Entrepreneurship and  Innovation – it refers to new or Chapter 3 – The Government

Business Planning different ways of doing things, like And Entrepreneurship

technology, marketing, human
Chapter 1 – Economic relations and management. Determines of Investment
Development and  Economic Development – refers to  Profit is the first consideration in
the progressive process of improving investment.
Entrepreneurship
human conditions by reducing or  Entrepreneur has control or
 The national economy is eliminating poverty, disease, influence in the operations of
composed of business enterprises, injustice, illiteracy and exploitation. internal economies of scale.
households and the government.  Entrepreneurship – is the capacity  They claim that the solution to
 Knowledge, skills and values are for innovation, investment and poverty is not to control population
the main determinants of economic expansion in new markets, products growth, but to create more
growth. and techniques. production and employment.
 Economic Development – is a
Philippine Economic process while economic growth is a The Role of the Government
Development product of economic development.  In democracy, fundamental
 The Philippines became the slave function of the government is to
of three colonial masters: Spain,
Development and Growth serve the best interests of the
United States and Japan. Theories people.
1.Laissez Faire Theory – it means  The role of the government is to
The Republic: 1946-1972 economic freedom. This explains that promote the welfare of all sectors –
 Bell Trade Act of 1946 – gave the the government should not interfere producers, consumers, employees,
American businessman the right to in economic activities. businessman and the rest of the
exploit our natural resources, to 2.Keynesian Theory – the society and economy.
operate public utilities and other government should play the key role
businesses, and to enjoy the pre-war in economic development Support for Entrepreneurship
free-trade agreement. 3.Ricardian Theory – the key factor  Entrepreneurship play a very
in economic growth is land. This important role in economic
The Aquino Administration means that agriculture plays a major development.
 The Aquino 6-year administration role in economic development.  The key factor of development of
plan was based on the following 4.Harrod-Domar Theory – the key the Ramos government is people
principles: factor is physical capital like empowerment.
 respect for human rights machines. This theory explains the
industrial success of rich countries. Government Assistance
 promotion of social justice
5.Kaldor Theory – the key factor of Program
 wiping out of poverty
economic development is technology. a. Peace and order
 attainment of economic growth 6.Innovation Theory – it stresses the b. Political Stability
 market economy role of innovators or entrepreneurs in c. Price Stability
economic development. d. Taxes
Fundamental Economic 7.Non-Economic Theories – the key e. Infrastructures
Problems factors are political stability, efficient f. Education and Training
 low salary public administration, open society g. Public Administration
 unemployment and positive cultural values. h. Production Technology
 poverty i. Marketing Assistance
 Free Enterprise or Market Contributions of Entrepreneurs j. Financial Assistance
Economy – is an entrepreneurial  Develop new markets
economy. This is an economy  Discover new sources of materials Government Program for
denominated by entrepreneurs. Such  Mobilize capital resources Entrepreneurs
individuals are risk-takers. They  Introduce new technologies, new
organize and manage their own industries and new products.  Magna Carta for Small
business.  Economic Nationalism – is the Entrepreneurs
control of the economic resources of  Kalakalan 20
Chapter 2 – The Role of the country by its own people, and  Micro-Enterprise Development
Entrepreneurship in Economic their use of such resources for their Program
Development own benefit and enjoyment.  Self-Employment Loan Assistance
 Training Programs for Small and 5. One who shifts economic principal worker, and he employs one
Medium Enterprises resources from a lower level to a or more assistants.
higher one.
Magna Carta for Small 6. One who organizes, operates and Common Characteristics of Small
Entrepreneurs assumes the risk for business Business
 Also known as R.A. 6977, an act to venturers. 1. It is privately-owned.
promote, develop and assist small 7. One who launches their own 2. It has few or no layers of
and medium scale enterprises venturers from scratch. management.
(SME’s) through the creation of 3. It has insufficient resources to
Small and Medium Enterprises Characteristics of dominate its field or business.
Development (SMED) Council. Entrepreneurs
1. Reasonable Risk-Takers Features of Small Business
 Small Business Guarantee and 1. A small business is low in capital
Finance Corporation (SBGFC) – 2. Self- Confident
3. Hardworking but high in labor intensity.
the mandatory allocation of credit 2. A small business is efficient in
resources to small enterprises and 4. Innovative
5. Leadership specialized skill or service.
the rationalization of government 3. A small business succeeds in
assistance programs and agencies 6. Positive Thinkers
7. Decision-Makers small, isolated or overlooked
concerned with the development of markets.
SME’s. 4. A small business often operates in
Qualities of Choosing the Best
Solution unstable markets.
Small And Medium Enterprise
 Presence of Risk 5. A small business is closer to the
 defined any business activity of market place.
enterprise engaged in industry,  Economy of Effort
6. Generally, the owner of small
agribusiness and/or services,  Time Factor
businesses are also the managers.
whether single proprietorship,  Availability of Resources
7. Capital comes from the owner or
cooperative, partnership or small group.
corporation whose total assets must Qualities of Entrepreneur
1. Self-Reliant 8. The area of operation is small.
have value falling under the 9. The size of the enterprise is small
following circumstances: 2. Risk-Taker
3. Industrious in relation to the industry.
 Micro - less than 50,000
4. Humble
 Cottage – P50,001 – P500,00 Small Big Enterprises
5. Helpful Enterprises
 Small – P500,001 – P5,000,000 6. Creative
 Medium – P5,000,001 – Change through a Change is
7. Happy
P20,000,000 cycle births and through
Managerial Skills an deaths expansion or
Small – Medium Enterprise contraction
Entrepreneur Must Possess:
Management Training Risk and reward The risk and
 Ability to conceptualize and plan. estimate is done reward is done by
- this program focuses on the
 Ability to manage others. by the owner employee-
development and training of existing
and/or would be small and medium  Ability to manage time and to learn who either gets managers
entrepreneurs so that they can  Ability to adapt to change. profit or loss
effectively contribute to the growth Has little or no Has tremendous
and stability of their business and/or Chapter 5 – Small Business is economic power influence on the
start a small and medium business. Beautiful economy
Serves markets Cannot serve
Chapter 4 – Characteristics of Business
Entrepreneurs - defined as an organized effort of Advantages of Small Business
individuals to produce and sell goods 1. Personalized relationships
Entrepreneur Definition and services in order to satisfy the with customers and employees
1. One who bears uncertainty. needs of society. 2. Flexibility in management
2. One who is an adventurer. - four types of productive resources: 3. Government incentives
3. One who is an innovator. Human, Financial, Material, and
4. Simple record keeping
4. One who always searches for Informational.
5. Independence
change.
Micro Business – a very small
business where the owner is the Disadvantages of Small Business
1. Difficulty of raising capital 2. Growth – sales rapidly rise as the Components of Business
2. Risk of failure product becomes popular. Planning
3. Limited management skills 3. Maturity – sales are still rising at  SWOT
4. Lack of opportunities for the beginning of this stage but the  Objectives
employees rate of increase has declined.  Strategies
4. Decline – thee is a sharp fall in
Why Small Businesses Fail?  Time Frame
sales volume while profit becomes
1. Lack of experience flat or horizontal. Characteristics of Sound
2. Lack of money
Market Research – it is the best Business Plan
3. Wrong location
1. Objectives
4. Mismanagement of inventory way to evaluate business
2. Clear
5. Poor credit practices opportunities.
3. Logical and Simple
6. Poorly planned expansion
1.Defining the problem 4. Flexible
7. Unsound or too little analysis in
2. Making a preliminary investigation 5. Stable
choosing the business
3. Planning the research 6. Complete and Integrated
Economic Contributions of 4. Gathering the data
5. Analyzing the data Steps in Business Planning
Small Business 1. Evaluate your personal resources
 They introduce innovation 6. Reaching a conclusion/decision
7. Implementing and evaluating and interests and the resources of the
 They create employment community.
decisions
 They provide competition 2. Analyze your market.
 They fill needs of society and big Location is the key factor in 3. Choose a proper business location.
businesses business success. In selecting a 4. Prepare financial plan.
business location, the following are to 5. Prepare a production pan.
Chapter 6 – The Search for be considered: population income, 6. Prepare an organizational plan.
Business Opportunities competition, government policies, 7. Prepare a management plan.
peace and order facilities, parking
Factors to be Evaluated in space, etc. Chapter 8 – Organizing the
Discovering Opportunities Enterprise
1. Markets Chapter 7 – Developing a
2. Individual Interests Business Plan Reasons Why People Go To
3. Capital Business
4. Skills Planning 1. Personal Satisfaction
5. Suppliers of Inputs - it involves the attainment of goals, 2. Family Involvement
6. Manpower and the way to accomplish such 3. Independence and Power
7. Technology goals. 4. Social Activities
- a time frame is needed in attaining 5. Profit Expectation
SWOT Analysis – it is used to the goals.
translate business opportunities into Organization – it is a group of two
- Planning answers the questions: or more persons who work together
profits. what to do, how to do it, when to do
S – trenghts to attain a common set of goals.
it, and what to expect in the future.
W – eaknesses
O – pportunities Organizing – it is a process of
Principles of Planning combining and coordinating sources
T – hreats 1. Planning must be realistic.
and activities in order to accomplish
2. Planning must be based on felt
 Backward Integration – is the effectively and efficiently certain
needs.
ownership or control of the inputs of objectives.
3. Planning must be flexible.
production by the enterprise. 4. Planning must start with simple
 Forward Integration – is the Forms of Business Organization
projects. 1. Single Proprietorship this is a
ownership or control of the marketing
system by the enterprise. form of business organization that is
Stages of Business Planning owned and usually managed by the
1. Unplanned Stage
Product Life Cycle person.
2. Budgeting-System Stage
1. Introduction – consumer 2. Partnership – it is an association
3.Annual Planning Stage
awareness and acceptance of the of two or more persons who act as
4.Strategic Planning Stage
product are low. co-owners of a business. Each partner
contributes money, property or common bond of interests, who have - Material Resources – these are
service to their organization. voluntarily joined together to achieve tangible, physical resources which are
3. Corporation – it is an artificial a lawful common social or economic used for production.
being created by operation of law end, making equitable contributions - Financial Resources – these are
having the right of succession, and to the capital required and accepting a funds used in the enterprise.
the power, attributes and properties fair share of the risks and benefits of - Human Resources – these are the
expressedly authorized by law or the undertaking in accordance with most important resources. It is the
incident to its existence. the university accepted principles of people who plan and implement
cooperation. business activities.
Advantages of Sole
- Informational Resources – correct
Proprietorship Definition of Terms
and complete information is vital to
1. Ease and low cost of formation and  Departmentalization – grouping the success of any business
dissolution of various positions into manageable organization.
2. Retention of all profits units.
3. Independence and flexibility  Centralization – distributing the Basic Functions of Management
4. Tax advantage and less responsibility and authority within 1. Establish goals of the enterprise
government regulation the organization. and develop plans to attain goals.
 Span of Management – number of 2. Organize people and other
Disadvantages of Sole subordinates who will report to each resources to achieve goals.
Proprietorship manager. 3. Lead and motivate people towards
1. Unlimited liability  Chain of Command – the goals and the enterprise.
2. Lack of stability distinguishing those position with 4. Maintain sufficient control system
3. Limited access to credit direct authority and those that are to ensure the enterprise is moving
4. Limited business skills and support positions. well towards its goals.
knowledge  Delegation – assigning a task to a
subordinate. Characteristics of Successful
Advantages of Partnerships  Responsibility – is a duty to do the Managers
1. Easy to organize 1. Technical Skills
job.
2. Availability of more capital and 2. Conceptual Skills
 Authority – is the power to do the
credit 3. Interpersonal Skills
job.
3. Retention of profits 4. Diagnostic Skills
4. Better business skills and  Accountability – is an obligation
to do the job. 5. Analytical Skills
knowledge
 Line of Authority – authority
passes from the highest level to the Theories of Management
Disadvantages of Partnerships 1. Scientific Management of Taylor
1. Unlimited liability lowest level.
- Frederich Taylor became interested
2. Lack of stability in improving efficiency of workers
3. Management disagreement Chapter 9 – Managing the
Enterprise based on hi bitter personal
4. Idle investment experiences as an employee of
Definitions of Management manufacturing plants. He suggested
Advantages of Corporation
- A process by which cooperative that each job should be broken down
1. Limited liability
group direct actions towards common into separate tasks.
2. Easy to raise capital
goals. 2. The Hawthorne Studies of Elton
3. Perpetual life
- One of the factors of production, Mayo - It proved that human factors
4. Specialized management
together with the land, labor and are as important as pay rates as far as
Disadvantages of Corporation capital. motivation is concerned. So,
1. Difficult to organize management should provide a
- A class and status system which
2. Strictly regulated and supervised favorable environment to maximize
requires an elite of intelligence and
by the government satisfaction of workers or employees.
education.
3. Some corporations are socially 3. Theory X and Theory of
- A process of coordinating the McGregor - Theory X assumes that
irresponsible resources of the organization in order
4. Formal and impersonal employer- workers dislikes work. So, managers
to achieve its primary goals. should force them to attain the goals
employee relationship - It is both an art and a science. of the enterprise. In the case of
Cooperative – it is a duly registered Theory Y, it assumes that work is an
Production Resources important part of the lives of the
association of persons, with a
people; that people are responsible 1. Short-term Financing (one year The Nature of Production
and therefor committed to the goals or less)  Production is the creation of goods
of the enterprise if these provide them a) Trade Credit – goods are and services.
personal rewards. delivered to retailers on consignment  Utility means satisfaction.
4. Heirarchy of Needs of Maslow - basis.
It assumes that people seek to fulfill a b) Promissory Notes – this is a
 In transforming resources into
variety of needs. Based on their written pledge by a borrower to pay a products, the principal actor is the
sequence of importance, these needs certain sum of money. entrepreneur.
are: c) Unsecured Bank Loans
Factors of Production
a) Physical/Physiological d) Commercial Paper – this a short-
 Land – includes natural resources
b) Safety term promissory note issued by big
such as forests, mountains and bodies
c) Social corporations.
of water.
d) Esteem
e) Self-realization 2. Long-term Financing (more than  Labor – refers to both physical and
5. Theory of Herzberg - Herzberg one year) mental efforts.
discovered that factors most 1.Loans  Capital – pertains to machines,
frequently associated with 2.Stock – this is a certificate of equipment, buildings and other
satisfaction are achievement, ownership. It is classified as common physical resources.
recognition, responsibility, and preferred.  Entrepreneurial Ability – it is the
advancement and growth, together 3. Bond – this is a certificate of spirit of the enterprise.
with work itself. These factors are indebtedness. It pledges to repay a
generally called motivation factors. specified amount of money with Rules of Production
This theory clearly shows that there interest. TR = Total Revenue (income)
are specific factors which are TC = Total Cost (expense)
responsible for satisfaction and Financial Plan
When TR is greater than TC, produce
dissatisfaction. - is a course of action of obtaining
more.
and using the money that is needed to
When TR is less than TC, stop
Risk - is the possibility that a loss or implement the goals of the business
producing.
injury will take place. organization.
When TR is equal to TC, maintain
Common Types of Non- Three Steps Involved in production.
Criminal Business Risk: Financial Planning:
Components of Total Cost (TC)
1. Fire 1. Establishing objectives
FACTORS
2. Natural calamities 2. Budgeting
Land
3. Personal liabilities 3. Identifying sources of funds
Capital
4. Economic problems Features of a Good Accounting Entrepreneur
5. Business interruptions System Total Factors
6. Loss of key personnel 1. Simple to understand
PAYMENTS
2. Flexible and adaptable to changing
Other Business Risks needs
Rent
1. Burglary Wage
3. Inexpensive to operate
2. Robbery Interest
4. Little time to operate
3. Shoplifting Normal Profit
5. Handy and convenient to use
4. Employee Theft TC of production
Basic Books to Keep
Chapter 10 – Financial 1. Purchase Journal – for credit
Variable Cost (VC) - refers to the
Management operating expenses like salaries, cost
purchases
of raw materials, office supplies and
2. Sales Journal – for credit sales
Definition of Financial bills.
3. Cash Disbursement Journal –
Management payments on cash basis
When TR is greater than VC, operate.
 it refers to activities that are When TR is less than VC, shut down.
4. Cash Receipts Journal – all cash
connected with securing money and sales and payments from credit
using it properly. Factors Essential in the
customers
Production Process
Sources of Funds Chapter 11 – Production of  The quality needed
Goods and Services  The quantity demanded
 Availability of supply
 Production requirements

Criteria for Selecting Good

Suppliers
 Price
 Quality
 Reliability

Types of Inventories
 Raw materials inventory – these
are stockpiles of materials for inputs
of production.
 Work-in-process inventory –
these are partially completed products
that require further processing.
 Finished goods inventory – these
are completed goods for delivery to
customers.

Definition of Terms
 Scheduling – is the process of
ensuring the delivery of materials at
the right place and right time.
 Quality control – is a process of
ensuring that goods and services are
produced in accordance with their
designs and specifications.
 Productivity - is the efficient
creation of goods and services.