Introduction to entrepreneurship

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 Organization - which means that because of entrepreneurship 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. They are willing to take the risks and generate unique ideas that can
provide profitable solutions to the needs of the market and the society.

Factors affecting entrepreneurship

1. Personality Factor which include:
a. Initiative – 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 challenge.
e. Persuasion - means that he can entice people to buy even if they don’t want to.
f. A planner - he makes plans before doing things and does 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
a. Decisive - an entrepreneur must be firm in making decisions.
b. Communicator - an entrepreneur must have a convincing power.
c. Leader - an entrepreneur must have the charisma to be obeyed by his employees.
d. Opportunity Seeker - an entrepreneur must have the ability to be the first to see business chances.
e. Proactive - an entrepreneur can control a situation by making things happen or by preparing for possible
future problems.
f. Risk Taker - an entrepreneur has the courage to pursue business ideas.
g. Innovative - the entrepreneur has big business ideas, and he does not stop improving and thinking of new
worthwhile ideas for his 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 - The entrepreneur constantly looks for new ideas, thus he needs to be creative.
3. Profit Potential - The entrepreneur can be compensated by his profit coming from the operation.
4. Risk Bearing - 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. They have
the ability to think newer, better and more economical 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 skeptical about changes to be made in the organization. They don’t initiate
but follow only after they are satisfied.
4. Drone Entrepreneurs - They are those who live 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 and drive social innovation and transformation 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 in the field of entrepreneurship, he can be a very good source of
advices to other entrepreneurs and would be businessmen.
2. Teacher - a graduate of an entrepreneurship can use his knowledge in teaching.
3. Researcher - the entrepreneur can be employed as a researcher by an enterprise.
4. Sales - the entrepreneurship graduate can apply as a salesman.
5. Business Reporter - the entrepreneur being expert in the field, can be employed as a business reporter.

Recognize a Potential Market

ENTREPRENEURIAL IDEAS
The creation of an entrepreneurial idea 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.

Essentials In Entrepreneur’s Opportunity – Seeking

These are the basic foundation that the entrepreneur must have in seeking opportunities:
a. 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 solutions when problems arise.

b. Entrepreneurial heart flame: Entrepreneurs are driven by 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.

c. 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 belief 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.
The following are some 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 – 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.Politics 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:

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
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 sources of entrepreneurial ideas, like the increasing
number of Internet Cafés at present could 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 a 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:
1. Buyers- The buyers are the ones that pay cash in exchange for your goods and services. One example is
the influence 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 are noticed:

The buyer has the

There are several The cost of switching
potential for
suppliers available in the supplier cost is
backward
the market. minimal.
integration.

The product The buyer purchases

represents a high large portions of the
percentage of the seller’s product or
buyer’s cost. services.

2. Potential new entrants

A new entrant is defined as companies or businesses that have the ability to penetrate or enter into a particular
industry.
For example, in 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 noticed if there is the presence of the following factors:

Substantial capital Strict government Difficulty in Economies of scale High switching cost
requirement policy accessing e. High cost of
distribution product
channels differentiation
3. Rivalry among existing firms
Rivalry is a state or situation wherein business organizations are competing with each other in a
particular market. 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:
1. Diversity of rivals
2. Number of competing firms
3. Characteristics of the products or services
4. Increased capacity
5. Amount of fixed costs
6. Rate of industry growth

4. Substitute products
Substitute is one that serves the same purpose as another product in the market. 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 noticed:
-Switching cost is low
-Preferences and tastes of the customers easily change
-Product differentiation is highly noticeable
-The quality of substitute products dramatically improves
-The price of substitute product is substantially lower

5. Supplier
The Suppliers are the one that provide something that is needed in business operations such as office
supplies and equipment. In an example where supplies and services being offered is unstable the intensity of
the threat is strong in this kind of the competitive force in the industry.
This can be noticed if there is the presence of the following factors:
-The supplier has the ability for forward
integration
-Suppliers in the industry are few, but the
sales volume is high
-Substitute products are not readily
available in the market
-The switching cost is very high
-The product or service is unique