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ENTREP3 PRELIMS REVIEWER AGUDA, STEPHEN DAVID M. | GUPO, YRIAH LOREIN M. XII-FARADAY CHAPTER 1: NATURE AND RELEVANCE OF ENTREPRENEURSHIP Lesson 1: Concept of Entrepreneurship ● economic and personal rewards ● opportunity seeking and exploitation ● encountering risks and uncertainties ● resource mobilization "Having profits from bearing uncertainty and risk” (Knight, 1921) "Carrying out new combinations of firm organization – new products, new services, new sources of raw material, new methods of production, new markets, new forms of organization.“ (Schumpeter, 1934) "Decisions and judgements about the coordination of scarce resources.“ (Casson, 1982) 1.) United States - One of the friendliest countries for entrepreneurs in the world. It is a home for thousands of successful entrepreneurs. 2.) China - This emerging country is home to budding entrepreneurs who manufacture different products that range from toys, gadgets, electronics and cars. 3.) Singapore - A small country that controls a significant portion of the economy in Asia. Many of their entrepreneurs innovate on existing services for local and international use. 4.) Canada - Entrepreneurs in Canada are exploring the opportunities over the internet. 5.) India - Entrepreneurship plays a dominant role in the country’s economic landscape, with the government providing a venue, Delhi Huts, to start up entrepreneurs which promote local handicrafts. 6.) Taiwan - Entrepreneurship is encouraged here through the small and medium enterprise incubation centers for the purpose of nurturing young firms, new products and technologies. 7.) Hong Kong - A knowledge-based economy known as a “shopping haven”. 8.) Thailand - The extent of government support to entrepreneurs is very evident. Tourism for international markets and agricultural exports are the two major sources of income generated by Thai entrepreneurs. 9.) Malaysia - Its current emphasis is on tourism as a business venture for entrepreneurs is gaining popularity. 10.) South Korea - The enterprising spirit is quite obvious in such companies as Samsung and Kia that have now become well-known even outside the country. Entrepreneurship in the Philippines - The Philippines is an entrepreneurial country, where 99.7% of all firms operating in the country are small and medium enterprises (SME) employing 69% of the labor force and 47% of the 803,476 registered establishments are SMEs owned by women. Lesson 2: Development of Entrepreneurship The Earliest Period - An entrepreneur is a person who sells goods on behalf of the goods’ owner - Enters into a formal agreement with a capitalist, bore all risks of possible damage and losses The Middle Ages - An entrepreneur is a person who merely managed the projects using the resources provided by the government - Did not assume any risks at all The 17th Century - An entrepreneur is a person who would enter into a formal agreement with the government to provide products or services - A risk taker and a bearer of uncertainty The 18th Century - An entrepreneur was distinguished from the capitalist - Someone who coordinates, leads, and manages all the activities of the firm ENTREP3 PRELIMS REVIEWER AGUDA, STEPHEN DAVID M. | GUPO, YRIAH LOREIN M. XII-FARADAY The 19th and 20th Century - Entrepreneurs are innovators who seeks opportunities and leads “existing means of production into new channels” - A little distinction between an entrepreneur and a manager The 21st Century - Entrepreneurs are considered as heroes of free enterprise - Creativity and innovation was used to exploit high growth potentials - Significant changes due to the Internet EVOLUTION OF ENTREPRENEURSHIP IN THE PHILIPPINES ● It started through the barter system wherein goods and services were the means of exchanges. ● Then, countries moved towards a money economy when people used different forms of money to pay for the goods they bought. ● However, when we were colonized for hundreds of years, the structure of society, economy, education, and political system were changed. ● We became family-centered, Catholic, capitalist, and a democratic country. ● After independence, the Philippine government realized the importance of entrepreneurship to individuals, society, and the country, and how it contributes to the nation’s economic development. Lesson 3: Relevance of Entrepreneurship and Entrepreneurs in Economic Development and Society Contribution of Entrepreneurship ● Entrepreneurship has a huge impact on the economy and in society ● It was Joseph Schumpeter, an Austrian economist who articulated the importance of entrepreneurship to the economy and in society in 1934 ● The increase in entrepreneurial activities has also initiated changes in the structure of business and society 1. Creates Employment - When entrepreneurs put up their business, they employ people who possess different competencies and personal values to help them operate the enterprise. 2. Develops New Market - They are opportunity seekers, creative and resourceful. They seek new buyers or customers. They go beyond the existing places where their products are sold. 3. Introduces Innovation - Innovations can be something ordinary or technological or breakthrough. Due to innovation, other businesses fold, while others will open or flourish. Some even restructure like merging or buying out firms, to respond to the changes that are required in order to become sustainable in the business. 4. Generates New Source of Materials - Entrepreneurs are always in constant search for better and cheaper sources of materials they need. Finding new materials providers or suppliers help in the economic growth of the place. 5. Stimulates Investment Interest in the New Business Ventures Being Created - When entrepreneurs engage in a new business, it stirs curiosity for other people to invest in the business because of the benefits it offers. This new investment contributes to economic growth. 6. Improves the Quality of Life - The new products and services developed by the entrepreneur contribute to the increase in the personal benefit and convenience of people in society. The use of automatic gadgets in cooking or washing clothes, mobiles phones, internet service, agricultural machines leads to a better quality of life. 7. Serves as Role Model - Entrepreneurs are people to be emulated by younger generations in the community and society. The attitude, behavior and personality traits like pro activeness, opportunity recognition, risk-taking, alertness and creativity are some of the characteristics that will also make them successful entrepreneurs in the future. 8. Bring Social Benefits to the People - Entrepreneurs pay taxes for every product or service sold to the market. The income derived from all these taxes by the government are then used for the people, especially the poor to have access to education and health as well as improvement in infrastructure facilities like roads and bridges. 9. Utilizes and Mobilizes Indigenous Resources - SMEs will always look for cheaper and local materials to supply their needs. This saves much in terms of foreign currency as local enterprises patronize their own resources and they do not become dependent on imported materials. ENTREP3 PRELIMS REVIEWER AGUDA, STEPHEN DAVID M. | GUPO, YRIAH LOREIN M. XII-FARADAY 10. Produces More Alternative Sources for Consumers - The stiff competition in the market for quality and cheaper products and services requires the entrepreneurs to come up with more products consumers can choose from. CHAPTER 2: ENTREPRENEURS AND ENTREPRENEURIAL COMPETENCIES Lesson 1: Concept of Entrepreneurs Today ENTREPRENEUR ● “Entreprendre” - French word meaning to undertake ● An entrepreneur is a founder and creator of the enterprise who makes use of the opportunities that abound to start or grow business, knowing that there are risks involved in such undertaking DEFINITION OF ENTREPRENEUR FROM AN ECONOMIST’S POINT OF VIEW FROM A PSYCHOLOGIST'S POINT OF VIEW FROM A MANAGEMENT PERSPECTIVE Someone who brings resources, labor, materials and other assets into combinations that make their value greater than before Someone who introduces changes, innovations and a new order A person who is “typically driven by certain forces such as the need to obtain or attain something, to experiment, to accomplish, or perhaps to escape the authority of others” Someone who identifies opportunities, plans, mobilizes resources, manages, and assumesthe risks of a business to have a positive impact on society COMMON PROFILE DIMENSIONS A. CALCULATED RISK-TAKING ● doing everything possible to get the odds in their favor, and they often avoid taking unnecessary risk EXAMPLE: Convincing investors to put up their money, creditors giving discounted interest rates, and suppliers offering special terms of payment for the raw materials. B. COMMITMENT ● the unwavering dedication to work for the common good of the society through one’s business EXAMPLE: Willingness to use one’s own savings, sacrificing family time, and working long hours and travelling to different places to acquire needed resources C. FEEDBACK-SEEKING ● the taking of steps to know how well they are doing and how they might improve their performance EXAMPLE: Constantly asking for comments, reactions and suggestions from their employees and customers, then using these feedbacks to improve their products. D. PERSEVERANCE ● the determination to succeed by overcoming obstacles and setbacks ● entrepreneurs will not easily give up when problems come their way Gender Dominated by Males Mixed Ownership Previous Experience Less Business Experience More Business Experience Utilization of IT Relies on Manual System Proficient in IT Leadership Style Directing Empowering Drive Orientation To get ahead To make a difference Perspective on Self-confidence “I can do it” “We can do it” CHARACTERISTICS OF ENTREPRENEUR DIMENSION IN THE PAST TODAY Educational Attainment Less Educated Highly Educated Age Older Younger ENTREP3 PRELIMS REVIEWER AGUDA, STEPHEN DAVID M. | GUPO, YRIAH LOREIN M. XII-FARADAY EXAMPLE: Borrowing money from other sources to augment capital, looking for and training employees and asking support from the government for small businesses. E. DRIVE TO ACHIEVE ● the internal desire to pursue and attain challenging goals ● entrepreneurs examine the situation, plan how to achieve their goals given the condition EXAMPLE: Regular assessment of the business performance, analysis of the competitors performance in the market, planning strategically to sustain the business. F. SELF-CONFIDENCE ● the belief that together with the other people, things can be done in the business EXAMPLE: Having positive belief and allowing those around them to help during a crisis or non-profitable period for the business G. OPPORTUNITY ORIENTATION ● the constant awareness of opportunities that exist in everyday life EXAMPLE: Studying the change in consumer preferences to improve an existing product or introduce a new one, importing more of the needed raw materials when the government provides more tax incentives. H. INNOVATIVENESS ● the ability to come up with something different or unique ● can be in terms of a new product, service, process, market or technology ● this trait is often related to creativity or “thinking outside the box” EXAMPLE: Development of new models of mobile phones, online buying and selling, introduction of online services like bills payment, internet banking. I. RESPONSIBILITY ● the willingness to put themselves in situations where they are personally responsible for the success or failure of the business operation EXAMPLE: Taking on the blame for mistakes of the employees, admitting to customers that there is an error that was done and that this will be corrected, standing up for what is right. J. TOLERANCE FOR FAILURE ● using it as a learning experience ● serious setbacks and disappointments become an integral part of the learning process. EXAMPLE: Confronting the source of their problems like employees or suppliers, not repeating the same mistake in the production of a product, admitting to the customer that there is a need to improve their services. Lesson 2: How Entrepreneurs Think ● Entrepreneurs think differently than non-entrepreneurs. They are more intuitive than non-entrepreneurs. ● An entrepreneur collect, process and evaluate information in a more intuitive manner than managers. ● According to Armstrong and Hird, entrepreneurs preferred to have an open-ended approach to problem solving. ● As observed by Timmons, this style of working is particularly suited to the needs of entrepreneurs who have to sense opportunities where others see chaos and confusion. “ENTREPRENEURIAL MINDSET INVOLVES THE ABILITY TO RAPIDLY SERVE, ACT AND MOBILIZE, EVEN UNDER UNCERTAIN CONDITIONS” - HISRICH, PETERS AND SHEPHERD ENTREPRENEURS THINK THIS WAY: 1. ACTUATE SELF-ASSESSMENT AND CHOOSE COURSE OF ACTION ● The entrepreneur determines what they have, like knowledge, skills, resources and people they know. Then choose from possible outcomes. COURSES OF ACTION: 1. Convince an investor to invest the needed money to start the business. 2. Invite friends and relatives and show what unique ethnic items you intend to sell. ENTREP3 PRELIMS REVIEWER AGUDA, STEPHEN DAVID M. | GUPO, YRIAH LOREIN M. XII-FARADAY 3. Might opt to direct or online sell instead of having a store to minimize expenses. 2. GENERATE MULTIPLE DECISION MODELS ● This thinking process enables the entrepreneurs to reflect, comprehend and control one’s learning and intellectual ability. It means that based on what an entrepreneur observes or feels, he will come up with a number of decision making models centered on reasonable solutions and acting on the situation. ● According to Kazmi, “the typical entrepreneur is alert, rational, well-informed and does not show carelessness and ignorance. 3. LEARN FROM FAILURE ● There are many causes of failure, such as lack of experience in doing business, inability to attract new funding, lack of new product development effort, lack of supply of needed raw materials, family conflict over the management of the business, resignation of skilled workers ● Failure always results in negative emotions like anger, guilt, anxiety and hopelessness. And these can hinder the entrepreneur’s ability to learn from failure and the motivation to try again. ● Self-determination, as well as proactive and positive thinking, can help the entrepreneurs go through the process of recovery. Lesson 3: Entrepreneurial Competencies ENTREPRENEURIAL COMPETENCIES The sum total of the personality, skills and knowledge that the entrepreneur possesses, which are necessary to effectively perform their functions and responsibilities ● According to Camuffo, Gerli, and Gubitta (2012) - the entrepreneur’s competencies can be divided into functional, behavioral, and cross-functional groups FUNCTIONAL COMPETENCIES - those skills, organized into clusters, regarding the main areas of managerial knowledge, such as accountancy, finance, control, marketing, HR Management, organization, operations, internationalization and strategy that enable the entrepreneurship to manage the organization. BEHAVIORAL COMPETENCIES - those specific behaviors grouped into 5 clusters, namely: ● Self-awareness ● Self-management ● Social Awareness ● Relationship Management ● Cognitive Competencies CROSS-FUNCTIONAL COMPETENCIES - those broad overall skills that are grouped into goal and action management cluster, people management cluster and analytical reasoning order - it is ideal that the entrepreneurs possess and demonstrate at an advanced level these various competencies to contribute to better firm performance “It is important to bear in mind that these entrepreneurial competencies are changeable and learnable through proper education and training.” Man and Chan (2002) categorized all of the identified competencies into relevant activities and behavior in the SMEs context. Six Competency Areas identified in literature are grouped together as: ● Opportunity Competencies - related to recognizing and developing market opportunities through various means ● Relationship Competencies - related to person-to-person or individual-to-group based interactions ● Conceptual Competencies - related to different conceptual abilities, which are reflected in the behaviors of an entrepreneur ● Organizing Competencies - related to the organization of different internal and external human, physical, financial, and technological resources ● Strategic Competencies - related to setting, evaluating, and implementing the strategies of the firm ENTREP3 PRELIMS REVIEWER AGUDA, STEPHEN DAVID M. | GUPO, YRIAH LOREIN M. XII-FARADAY ● Commitment Competencies - the drive of an entrepreneur to move ahead with the business Lesson 4: Entrepreneurial Decision-Making as a Core Competency ● Entrepreneursthink and process differently ● The critical and creative skills of the entrepreneurs are utilized in decision-making ● Entrepreneurs will always make decisions from the identification stage, to the organization, and implementation/execution stages of their business venture Important factors that determine the entrepreneurial decision-making process: 1. RATIONAL/SCIENTIFIC METHOD IN DECISION-MAKING ● involves the use of the standard six-step process to arrive at a decision ● requires the use of management quantitative techniques The Standard Six-step Process: ● Identify the Problem ● Gather Data ● Analyze Data ● Formulate Alternative Solutions ● Select the Best Alternative ● Implement the Decision 2. USE OF INTUITION IN DECISION-MAKING ● the use of “gut feel” to arrive at a decision ● sometimes, entrepreneurs making fast decisions may result in missed opportunities, disappointments, or business failure 3. AFFECT INFUSION ● suggests that entrepreneurs’ current moods influence judgements or decisions 4. ATTRIBUTION STYLE ● refers to the entrepreneurs’ self-serving bias ● this bias is related to: 1. a strong tendency on the part of most entrepreneurs to attribute positive outcomes to internal causes, and; 2. a corresponding tendency of entrepreneurs to attribute negative outcomes to external causes 5. COUNTERFACTUAL THINKING ● an afterthought in decision-making in which the procedures followed to perform the task are discussed, and various alternatives that could have been followed are considered 6. OVER-CONFIDENCE ● the tendency to think that they know more than what they really know when they make the decision ● the entrepreneurs’ failure to know the limits of their own knowledge 7. KNOWING-STYLE ● combination of analytical and conceptual thinking ● entrepreneurs look for facts and data before they make decisions ● this style tends to be slower, cautious, and centralized 8. CREATIVE STYLE ● holistic and conceptual thinking ● entrepreneurs tends to be creative and enjoy experiments before making decisions ● thinking out of the box Entrepreneurial Adaptation: Pandemic-Driven Business Trends The COVID-19 pandemic posed major challenges for businesses globally but also sparked entrepreneurial innovation and adaptation. Entrepreneurs across industries have pivoted their business models, developed new products, and embraced emerging technologies to navigate the crisis, demonstrating resilience and creativity. ENTREP3 PRELIMS REVIEWER AGUDA, STEPHEN DAVID M. | GUPO, YRIAH LOREIN M. XII-FARADAY Accelerating the Shift to E-Commerce Online Retail Startups ● The pandemic has sparked a surge in new registrations for online retail businesses, as entrepreneurs have launched e-commerce platforms to meet the growing demand for home delivery services and products. This shift has been driven by the need for safe and convenient shopping alternatives during periods of lockdown and social distancing. Enhanced Digital Presence ● Established businesses have also been quick to enhance their online presence and e-commerce capabilities, recognizing the importance of a robust digital strategy to sustain operations and reach customers. This has involved the development of user-friendly ecommerce websites, mobile apps, and integrated payment systems to facilitate seamless online transactions. Omnichannel Approach ● Some entrepreneurs have adopted an omnichannel approach, integrating their physical and digital sales channels to provide a more seamless and personalized customer experience. This has involved features like curbside pickup, virtual showrooms, and personalized online recommendations, blending the convenience of e-commerce with the personal touch of brick-and-mortar stores. Addressing Surging Demand for Health and Safety Products 1. PPE Production - Entrepreneurs quickly adapted their manufacturing capabilities to produce essential personal protective equipment (PPE), such as face masks, shields, and sanitizers, to address the urgent needs of healthcare workers and the general public during the pandemic. 2. Supply Chain Diversification - To mitigate disruptions in the global supply chain, entrepreneurs have sought to diversify their sourcing and distribution networks, forging partnerships with local suppliers and exploring alternative logistics solutions to ensure the reliable delivery of health and safety products. 3. Innovative Product Development - Recognizing the evolving needs of consumers, entrepreneurs have also invested in the development of innovative health and safety products, such as smart wearables, contactless technologies, and advanced air purification systems, to provide enhanced protection and peace of mind. Transforming the Food and Dining Experience Delivery and Takeout Services - With restaurants facing capacity restrictions or temporary closures, many food entrepreneurs have launched or enhanced their delivery and takeout services to cater to the increased demand for safe dining alternatives. This has involved the development of user-friendly online ordering platforms, contactless payment options, and efficient logistics to ensure timely and reliable food delivery. Virtual Dining Experiences - Some entrepreneurs have also explored the concept of virtual dining experiences, offering interactive cooking classes, gourmet meal kits, and themed virtual events to recreate the social and culinary aspects of dining while adhering to safety protocols. These innovative approaches have helped to maintain a sense of community and connection during the pandemic. Ghost Kitchens and Cloud Kitchens - The rise of ghost kitchens and cloud kitchens, which are food preparation facilities designed solely for delivery and takeout, has enabled entrepreneurs to minimize overhead costs and focus on streamlining their operations to meet the growing demand for convenient and contactless food options. Enabling Remote Work and Learning 1. Collaboration Software - Entrepreneurs have developed or enhanced platforms for virtual meetings, project management, and team collaboration, enabling seamless remote work and facilitating effective communication and coordination among distributed teams. 2. E-Learning Platforms - With the shift to online learning, new startups have emerged offering a wide range of virtual courses, tutoring services, and educational resources to cater to students and professionals seeking to upskill during the pandemic. 3. Productivity Tools - Entrepreneurs have also created or improved productivity tools, such as task management applications, time-tracking software, and virtual whiteboards, ENTREP3 PRELIMS REVIEWER AGUDA, STEPHEN DAVID M. | GUPO, YRIAH LOREIN M. XII-FARADAY to help remote workers and students maintain focus, organization, and collaboration in the digital workspace. 4. Wellness and Mental Health Solutions - Recognizing the psychological toll of the pandemic, entrepreneurs have developed teletherapy platforms and mental health apps to provide virtual counseling, mindfulness resources, and other well-being support to address the increased need for accessible mental health services. Fostering Community Resilience Support Networks - Entrepreneurs have launched various initiatives to provide resources, mentorship, and financial assistance to struggling businesses and individuals within their communities, fostering a sense of solidarity and helping to mitigate the economic impact of the pandemic. Volunteer Initiatives - Many entrepreneurs have organized or participated in volunteer programs, donating their time, expertise, and resources to support vulnerable populations, such as the elderly, low-income families, and frontline workers, during the crisis. Philanthropic Efforts - Recognizing the importance of collective action, entrepreneurs have also spearheaded philanthropic initiatives, such as fundraising campaigns and charitable donations, to channel resources and support towards critical community needs and relief efforts Embracing Sustainability and Local Sourcing 1. Local Supply Chains - Entrepreneurs have focused on creating and promoting local supply chains, forging partnerships with regional producers, manufacturers, and distributors to reduce reliance on global logistics and provide consumers with more sustainable and ethically sourced products. 2. Sustainable Materials - Responding to the growing consumer demand for eco-friendly products, entrepreneurs have invested in the development and use of sustainable materials, from biodegradable packaging to upcycled textiles, to minimize their environmental footprint and appeal to a more conscious consumer base. 3. Community-Driven Initiatives - Entrepreneurs have also launched community-driven initiatives, such as farmers' markets, co-ops, and local food hubs, to connect consumers directly with producers and promote the consumption of locally grown and produced goods, fostering a sense of community and supporting the local economy.