Entrepreneurship

ELBENSON P. RESCOBER, CHE

Learning Outcomes:
1. Understand the role and characteristics of an Entrepreneur

2. Explain how economies of scale and the control of natural

resources led to the necessary formation of legal monopolies

3. Analyze the importance of trademarks and patents in promoting

innovation
Status of Salaried Person
Disadvantages for some:

 Subordinated rights
 Limited Earnings
 Curbing (restrain) of initiatives
 Possibility of mismatched career
 Does not enjoy any pleasure of doing anything unique
 Can not easily provide jobs at their choice for some one they require
to do.
Advantages of Becoming Entrepreneur
1. Self-expression
2. Growth
3. Community Service
4. Self-employment
5. Social Relations
6. Advancement
7. Security [none can fire him]
8. Legacy – heirs can inherit wealth
9. Independence
10. Proving capability better than others
11. Enjoy greater prestige and status in the society
12. Desire to occupy time when financially independent, regards of age.
13. Desire to supplement income after retirement
14. Efficient & creative
 Definition of Entrepreneurship
Entrepreneurship is considered as the act of assuming the risk and the tasks of an
entrepreneur.
1. Kuratko D F and Hodgetts RM – “ The process of organising,
managing and assuming the risks of a business.”
2. Koontz & Fulmer – “The ability of a person to see business
opportunity, to get together the capital needed to take advantage of
the opportunity, and to start a business, taking the risk of failure in
the hope of reaping the rewards of success.”
3. Nathaniel H Leff – “Entrepreneurship is the capacity for
innovation, investment, and expansion in new markets, products
and techniques.”
4. An expert ‘ “The act of starting a business
Definition of Entrepreneur
Entrepreneur
Takes the key role in controlling and administering the firm in all its
aspects and functions. He is the one who takes most of the risks (as
when he loses his shirt and faces scorn) and receives most of the
rewards (as when he gets rich and reaps recognition. (DTI – YOUR GUIDE
TO STARTING A SMALL ENTERPRISE)

Ang entrepreneur ay ang individual na may maliit o malaki na

negosyong ipupundar o naipundar na. Basta't nakapagsimula na ng
isang kalakalan, ang isang individual ay matatawag ng entrepreneur o
negosyante. (TESDA)
 Role of Entrepreneur
1. The entrepreneur plans, organizes, and puts together all the resources
required to start a new enterprise and to run and operate it on a sustained
basis
2. The entrepreneur takes risks
3. The entrepreneur innovates
4. In the process of starting, running and growing their business, small
entrepreneurs help build the nation.
 Bring about employment
 Improve the quality of life
 Contribute to a wider distribution of income
 Utilize resources for national productivity
 Generate social benefits through government
Personal Characteristics of Entrepreneur
 Opportunity Seekers
 Persistent
 Committed to work
 Risk-takers
 Demanding in terms of quality and efficiency
 Goal Setters
 Information seekers
 Good in planning and monitoring
 Persuasive and good in networking
 Confident
 Creative
Barriers to Entry
Barriers to entry are the legal, technological, or
market forces that discourage or prevent potential
competitors from entering a market.

The existence of barriers to entry make the market less

contestable and less competitive. The greater the
barriers to entry which exist, the less competitive the
market will be. Barriers to entry are an essential aspect
of monopoly markets.
 Natural Monopoly
1. Control of Physical Resources. Economies of scale occur when increased output leads to lower average
costs. Therefore new firms, with relatively low output, will find it difficult to compete because theirs average
costs will be higher than the incumbent firms benefiting from economies of scale. The prospect of higher
average costs may deter entry.

2. Natural / Geographical Barriers : Another type of natural

monopoly occurs when a company has control of a scarce physical
resource.
Legal Monopoly
legal prohibitions against competition, such as regulated monopolies and intellectual property protection

 Patent, trademark, and copyright

A patent gives the inventor the exclusive legal right to make, use, or sell the invention for a 
limited time;

A trademark is an identifying symbol or name for a particular good

A copyright, according to the IPO, “is a form of protection provided by the laws of the United 
States for ‘original works of authorship’ including literary, dramatic, musical, architectural, 
cartographic, choreographic, pantomimic, pictorial, graphic, sculptural, and audiovisual 
creations.” 
How to create barriers to entry
In Summary ……
Barrier to Entry Example
Natural monopoly Water and electric companies
Control of a physical resource DeBeers for diamonds
Post office, past regulation of airlines and
Legal monopoly
trucking

Patent, trademark, and copyright New drugs or software

Intimidating potential competitors Predatory pricing; well-known brand names

Table 1. Barriers to Entry

Private Investors
A company or individual that takes their own money and uses
it to help another business or individual is known as a private
investor.

They invest in small or large start-up businesses, as well as

businesses that have been operating, but have run into hard
financial times.

Some private investors also help individuals who cannot

secure a mortgage or loan through a bank. The investor will
negotiate the terms of the investment.
Why businesses are looking for private investors
1. Securing business funds from large banks is usually
difficult.
2. Businesses make less revenue
Key Concepts and Summary:
Barriers to entry prevent or discourage competitors from entering the market. 

These  barriers  include:  economies of scale that  lead  to  natural  monopoly;  control of a
physical resource;  legal restrictions on competition;  patent,  trademark  and  copyright 
protection; and practices to intimidate the competition like predatory pricing. 
Intellectual  property  refers  to  legally  guaranteed  ownership  of  an  idea,  rather  than  a 
physical item. 

The  laws  that  protect  intellectual  property  include  patents,  copyrights,  trademarks,  and 
trade  secrets.  A  natural  monopoly  arises  when  economies  of  scale  persist  over  a  large 
enough range of output that if one firm supplies the entire market, no other firm can enter 
without facing a cost disadvantage.
References

Department of Trade and Industry. Bureau of Small and Medium Enterprises

Development. Your Guide to Starting a Small Enterprise. Makati City, 2006.