Notesale: Turn your study into money

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UNIVERSITY OF PANGASINAN-PHINMA
Hospitality Management

CHAPTER 1: A PERSPECTIVE ON ENTREPRENEURSHIP
Entrepreneurship is a very important component of a capitalist economy like the
Philippines
...
When
entrepreneurs become successful, the nation is immensely benefited
...


ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT
Economic development is a scheme aimed at improving the living standards of the
nation’s citizenry
...
human resources (labor supply, education, discipline, motivation)
2
...
capital formation (machines, factories, roads); and
4
...
This happens when the element of entrepreneurship is performed well by
the players
...
There is a

need for entrepreneurs to perform the function of harnessing the potentials of any or all of the
various elements, determining the right quantity of resources needed, and applying the
elements at the right time
...
Apart from other obstacles, government restrictions limit the
effectiveness of entrepreneurs
...
The person who undertakes entrepreneurial
activities is called an entrepreneur
...
An example of these activities is properly shown on Table 1
...
AN EXAMPLE OF ENTREPRENEURSHIP ACTIVITY
Entrepreneur’s Concern
1
...
Assembling
resources required
3
...
High income
families are not
satisfied with the
services provided by
high schools in their
area
...
Resources must be
made available
3
...
Establish a high school
education with higher
standards than the
current high schools are
providing
...
Acquire funds, hire
people, construct
buildings, and the like
3
...


If all the requirements in a capitalist economy are in place, the entrepreneur can assume
his assigned role in the development of the economy
...
Even if many of these businesses failed to survive, still a sizable number
developed and proceeded to make the capitalist economy a viable concern
...
Products and services for customers and producers;
2
...
Taxes;
4
...
Training facilities for future entrepreneurs
...
When a consumer is making a decision on which
brand of soap he is going to buy, for instance, he will be choosing from as many as 10
different brands
...
Much earlier,
soap was not even available for sale
...

What brought the c9nsumer to the situation where he has the luxury of choosing from
many options? And this does not refer to soaps alone but other products as well
...
The fast food canteen at the corner, parcel delivery, communication through cell
phones, cable television, short-term credit through credit card, money remittance, and the
like, are among the many services made possible by entrepreneurs
...


The taxes paid to the government in the form of licenses, fees, and permits applicable to
the enterprises, as well as income taxes applicable to the employees and entrepreneurs, easily
amount to billions of pesos
...

The entrepreneurs also make sure that the suppliers will have a ready market for their
products and services
...
Hollow block manufacturers utilize the
output of big cement factories
...

Lastly, business enterprises provide a training ground for future entrepreneurs
...
Many of them used
their acquired skills in starting new businesses
...

LAND
(Natural Resources)

LABOR
(Human Resources)

CAPITAL
(Financial Resources)

ENTREPRENEUR

PRODUCTION PROCESS

FINISHED GOODS AND
SERVICES
Figure 1
...
to supply the necessary capital;
2
...
to decide on the rate of output, in the light of his expectation about demand; and

4
...

Any business enterprise must offer the products or services to the buyers whether these
buyers are consumers or producers
...
In any case, there will be a need to hire the services of
employees, laborers, and managers
...

All of these will need funds which the entrepreneur must produce, in addition to whatever
fund reserves are required
...

The entrepreneur will also determine and make decisions on the rate of output the firm
must produce
...

Finally, whatever risk is involved in the entrepreneurial activity, he must suffer the
consequence of losses if he fails, but he will enjoy the profits as a reward if he succeeds
...

Buyers of commodities have a tendency to patronize innovative offerings of any kind and if
one wants patronage, he must remember this motivation
...
Innovation could be any of the following:
1
...
new process of production;
3
...
reorganization of production, internal function, or distribution arrangement leading to
increased efficiency, better support for a given product, or lower costs; or
5
...
Innovation may also be
viewed as the last stage in an important process consisting of the following:
a
...
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
c
...

Innovation, if it must be made successful, must provide value to the buyers over and
above those offered by competitors
...

Examples of successful innovations are the following:
1
...
Microwave oven;
3
...
Kung fu fight scenes developed by Bruce Lee in the movies;
5
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Use of Laser in the treatment of eye conditions; and
7
...

NEW VENTURES AND LONG-TERM ENTERPRISES
A new venture cannot remain as such forever
...

The transition from a new venture to a successful long-term enterprise consists of at least
four major stages
...
Prestart-up stage;
2
...
Early growth stage; and
4
...

The prestart-up stage happens when the entrepreneur starts to question the feasibility of
an idea, product, or service
...
This is a very important stage that the entrepreneur must consider
...

In the start-up stage, the following activities are undertaken:
1
...
generation of necessary capital;
3
...
constructing prototype products; and
5
...

No full-scale activity must be undertaken at this stage for the simple reason that
feasibility must be established and verified
...
Activities will be on a small
scale, i
...
, selling to limited markets with limited resources
...
If the enterprise is successful at this stage, the option to move to the next
stage can be exercised
...
This is when management is structured, long-term financing is established, and
facilities planning are undertaken
...
Instead, the skilled manager begins to take over
...
The factors referred to as “things required for making a commodity” consist of
land, labor, and capital
...

When land is used in production activities, the owners of land are paid a compensation
called rent
...

For the effort of laborers, they are paid wages or salaries
...

Interest is the compensation paid to owners of invested capital
...

The rates of compensation provided to the factors of production are limited to a large
extent by either industry norms or market forces
...

The profits accruing to the entrepreneur, on the other hand, are limited only by his
skills and industry
...

As the landowners earns rent for allowing use of his property, the owner of capital
earns interest for allowing use of his capital
...
If he
succeeds, he is compensated for his vision, originality, and bold undertaking (Table 2)
...
THE FACTORS OF PRODUCTION AND THEIR REWARDS
FACTORS OF
PRODUCTION

ECONOMIC REWARD

LIMITING FACTOR
FOR REWARDS
RECEIVED
supply and demand

Land

rent

Capital

interest

industry rates/government
mandated rates

Labor

wages/salary

supply and demand
legislation

Entrepreneur

profits

skill of entrepreneur

THE ENTREPRENEUR’S TASK
In the race for winning the all-important consumer’s pesos, the business will have to
offer products or services that have certain advantages over the competition’s wares
...
At this stage, he will reap the profits for being ahead of the
competitors
...
The competitor may
either imitate or offer better innovations
...
INNOVATION AND ITS POSSIBLE EFFECTS ON COMPETING FIRMS
ENTREPRENEUR 1
Year 1
introduce
innovative
product
Year 2

reap
moderate
profits

ENTREPRENEUR 2
inactive

introduce
innovative
product

ENTREPRENEUR 3
inactive

inactive

Year 3

maximize
profits

reap
moderate
profits

introduce
innovative
product

Year 4

profits
decline

maximize
profits

reap
moderate
profits

Year 5

introduce
innovative
product

profits
decline

maximize
profits

ENTREPRENEURSHIP AND BUSINESS SIZE
To many people, entrepreneurship means running a small business
...
Both small and large businesses
are confronted by problems that are entrepreneurial in nature
...
Examples of innovations are the following:
1
...
manufacture and sale of new products; and
3
...

Small businesses have the advantage of switching to another business concept whenever
necessary
...
To offset the
disadvantage, however, large businesses have started to engage in “entrepreneurship” where a
person with entrepreneurial skills and is employed by the corporation is tasked to launch new
products
...


SUMMARY
Entrepreneurship is an activity that assures the viability and growth of the economy
...

The entrepreneur’s task consists of assembling the resources consisting of land, labor,
and capital for the purposes of producing goods and services
...
He also bears the risk
inherent to the venture
...

Innovation is an important aspect of entrepreneurship
...

New ventures must develop into small business or grow into a mature and bigger
company
...

The transition from a new venture to a long-term enterprise consists of the prestart-up
stage, start-up stage, early growth stage, and large growth stage
...

The entrepreneur cannot feel secure of continuous success in his new venture
...

Although entrepreneurship is generally regarded as a useful means of running a small
business, it is also conductive is maintaining the growth of large corporations

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