2. The freedom of competition afforded by the capitalistic economy serves to
drive the entrepreneur to innovate and be ahead of his competitors lest he be
driven out of the market. The buyers of commodities will naturally patronize
innovative offerings of any kind and if one wants patronage, one must remember
this motivation.
Innovation, according to Webster, is the introduction of “a new method,
custom, device, etc.” it includes the departure from the previous procedures.
To eliminate unnecessary work and avoid duplication.
3. Innovation may be viewed as the “last stage in the important process” which
includes the following:
a. Invention- the discovery or devising of new products and processes;
b. Developments- the process by which the ideas and principles generated from
the stage of invention are embodied in concrete products and techniques; and
c. Innovation- the actual introduction of a new product or process.
4. Innovation, if it must be made successful, must provide value to the buyers
over and above those offered by competitors. Innovation, must, therefore,
reduce costs of improve the quality of products or services offered for sale.
Examples of successful innovations are the following:
1. Cordless microphone;
2. The microwave oven;
3. The cellular phone;
4. The kung fu fight scenes developed by Bruce Lee in the movies;
5. The karaoke music appliance;
6. The use of laser in the treatment of eye disease; and
7. The use of computers in the design of buildings by architects and civil
engineers.
5. “I think a good entrepreneur has a very clear grasp of what
the goal is, an unwavering sense of the goal, an utterly agile
approach of getting there”
-John Katzman, CEO Noodle Education
7. In the race for the consumer’s pesos, a business will have to offer products or
services that have certain advantages over the competitor’s wares.
In the creation of a new venture, the entrepreneur may be successful in
offering innovative products or services, at this stage, he will reap the profits for
being ahead of the competitors. The competitor may either imitate or offer
better innovations. If the competitor is successful, the profits of the
entrepreneur will decline.
The entrepreneur will, then, consider offering newer and better innovations.
The cycle continues until one or both finds a reason to stop.
Factors of production Economic reward Limiting factor for rewards
received
Land Rent Supply and demand
Capital Interest Industry rates/government
mandated rates
Labor Wage/salary Supply and
demand/legislation
Entrepreneur Profits Skill of entrepreneur
8. An entrepreneur is one who creates a new business in the face of risk and
uncertainty for the purpose of achieving profit growth by identifying
significant opportunities and assembling the necessary resources to capitalize
on them. Although many people come up with great business ideas, most of
them never act on their ideas. ENTREPRENEURS DO.
“entrepreneurs are more than just business creators, they are change agents
in society.” (Theory of Economic Development, Joseph Schumpeter)
The process of creative destruction, in which entrepreneurs create new ideas
and new business that make existing ones obsolete, is a sign of a vibrant
economy. Although this constant churn of businesses- some rising, other
sinking, new one succeeding, and many failing- concerns some people, in
reality, it is an indication of a healthy, growing, economic system that is
creating new and better ways of serving people’s needs and improving their
quality and standard of living.
9. Researchers have invested a great deal of time and effort over the last few
decades trying to paint a clear picture of “the entrepreneurial Characteristics”.
Although these studies have identified several characteristics entrepreneur tend
to exhibit, none of them has isolated a set of traits required for success.
We now turn to a brief summary of the entrepreneurial profile.
1. Has a Drive or Desire for responsibility. They prefer to be in control of their
resources, and they use those resources to achieve self-determined goals.
2. Preference for moderate risk. Entrepreneurs are not wild risk takers but are
instead calculated risk takers. They usually spot opportunities in areas that
reflect their knowledge, backgrounds and experiences, which increases their
probability of success. One writer observes,
Entrepreneurship is not the same thing as throwing darts and hoping for the best. It is about
planning and taking calculated risks based upon knowledge of the market, the available
resources or products, and a predetermined measure of the potential for success.
In other words, successful entrepreneurs are not as much risk takers as they are risk
eliminators, removing as many obstacles to the successful launch of their ventures as possible.
One of the most successful way of eliminating risks is to build a solid business plan for a
venture.
10. 3. Confidence in their ability to succeed. Entrepreneurs typically have an
abundance of confidence in their ability to succeed and are confident that
they chose the correct career path.
4. Desire to immediate feedback. Entrepreneurs enjoy the challenge of running
a business and they like to know how they are doing and constantly looking
for feedback.
5. High level of energy. Entrepreneurs are more energetic than the average
person. That energy may be a critical factor given the incredible-effort
required to launch a start-up company.
6. Future oriented. Entrepreneurs have a well-defined sense of searching for
opportunities. They look ahead and are less concerned with that they did
yesterday than with what they might do tomorrow.
7. Skill at organizing. Entrepreneurs know how to put the right people together
to accomplish a task. Effectively combining people and jobs enables
entrepreneurs to transform their vision into reality.
11. 8. Value of achievement over money. One of the most common misconception
about entrepreneurs is that they are driven wholly by the desire to make
money. To the contrary, achievement seems to be entrepreneurs’ primary
motivating force; money is simply a way of “keeping score” of
accomplishments- a symbol of achievement. What drives entrepreneurs goes
much deeper than just the desire for wealth.
9. Thinking ability. Solutions to entrepreneurial problems are oftentimes arrived
at with the use of the intellect. Innovations in whatever form will require
superior thinking ability. Problems in entrepreneurship are not often
apparent. So, skills in abstract thinking and the use of creative means to
handle difficulties are very important traits of the entrepreneur.
10. Human Relations Ability. The objective of any business, big or small, is to
derive some profit by satisfying some needs of the customers. To achieve
this, the entrepreneur oftentimes needs the assistance of employees. Since
the entrepreneur cannot avoid dealing with people either as customers or
employees, he must have sufficient human relations skill to effectively
motivate customers to buy and employees to work.
12. 11. Communication Ability. There are many instances where the action solicited from
either customers pr employees could not be realized because neither of them
could comprehend what is required by the entrepreneur. Oftentimes, the ability to
communicate resolves the problem. The entrepreneur will need all his skills in
communication to get through many of his difficulties
12. Technical knowledge. It refers to the various skills needed to perform the job of
the entrepreneur. He is expected to know, for instance, the equipment and
facilities required before the actual commencement of operations.
Those assisting the entrepreneur will need some assurance and directions in the day-
to-day operations. The lack of technical knowledge on the part of the entrepreneur
will seriously hamper the fluidity of movements and decision-making.
The following are only some of the skills he is expected to possess:
1. Preparation of a sales invoice;
2. Nuances of encashing a check
3. Determination of pay rates applicable to employees
4. Finding a suitable source of supply
5. Negotiating a loan with a bank
6. Determination of the most qualified applicant for a job.
13. 13. Goal setter. Goal setting is one of the activities necessary for successful
entrepreneurship. Before a goal is achieved, it must be set first. Goal setting
provides direction to the entrepreneur. One who is a goal setter provides a glimpse
of the orderliness of that person’s thinking process.
14. Accountable. Accountability refers to the responsibility for results. An
entrepreneur must be willing to take the blame or accept honor for whatever
happens to his venture. In this manner, he can expect compliance from his
subordinates.
15. Innovative. When competition becomes too tough, innovation will save the
entrepreneur. When the market becomes too sluggish, innovation will stir it up to
the benefit of the entrepreneur.
Being innovative may be the only way the entrepreneur can achieve the following:
1. Penetrate the target market
2. Reduce manufacturing cost
3. Increase productivity
4. Shorten delivery routes and
5. Synchronize production output with demand.
14. Henry Ford (1863-1947) of the United State is a fine example of an
entrepreneur with the innovative spirit. One of his innovations during his time
resulted in the lowering of the cost of card manufactured by his firm. He
achieved this by creating the assembly line method (unknown at that time) in
his factory effectively reducing the assembly time of a Ford car from 12.5
worker-hours to 1.5 worker-hours. The effect of Ford’s innovations were
higher profit and faster growth for his company.
15. Other Characteristics frequently exhibited by entrepreneurs include:
High degree of commitment. Entrepreneurship is hard work and launching a
company successfully requires total commitment from an entrepreneur. Business
founders often immerse themselves completely in their companies. Most
entrepreneurs have to overcome seemingly unsurmountable barriers to launch a
company and to keep it growing. That requires commitment.
Tolerance for ambiguity. Entrepreneurs tend to have a high tolerance for
ambiguous, ever-changing situations, the environment in which they most often
operate. This ability to handle uncertainty is critical because these business
builders constantly make decisions using new, sometimes conflict in gleaned from
a variety of unfamiliar resources.
16. Flexibility. One hallmark of true entrepreneurs is their ability to adapt to the
changing demands of their customers and their businesses. In this rapidly
changing global economy, rigidity often leads to a failure. As our society, its
people, and their tastes change, entrepreneurs also must be willing to adapt
their businesses to meet those changes. When their ideas fail to live up to their
expectations, successful entrepreneurs change them!
Tenacity. Obstacles, obstructions, and defeat typically do not dissuade
entrepreneurs from doggedly pursuing their visions. They simply keep trying.
Noting the obstacles that entrepreneurs must overcome.
