. Once more, Angelita felt a rising anger within her.
She wants to avoid the guy, so she is considering shifting to another type of business like that of drug
wholesaling or hospital supplies.

Guide Questions:
1. 1. What would be your advice to Angelita?
 While it's understandable that Angelita might feel uncomfortable seeing her ex-boyfriend, it's
crucial to maintain professionalism and focus on the success of the construction supply
business. The primary objective is to achieve financial success and provide a valuable service
to the community, and personal feelings should not interfere with this goal. Angelita should
approach her interactions with Hamilcar with respect and professionalism to ensure a positive
business relationship and prevent potential conflicts. By concentrating on building strong
relationships with other contractors and suppliers, she can unlock the business's potential for
growth.
2. 2. If you were Angelita, will you change your business preference or not? Why?
 I would not recommend changing the business preference based solely on personal feelings.
The construction supply business has potential, and Angelita has the necessary skills and
resources to make it successful. It's important to consider the long-term benefits and avoid
making impulsive decisions based on short-term emotions.
3. 3. Would you consider your personal issue with Hamilcar or will you be professional enough to handle
the situation? Explain your answer.
 It's crucial to handle the situation professionally. Angelita should avoid allowing her personal
feelings to influence her business decisions. She should treat Hamilcar as any other customer,
focusing on providing excellent service and building a positive business relationship.

Case Study 2: The Windsor Hotel Ltd.

In the late 1950s, a young couple worked and met at the Queen’s hotel in Birmingham, UK. The Queen’s
was only one of many British Transport hotels dotted around the country at that time built originally to
accommodate rail passengers using the network. In the early 1960s, this along with many other sister
hotels was sold or demolished. Regrettably, David and Greta were forced to look elsewhere for work. In
those days, job opportunities were in abundance especially in industrial Birmingham and so both found jobs
soon after being made redundant from the Queen’s hotel. Ideally, they would both have liked to remain in
the hospitality industry but they now had a young son and so opted for factory work as it was much better
paid.
Over the next couple of years, Greta’s family decided they would like to move to Great Yarmouth
where they had enjoyed many happy holidays. Greta’s parents were coming up to retirement age and
thought the change of surroundings would be appropriate at their time of life. After much family discussion,
David and Greta decided to follow them but for reasons quite different to her parents. Great Yarmouth in
the1950swasboomingseasideresortmuch like others including Blackpool, Margate and Bournemouth.
These were the days when hospitality firms needed very little (if any) promotion due to the excessive
demand from the domestic mass-tourist market. Having a hospitality industry background and experience
both David and Greta had an inkling that setting up their own small guest house business might just be
viable. On the basis of this hunch, and that Greta wanted to be near to her parents in their declining years,
they sold their property in Birmingham and bought an eight-bedroom guest house a couple of streets back
from the sea front esplanade. To their delight, the guesthouse was enormously successful although David
and Greta had to do most of the work themselves. Recognizing the ‘healthy’ state of the market a couple of
years later in 1966, they bought the house next door and converted both int oone16bedroom guest house.
Over the next 10years David and Greta became well-known in the town as they joined their local Rotary
and Lions clubs, attended many employer association meetings and networking events. Whilst their
business continued building on its initial success there was one increasing threat on their business horizon,
that of the cheap Spanish continental package holiday. Recognizing this, they set about undertaking some
elementary business research to see what could be done to counter this challenge. In short, David and
Greta identified a market that they were not currently satisfying, that of a higher spending quality conscious
segment; not at all like what the traders in great Yarmouth referred to as ‘the bucket and spade brigade’.
Worryingly, the image of their existing guest house appealed only to the extant lower income tourists. They
decided that the purchase of a new upmarket hotel was probably the only answer for continued success
into the future. However, even the sale of their business, accrued savings and a bank loan would not be
enough to secure a business property of the type they had envisaged. For the next few years, they thought
long and hard about the issue but resolved that they would never be able to realize their dreams. Instead,
they, together with other small guest house owners, debated and discussed what Great Yarmouth as a
town could do to address the falling tourism demand. At one particular Lion’s club meeting, David was
approached by one of the town’s leading hotel owners. In fact, Jeremy Ingold owned his own 60-bedroom
four-star hotel and was a partner in the Windsor hotel, the largest privately owned hotel in Great Yarmouth.
In brief, he and the other partners had seen the Windsor ’s performance decline uniformly since they had
bought it from Trust House Forte some five years earlier. Their strategy was to take a ‘hands off’ approach
to running the Windsor by employing a manager to take care of operations. After a five-year period and a
succession of unsuccessful managers, the Windsor was in danger of failing. Jeremy explained the situation
to David and, based on the reputation of the guest house, invited him and Greta to become full salaried
managers of the hotel. The Windsor was just like the hotel that David and Greta had identified a whilst
earlier. It had three stars (Royal Automobile Club), 80 bedrooms, four bars, a huge ballroom and several
function suites. Excitedly, David discussed the proposal with his wife. Despite the misgivings of their current
situation, Greta was far more cautious about the idea, pointing out that they would no longer be their own
boss nor have the security of their own small firm. ‘‘Why would you want to go back to earning a wage?’’
she said. David had to agree and admitted that his emotions had got the better of him but the proposition
started a long process of deliberation and extended discussion with Jeremy Ingold and the other partners to
see whether their idea could be amended to David and Greta’s advantage. One potentially key point
strategically was that all partners were in their mid-fifties and upwards. Greta pointed out that they would
soon be retiring and would need to make some significant decisions about the Windsor and their role as
partners. In other words, they would soon be considering appropriate exit strategy. ‘‘If they are taking this
hotel seriously, they must also recognize that any manager must be fully committed to the business. I think
we should negotiate first an equal partnership deal and second speak about their impending retirements,
after all it cannot be more than 10 years away at most ‘said Greta. David and Greta agreed and decided to
propose a clause whereby they would have an option to buy out the other partners indue course. Over the
next couple of months, a deal was struck including the equal partnership and buy out options. During their
first summer season at the Windsor, they be friended a bank manager who stayed at the hotel for three
months during the first year of trading. He was to manage the local branch and stay at the hotel whilst
searching for a house and moving his family to Great Yarmouth. David and Greta spoke to their new friend
about their plans and that they intended to buy out their partners the following year. In short, the bank
manager arranged for an ‘unsecured loan’ of a specific amount for David and Greta to buy the hotel.
Fortunately, their partners were not unreasonable and were happy to take a modest sum each for their
portion of the Windsor. David and Greta owned and operated the Windsor successfully for just over
25years.By 2000, the domestic tourism market in great Yarmouth had declined to such an extent that even
the larger three- and four-star hotels had become effected. They had little option but to sell the business but
to whom? Clearly it would not be to anyone or any company that relied on domestic tourism income alone.
David and Greta decided to advertise the sale of their business via a few selective media ensuring a wide
range of potential buyers. After 2years and a number of unsatisfactory offers, they accepted a modest
proposal from a Chinese company already owning a number of other tourism-related businesses including
travel agents and tour operations. For David and Greta this was a stroke of fortune as the purchase
represented a form of vertical integration for the Chinese buyers. Thus, they would not be relying on the
ever-dwindling domestic tourist. Currently, the Windsor hotel remains successful but the focus has moved
toward the international market, specifically Chinese.
1. 1. Discuss David and Greta’s ability to spot an opportunity
 David and Greta consistently demonstrated a keen eye for opportunity throughout their
careers. When package holidays posed a threat to their existing business, they identified a gap
in the market for higher-spending clientele in Great Yarmouth and successfully launched a
guest house. Later, they recognized the potential of the struggling Windsor Hotel to cater to a
more upscale market. Eventually, as domestic tourism declined, they wisely decided to sell the
 business to a buyer focused on international markets, showcasing their ability to adapt to
changing trends.
2. 2. How ambitious are this couple?
 David and Greta's ambition evolved significantly over time. Initially, they likely sought security
and a stable income, which led them to factory work. However, their aspirations grew, and they
pursued the goal of becoming their own bosses by starting a guest house. Later, their ambition
expanded further with the acquisition of The Windsor, a larger and more complex operation,
reflecting their desire to take on greater challenges. Ultimately, their decision to pursue a buy-
out of the prestigious hotel demonstrated a high level of ambition, aiming for full ownership and
control of a distinguished property.
3. 3. Can you identify some key entrepreneurial characteristics for David and Greta? Are they the same
for each person?
 Key Entrepreneurial David and Greta both exhibit key entrepreneurial characteristics such as
opportunity recognition, adaptability, networking, business acumen, and long-term vision, but
with subtle differences in their approach. David appears to be more impulsive, as shown by his
initial enthusiasm about the Windsor offer, while Greta is more cautious and strategic,
demonstrated by her concerns about working for others and her suggestion of a partnership
deal with a buy-out option. Despite these variations, they both adjusted their business model
based on market changes, actively engaged in local business associations, and planned for
the future by considering their partners' retirement and the hotel's exit strategy.
4. 4. How important was ‘fate’ in David and Greta’s entrepreneurial career?
 Fate played a role in presenting opportunities, like meeting the bank manager. However, David
and Greta's success stemmed from their ability to recognize and capitalize on those
opportunities.
5. 5. How important are exit strategies in entrepreneurship?
 The case highlights the importance of exit strategies. David and Greta's foresight in securing a
buy-out option allowed them to eventually control their exit from the business.
6. Comment on whether David and Greta’s businesses were ‘life style’ or ‘growth’
 The guest house likely functioned as a lifestyle business for David and Greta, offering them a
comfortable living while allowing them to be their own bosses. In contrast, the Windsor
represented a shift to a growth business, where the focus shifted towards expansion and
profitability through eventual ownership. This change indicated a move from maintaining a
steady, manageable income to pursuing larger-scale opportunities and financial growth.

Learning Journal

Briefly discuss 10 new ideas and/or concepts you learned in this chapter. Write two paragraphs explaining
each new idea and/or concept.
Write your reflection about a specific topic discussed in this chapter. Your reflection can include the
reasons why you are interested in the subject matter, your prior knowledge about the topic, and your
personal experiences.

Entrepreneurship plays a crucial role in economic development, offering individuals the chance to start
businesses regardless of financial capacity. One key idea is that entrepreneurship is accessible to all,
whether they possess minimal or substantial resources. While those with limited capital often start small
businesses, those with greater resources might pursue larger enterprises. This inclusivity highlights small
businesses as foundational to economic growth, allowing people of varying financial backgrounds to
contribute to the market. Proper management of small businesses is critical, as it can lead to growth and
the eventual transition into larger enterprises. Strategic decision-making and adaptability enable small
businesses to thrive, becoming key contributors to job creation and economic innovation. Small
businesses, categorized into industries like manufacturing, services, and construction, play a diverse and
essential role in the economy by providing employment, supporting larger firms, and filling critical gaps in
the market. While small business ownership offers many advantages—such as control over one’s destiny
and the potential for unlimited profits—it also comes with challenges. Entrepreneurs face risks like income
uncertainty, long working hours, and the potential loss of capital. These challenges require resilience and
perseverance. Additionally, small businesses provide a wide range of services, catering to local and
 specialized needs, which highlights their significance in everyday life. Reflecting on these concepts, I am
particularly intrigued by the idea that small businesses, despite limited initial resources, can grow into larger
enterprises. Through family experience, I have seen the challenges and rewards of entrepreneurship,
including the long hours and financial risks. However, the independence and satisfaction that come from
building a business and contributing to the community are substantial. This understanding has deepened
my appreciation for the balance between risks and rewards in entrepreneurship, underscoring the
importance of strategic management and adaptability.

REFERENCES
Arenas, C.D. (2020). Entrepreneurship in tourism and hospitality industry. Edric Publishing House
Banastao C. (2008). Entrepreneurship, Philippines. Katha Publishing Co., Inc.
Brookes, M. (2015). Entrepreneurship in hospitality and tourism. Goodfellow Publishers Limited
Medina R. G. (2014). Entrepreneurship and small business management. Sampaloc Manila. Rex Bookstore
Ross, D. L (2009). Entrepreneurship and Small Business Management in the Hospitality Industry.
Butterworth-Heinemann is an imprint of Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP, UK
Saidali M. R (2015) The Entrepreneur. Intramuros Manila Mindshapers.Co., Inc.
Tieng, S. (2019). Entrepreneurship management in hospitality industry. Society Publishing

RUBRICS
 Problem Solving and Research Capability 50%
 Answer to the Case Study Question and Potential Solution to the Case Study 30%
Problem
Written Communication
Critical Thinking
 Analysis and Synthesis of the Articles 20%

____
TOTAL: 100%