entrepreneurial management

1. ENTREPRENEURIAL MANAGEMENT
MODULE 1: DEFINING ENTREPRENEURSHIP AND ITS RELATED
RISKS AND REWARDS
ENTREPRENEURIAL MANAGEMENT

2. Learning Outcomes
By the end of this topic, you should be able to:
 History of Entrepreneurship
 Evolution of Entrepreneurship in the Philippines
 Define Entrepreneurship & Entrepreneurial Management
 The Entrepreneurship Task
 Four Major Stages of Long-term Ventures
 Determine the risks and rewards of going into business
 Identify the difference of Small Businesses and Entrepreneurial
Ventures

3. HISTORY OF ENTREPRENEURSHIP
In the Earliest period around 1271-1295, definition of entrepreneurship began as
early as the Marco Polo who comes to the Middle East for trade. Marco Polo has
signed an agreement with the capitalists to sell their products.
In middle ages (15th century), Entrepreneur is described as someone who is
involved in the care and control of a large production projects.
A typical entrepreneur in the middle age was the cleric – the person in charge of
great architectural works, such as castles and fortification, public buildings,
abbeys and cathedrals.
In 17th century, the evolution of entrepreneurship can be related with the
relationship between risk and entrepreneurs. Entrepreneurship is the person who
signed the contract agreement with the government to provide a service or supply
products that have been determined

4. In the 18th century, the person with capital was differentiated from the one who
needed capital. The entrepreneur was distinguished from the capital provider. One
reason for this differentiation was the industrialization occurring throughout the
world.
In late 19th and early 20th century, Entrepreneurs are not always associated with
the management. The entrepreneur organizes and manages an enterprise for
personal gain. The materials consumed in the business, for the use of the land, for
the services he employs, and for the capital he requires
In 21st century, Entrepreneurs are known as a hero for Free Enterprise market.
Entrepreneur of the century created many products and services and is willing to
face a lot of risks in the business.

5. EVOLUTION OF ENTREPRENEURSHIP
IN THE PHILIPPINES
Entrepreneurship has existed in the Philippines.
They started business transactions through the barter system – goods and
services were means of exchanges.
The small and medium enterprises (SMEs) became the embodiment of
entrepreneurship in the country.
The SME development regulatory framework and policies started in 1935 when
the 1935 Philippine Constitution first recorded the national commitment to
economic success through industrial and technological growth.
The SME sector was given emphasis in the Philippine Development Plan (1972-
1976).

6. EVOLUTION OF ENTREPRENEURSHIP
IN THE PHILIPPINES
 1987 Philippine Constitution – reinforced the commitment for the development of the private
sector and provided for a wide range of government reforms and reorganizations.
 Magna Carta for Small Enterprises is the landmark legislation which reflects the current
government policy to foster a dynamic SME sector, particularly rural and agricultural-based
manufacturing ventures.
 Republic Act 7882, the Act Providing Assistance to Women –special role of women in
development and supports women entrepreneurs who are engaged in the manufacturing,
processing, service and trading businesses.
Government financing institutions (GFIs) are mandated to provide assistance to:
Non-governmental organizations (NGOs) engaging in developing women’s enterprises up to
Php 2M
Existing women enterprises to the upper limit of Php 50,000
Potential women entrepreneurs with sufficient training up to a limit of Php 25, 000 each

7. ENTREPRENEURIAL MANAGEMENT
Entrepreneurial management is the concept of utilizing
creative and innovative abilities, skills, and expertise to
efficiently open and manage a startup organization.
It is the practice of taking entrepreneurial knowledge and
executing it for increasing the effectiveness of new business
venturing. Also, the means of solving a mass problem through
a unique and profitable business solution.

8. ENTREPRENEURSHIP
- is the process of creating something different with value by
devoting the necessary time and effort, assuming the
accompanying financial, psychic, social risks and receiving
the resulting rewards of monetary and personal satisfaction
and independence.
Points to note:
1. Creating something different with value
2. Devoting necessary time & effort
3. Assuming accompanying financial, psychic and social risks
4. Receiving resulting rewards – Monetary, Personal satisfaction, independence

9. ENTREPRENEURSHIP – is a process of developing, organizing and running a
new business to generate profit while taking on financial risk.
ENTREPRENEUR - a person who organizes and operates business taking on
greater than normal financial risk.
CONTEMPORARY VIEWS OF ENTREPRENEURSHIP
Lloyd Shefsky, in his book, Entrepreneurs are Made Not Born, defined
entrepreneur by dividing the word into 3 parts: Entre means to enter, Pre means
before, Neur means nerve center.
Entrepreneurship is someone who enters business – any business – in time to
form change substantially that business nerve center.

10. Karl Vesper. “Entrepreneurship is now a concern of various professions”
• Economist: Brings resources, labor, materials and other assets who increases its
value
• Psychologist: Driven by certain forces; Need to obtain something, to accomplish
or escape from authority of others
• Businessman: Threat, aggressive competitor, ally, a source of supply, customer
or someone good to invest in.
• Capitalist: Creates wealth for others, finds better ways to use resources, reduce
waste and produce jobs.
Albert Shapero, “a kind of behavior that will include:
• Initiative taking
• Organizing and recognizing of social/economic mechanisms to turn resources
and situations to practical account
• Acceptance of risks and failures

11. CONTRIBUTIONS OF ENTREPRENEURSHIP TO THE ECONOMY
1. Creates employment. They employ people who possess different competencies
and personal values to help them operate the enterprise.
2. Develop new markets. They seek for new buyers of their product.
3. Introduces innovation.
4. Generates new sources of materials. Entrepreneurs are always in constant
search for better and cheaper sources of materials.
5. Stimulates investment interest in the new business ventures being created.
6. Improves the quality of life. The new products contribute to the increase in the
personal benefit and convenience of people in society.
7. Serves as role model. Entrepreneurs are people to be emulated by younger
generations in the community.
8. Brings social benefits to the people.
9. Utilizes and mobilizes indigenous resources
10. Provide more alternative for consumers.

12. THE ENTREPRENEURIAL TASK
If all the requirements in a capitalist economy are in place, the entrepreneur can
assume his assigned role in the development of the economy. A review of the
contributions of entrepreneurs will reveal that no business, big or small, started
without the hand of the entrepreneur.
This is made possible because the surviving enterprises are responsible for
providing the following:
1. products and services for customers producers;
2. employment;
3. taxes;
4. demand for suppliers' products and services; and
5. training facilities for future entrepreneurs.

14. In the attempt to make profits, the entrepreneur
performs the following specific functions:
1. to supply the necessary capital;
2. to organize by buying and combining inputs like materials and labor;
3. to decide on the rate of output, in the light of his expectation about
demand; and
4. to bear the risk inherent to the venture.

15. FOUR MAJOR STAGES OF ENTREPRENEURSHIP
The transition from a new venture to a successful long-term
enterprise consists of at least four major stages. The stages are as
follows:
1. prestart-up stage;
2. start-up stage;
3. early growth stage; and
4. late growth stage.

16. The prestart-up stage happens when the entrepreneur starts to question the
feasibility of an idea, product, or service.
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.
The early growth stage follows after establishing feasibility.
The late growth stage is the final stage before the new venture matures into a
stable enterprise.

17. RISKS OF ENTREPRENEURSHIP
There are several potential risks that an entrepreneur may face in opening up their
own business:
●Financial Risk - they need funds and careful auditing skills along the process.
If not being cautious, the business may go bankrupt.
●Strategic Risk - strategies may easily be outdated because of the fast-paced
culture and lifestyle we have, what trends today may not be the same tomorrow.
●Technology Risk - the reality that every company needs technology to run,
promote, operate, and manage their business in a technological-driven world.
●Market Risk - the changing and unpredicted shift of the market’s demand and
supply may highly affect how an entrepreneur runs their business.

18. RISKS OF ENTREPRENEURSHIP
●Competitive Risk - the reality of the competitors in the market share, and the
acceptance that some of them are better and some are not, but giving enough
focus on how to do better or extra than them is also a challenge, struggle, and risk.
●Reputational Risk - it is about the challenge and risk of meeting the customer’s
expectations of the product or service an entrepreneur offers. It is solely about the
company’s image, but the value it drives and gives to its consumers.
●Environmental, Political, and Economic Risk - this sphere is about what an
entrepreneur cannot control within his surroundings that can affect his/her
business. Things such as wars, earthquakes, economic recessions, inflation, and
typhoon

19. REWARDS
There are three major biggest rewards of starting own business:
●Personal Freedom - simply means you are in control to do what you love, what
inspires you, to execute your creativity, to choose who you work with, and manage
your vision for the company.
●Financial Opportunity - to have your own passive income and commissions
flowing to your pocket. To manage the finances based on what is more important
to you as of running the business. Learning to be responsible and
accountable for every small or big monetary reward.
●Ownership - it is different from being self-employed or freelance, starting an
own business means creating a different entity within, outside, and like us. It does
not only give customers, but also business partners in negotiations, sponsorship,
and market community. It can also be passed on to the next generation, help those
in need of jobs, and make something diffoffered.

20. Factors of Production Economic Reward
Limiting Factor for
Rewards Received
Land Rent
Capital Interest
Labor Wage / Salaries
Entrepreneur Rent
supply and demand
industry
rates/government
mandated rates
supply and demand
legislation skill of
entrepreneur

21. SMALL BUSINESS VS ENTREPRENEURIAL VENTURE
It is essential to know the difference between entrepreneurial ventures
and small businesses. They both contribute to the growth of the
economy in different ways.
Both need entrepreneurial action for start-up, but the small business
venture tends to stabilize at a certain stage and grows only with
inflation.

22. Small business owners are individuals who establish and manage
their businesses for the principal purpose of furthering personal goals
and ensuring security. A small business is therefore any business that
is independently owned and operated, but is not dominant in its field
and does not engage in any new marketing or innovative practices
Owners of small businesses are not necessarily interested in growth
as an objective. Profitability of the business means success to them.
Autonomy and security are the primary objectives of some owners of
small businesses. They consider themselves successful even if they
earn a smaller income than they would have as employees.

23. Entrepreneurial ventures are businesses in which the
principle objectives are profitability and growth, three
characteristics that distinguish entrepreneurial ventures from
the small businesses according to Wickham (2001) are:
1. Innovation. Entrepreneurial ventures thrive through
innovation, this could be technological innovation, a new
product or a new way of producing, offering a service,
marketing or distribution or even the way the organization is
structured or managed. Small business is usually involved in
delivering an established product or service.

24. 2. Potential for growth. Due to its innovative approach, an
entrepreneurial venture has a great deal more potential for
growth than a small business. It is in a position to create its
own market. The small business operates in an established
industry and is unique only in terms of its locality. It operates
within a given market.
3. Strategic objectives. The entrepreneurial venture will
usually set itself strategic objectives in relation to:
- market targets, market development, market share, market
position

25. THANK YOU