THE ORIGIN AND NATURE OF ENTREPRENEURSHIP

ENTREPRENEURSHIP CONTEMPORARY VIEWS

• Lloyd Shefsky
- Wrote a BOOK, “ENTREPRENEURS ARE MADE NOT BORN”
Disserted the word ENTREPRENEUR into 3 parts
- ENTRE – to enter
- PRE – before
- NEUR – nerve center
ENTREPRENEUR – someone who enters a business to make change to the nerve center
As an APPROACH – the entrepreneur considers the business opportunity as a chance to solve the problem
rather than solving the problem itself.
As a PROCESS – Entrepreneurship also is a dynamic process of innovation and new-venture creation through
5 MAJOR DIMENSIONS:
- INDIVIDUALS
- ORGANIZATIONS
- ENVIRONMENT
- PROCESS
- INSTITUTIONS

• Karl Vesper
- Pioneer in the field of Entrepreneurship research and education
ENTREPRENEURSHIP – the dynamic process of creating incremental wealth
As an APPROACH – those who practice idea-generation techniques can become more creative. The best
ideas sometimes come later in the idea-generation process – often in the days and weeks following the
application of the idea-generating processes
As a PROCESS –
- Trying different ways of looking at and thinking about venture opportunities.
- Trying to continually generate ideas about opportunities and how to exploit them
- Seeking clues from business and personal contacts, trade shows, technology licensing offices, and
other sources
- Not being discouraged by others’ negative views because many successful innovations were first
thought to be impossible to make
- Generating possible solutions to obstacles before stating negative views about them

• Robert Nelson
ENTREPRENEUR – a person who is able to look at the environment, identify opportunities to improve the
environment, and implement action to maximize those opportunities
As an APPROACH – able to look at environment, identify opportunities to improve the environment, marshal
resources and implement action to maximize those opportunities
As a PROCESS – instruction in entrepreneurship education through the formal educational system is one way
to impact youth at an early age. Entrepreneurship education should be considered as a required general
education course

• Joseph Schumpeter
- Wrote a BOOK, “CHANGE AND ENTREPRENEUR”
ENTREPRENEURSHIP – doing things that are not generally done in the ordinary course of business routine.
Finding and promoting new combinations of productive factors
As an APPROACH – entrepreneurs could earn economic profits by introducing successful innovations
As a PROCESS – innovation includes:
o Introduction of new goods
o Introduction of new methods of production
o Opening of a new market
o Discovering a new source of raw materials
 o Carrying out new source of an organization

• Jeffrey Timmons
- Wrote a BOOK, “NEW VENTURES CREATION”
ENTREPRENEURSHIP – the ability to create and build a vision from practically nothing
As an APPROACH – opportunities are more essential than the talent or competence of lead entrepreneur and
the team because a right opportunity identified ensures long-term success of the business
As a PROCESS – The TIMMONS MODEL OF ENTREPRENEURIAL PROCESS:
3 KEY ELEMENTS

o OPPORTUNITIES
o TEAMS
o RESOURCES
which must fit together and should be properly aligned in conjunction with each other in order to make the
business plan successful

• Albert Shapero
- Has opined in all of the definitions of entrepreneurship, THERE IS A KIND OF BEHAVIOR THAT
ENTREPRENEURS:

o INITIATIVE TAKING
o ORGANIZING AND RECOGNIZING SOCIAL/ECONOMIC MECHANISMS
o ACCEPTANCE OF RISK/FAILURE
As an APPROACH – the entrepreneurial process focuses on an individual as the central object of study
As a PROCESS – desirability, feasibility, and a propensity to act are the most crucial factors influencing an
individual’s intention to start a venture
DEFINITION OF ENTREPRENEUR AND ENTREPRENEURSHIP

SOURCE DEFINITION
Carrying out new combinations of firm
organization – new products, new services,
Schumpeter (1934) new sources of raw material, new methods of
production, new markets, new forms of
organization
Uncertainty bearing… coordination of
Hoselitz (1952) productive resources… introduction of
innovations and the provision of capital
The pursuit of opportunity without regard to
resources currently controlled, but constrained
Hart, Stevenson, & Dial (1995) by the founders’ previous choices and
industry-related experience
A dynamic process of vision, change and
Kuratko & Hodgets (2004)
creation…
Stevenson, Roberts, & Grousbeck (1989); The pursuit of opportunity without regard to
Barringer & Ireland (2006) resources currently controlled
A mindset or way of thinking that is opportunity
focused, innovative, and growth-oriented. Can
Allen (2006)
be found in large corporation and socially
responsible not-for-profits

COMMON ELEMENTS AND CHARACTERISTICS:

• Creativity and innovation

• Resource identification, acquisition, and marshalling
• Economic organization
• Opportunity for gain (or increase) under risk and uncertainty
ENTREPRENEURSHIP – the control and deployment of resources to create an innovative economic organization
(or network of organizations) for the purpose of gain or growth under conditions of risk and uncertainty.
DEFINITION OF ENTREPRENEUR
- Originates from a 13th century French verb, entreprendre, meaning “to do something” or “to undertake.”
By the 16th century, the noun form, entrepreneur, was being used to refer to someone who undertakes a
business venture.

- According to Schumpeter, the entrepreneur is the individual which innovates when he introduces
something new in the market, either a product, a service, or a method, although recognizing that a
substantial part of these innovations imply a (re)combination of existing elements.

- Today, an entrepreneur is defined as an individual who creates a new business, bearing most of the risks
and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new
ideas, goods, services, and business or procedures. Entrepreneurs play a key role in any economy, using
the skills and initiative necessary to anticipate needs and bring good new ideas to market.

ENTREPRENEURIAL SKILLS
SKILLS AND TRAITS THAT MAKE A SUCCESSFUL ENTREPRENEUR:
1. Problem Solving
- This trait is the MOST COMMON and often taken for granted. In fact, it’s so important to have the ability
to problem-solve and think critically about issues at hand no matter what comes up in your life.

2. Impeccable Communication
- As an entrepreneur, you can accomplish little to nothing if you lack communication skills.

3. Determination to Excel
- This trait is something that only those who know what it feels like to fail can genuinely appreciate
determination

4. Calculated Risk-taking
- If not used properly, this trait can be a weakness; however, taking risks and making calculated decisions
have helped many entrepreneurs succeed.

5. Learning Continuously
- There is always more you can learn and new tools that will help your business grow
6. Strong Leadership Skills
- While leadership attributes are essential for everyone, they become even more critical when running your
own business

7. Passion and Ambition

- Passion is the flicker of excitement in your eyes when you get asked about your business, or for some,
it’s practically their life

8. Open-Mindedness
- As an entrepreneur, creating and launching a product involves extensive research on what customers
want and need

9. Work-Life Balance
- There seems to be a never-ending debate about whether entrepreneurs need a work-life balance

10. Team Player

- Managing a business requires a wide variety of skills, and a good entrepreneur needs to navigate the
landscape full of the diverse people they will work with.
HOW ENTREPRENEURSHIP BENEFITS AN ECONOMY?
Economic development means a process of upward change whereby the real per capita income of a country
increases over some time. Economic growth has always been a serious issue and in the last 6 months, it has become
a worldwide problem. There is a sudden decline in the economic growth of every country due to this pandemic
ENTREPRENEURSHIP IS IMPORTANT TO THE ECONOMY:

• SPURS ECONOMIC GROWTH

 - When entrepreneurs build businesses, it affects every part of the economy. Unemployed people get jobs
through it directly or indirectly. New services and products developed by entrepreneurs increase the
exchange of money in the country and abroad as well which spurs economic growth

• ADDS NATIONAL INCOME

- As new businesses or enterprises boom, it creates opportunities for people. A large number of people get
employed through it. An increase in employment adds to national income in the form of tax revenue and
higher government spendings. This amount can be used by the government for the betterment of other
struggling sectors

• EMPLOYMENT OPPORTUNITIES
- Business enterprises are one of the biggest sources of jobs in a nation. Entrepreneurship firms not only
empower an individual but also creates opportunities for many people. A startup requires various people
with different skill sets to run smoothly creating job opportunities for several people in various fields.

• INNOVATION
- Entrepreneurship is like an incubator of innovation. In this competitive world innovation is one thing that
will separate you from the rest. To create an outstanding product, build a stronger network, and reach out
to consumers quickly, you need to innovate. To fulfill the demands of the people and to cope with the
market competition, entrepreneurs come up with creative ideas and services. And this brainstorming to fill
the consumer need makes them innovative thinkers

• IMPACT ON COMMUNITY LIFE

- The establishment of an enterprise helps promote numerous retail facilities, a higher level of
homeownership, fewer slums, better sanitation standards, and higher expenditure on education,
recreation, and religious activities. They invest in community projects and provide financial support to local
charities. This enables further development beyond their ventures. Thus, entrepreneurship leads to more
stability and a higher quality of community life.
ATTRIBUTES OF AN ENTREPRENEUR

ATTRIBUTES OF AN ENTREPRENEUR

You have to be able to differentiate yourself

somehow from all of the others on the market if you
want to be a successful entrepreneur. You can do
They’re innovative this in many different ways. You can offer a new
product or a new variation on an existing product.
You can build up an iconic brand or offer a unique
customer service experience.

Starting a business is a risky endeavor since there

is always a chance that your business will fail. Not
only that, but you may have to take many risks over
the course of growing your business, expanding
They aren’t afraid to take a chance into new markets, investing capital, and hiring new
employees. If you hesitate or if you are afraid to
jump in with both feet, you will never be able to
grow your business or make your business a
success.

An entrepreneur can have the best idea in the

world, but he will not be successful in business
unless he knows how to make that idea profitable
They know how to manage money and people
and how to actually run a business. This means
that it is important to know the practicalities of
managing a business.

Some entrepreneurs’ businesses start as a hobby that becomes lucrative enough for the entrepreneur to
give up their job to work on their new enterprise. Some entrepreneurs start their business to expand on their
expertise – an accountant might start a business advisory firm, or a scientist might start a biotech
manufacturing business
QUALITIES AND CHARACTERISTICS OF AN ENTREPRENEUR

• IMAGINATIVE, BEING CREATIVE AND FLEXIBLE

Above all else, an entrepreneur is an inventor, pushing back borders and seeing no limits. Not only do they
bring their initial idea to life, but their creative minds enable them to adjust and enhance it along the way

• HAVING A VISION, A GOAL

A good entrepreneur is always setting goals. More importantly, a good entrepreneur asks key questions: What
vision do I have for my business? Why do I want to become an entrepreneur? If you’ve managed to shape a
vision, you’ll know how to keep your eye on the target throughout your venture to entrepreneurship

• HAVING A HUNGER FOR LEARNING AND BEING CURIOUS

Entrepreneurs have a visceral and insatiable need to always dig farther (for themselves and their employees).
They are naturally very curious and on the lookout.
IMPORTANT GUIDELINES IN ENTREPRENEURSHIP
APPRAISING YOURSELF FOR AN ENTREPRENEURIAL CAREER
A. BE CREATIVE
- Juggling ideas, exploring them, and being able to come up with new and better ideas

B. ACTIVELY SEEKING OPPORTUNITIES

- It is about thinking of ways to transform ideas and concepts into opportunities

C. TAKE MODERATE RISKS

- Being able to recognize, assess, and minimize risks

D. PRACTICE PERSISTENCE
- The idea of trying and trying until one succeeds

E. BE COMMITTED TO WHAT YOU SET OUT TO DO

- The idea of keeping promises and commitments

F. SET HIGH STANDARDS OF QUALITY AND EFFICIENCY

- Demanding quality and efficiency from workers, suppliers, and entrepreneurs themselves

G. SEEK INFORMATION
- The value of information in determining the fate of business ideas and concepts

H. BELIEVE IN YOURSELF
- Having faith in yourself
ASSESSING YOUR PERSONAL ENTREPRENEURIAL COMPETENCIES
1. Competencies are essential skills needed by employees to be able to do their jobs properly. In our present
time, there are a lot of competencies that need to be acquired by employees, one of it being the
entrepreneurial competency

2. ENTREPRENEURIAL COMPETENCY is a set of skills and behavior needed to create, develop, manage, and
grow a business venture. It also includes the ability to handle the risks that come with running a business

3. It is important to know your entrepreneurial competencies. An honest assessment of these can help a person
identify the strengths and areas that need improvement to be able to have successful entrepreneurship
4. According to a survey conducted by Forbes, entrepreneurs are considered as some of the most engaged and
healthiest individuals in the world. This is because they are passionate in their craft and they are always open
to explore new opportunities
 Employees with entrepreneurial Employees without entrepreneurial
competencies competencies
The ultimate need is freedom and creativity; The ultimate need becomes job security; hence
hence, these employees TAKE MORE RISKS these employees TAKE VERY FEW RISKS
Time-based compensation is taken seriously and
Don’t worry about time-based compensation and
employees work only for what they feel their salary
are very invested in their jobs
is worth
Self-motivated and driven and don’t require a lot Employees function better when they are told what
of monitoring to do and are monitored
End up owning decisions and responsibilities. Like handling over responsibilities to others, doing
They enjoy accountability only what is asked of them
Consider the organization as just a workplace to
Have a sense of ownership to the organization
become financially stable

5. As shown in this table, here are the basic differences between any ordinary employee and one with
entrepreneurial competencies:

6. How important is the act of assessing personal entrepreneurial competencies? It helps entrepreneurs move
from individual roles to management roles and it allows them to flourish even more and take giant strides
ahead

7. Possible ways to encourage entrepreneurial competencies in individuals:

a. Allow knowledge sharing

b. Initiate programs that can help promote creativity and new ideas
c. Create an environment of protection and security

8. Entrepreneurship can be very complex because of today’s fast technological advancements. In line with this,
entrepreneurs are expected to acquire entrepreneurial competencies to interact with environmental forces
that he or she is bound to encounter
PECS SELF-RATING QUESTIONNAIRE
Personal Entrepreneurial Competencies, sometimes referred as PECS, are the essential qualities that a successful
entrepreneur has to possess. These are any competences that can be tested against industry-accepted standards,
may be developed through group of connected knowledge, qualities, attitudes, and abilities that have a significant
impact on a person’s employment
PECS QUESTIONNAIRE – a self-assessment tool for evaluating how each respondent compares to the common
capabilities outlined. Finding and analyzing an individual strong and weak spots will be greatly aided by an awareness
of your PECs. Thus, it is said that these behavioral characteristics are helpful in boosting entrepreneurial potential
SOME EXAMPLES ARE:

• Opportunity seeking • Goal setting

• Persistence • Information seeking
• Commitment to work • Systematic planning and monitoring
• Demand for quality and efficiency • Persuasion and networking
• Risk-taking • Self-confidence
PECS PROFILE – fluid, whatever difficulties you may be facing might potentially be expanded upon. Once these
difficulties are overcome with conviction and in accordance with your corporate strategy, your PECs account will be
technically advanced. In a broader sense, having a captivating personality is seen to be a major determinant of your
suitability to launch or run a business
DEVELOPING YOURSELF FOR ENTREPRENEURSHIP
DEVELOPING YOURSELF TIMELINE:
1. READ MORE BOOKS
- Reading exercises your brain. It improves your concentration and focus, expands your vocabulary, and
helps you build better communication skills

2. TAKE A COURSE
- Being an entrepreneur means constantly learning new skills relevant to your industry

3. WORK ON TIME MANAGEMENT

 - Most entrepreneurs would agree they’re busy. But being “busy” with the right things is a difficult skill worth
learning. There are always going to be things that need to be done in your business, but focusing on the
right ones is where you can work on improving

4. IMPROVE YOUR PEOPLE SKILLS

- Whether you’re managing a team of people or working directly with clients in your solo business,
communicating with people is an inevitable part of your job. Working on your people skills will help reduce
stress for you and the people you’re working with

5. WORK ON YOUR SALES SKILLS

- Every entrepreneur is in the business of selling whether you’re selling a product or service

6. FIND YOUR ZEN

- Remember to make time for you. You need quiet time to relax and recharge. Figure out what helps you
destress and make time for that

7. FOCUS ON YOUR HEALTH

ENTREPRENEURIAL ACTIVITIES IN SEARCH OF BUSINESS OPPORTUNITIES
SEARCH FOR BUSINESS OPPORTUNITY, IDEATION, INNOVATION, AND CREATIVITY
OPPORTUNITY – the gap in a market where the potential exists to do something better and create value
OPPORTUNITY RECOGNITION - corresponds to the principal activities that take place before a business is formed
or structured
5 MAIN STEPS IN THE OPPORTUNITY IDENTIFICATION AND EVALUATION STAGE:
1. SCANNING THE ENVIRONMENT/GETTING THE IDEA
- may provide you with idea and business opportunities
According to Peter Drucker, these gaps provide opportunity conducive to innovation. Some of these gaps are
in the form of:
o Unexpected Success and Failures
o Deviation from Conventional Wisdom
o The Need for a Process Creation of Process Revisionism
o Change in Society Structure and Perceptions
o Location
o New Concepts

2. OPPORTUNITY IDENTIFICATION
- The ability to see, discover and exploit opportunities that others miss

3. OPPORTUNITY DEVELOPMENT
- The process of combining resources to pursue a market opportunity identified

4. OPPORTUNITY EVALUATION
- Allows the entrepreneur to assess whether the specific product or service has the returns needed for the
resources required

5. ASSESSMENT OF THE ENTREPRENEURIAL TEAM

- It will not make a successful business unless it is developed by a team with strong skills
EXPLORING IDEAS AND OPPORTUNITIES
Entrepreneurs are attuned to opportunities and always on the lookout for them. This process of opportunity-seeking
is the one that makes innovation possible
OPPORTUNITIES OFFER THE POSSIBILITY OF CREATING NEW VALUE
They can be recognized in the form of:

• A new product • New distribution route

• A new service • Improved service
• A new means of production • New networks and relationships
3 SOURCES OF OPPORTUNITY:
 1. COMPETITION
- Benchmarking provides necessary insights to help you understand how your organization compares with
similar organizations, even if they are in a different business or have a different group of customers
WHY DO WE BENCHMARK?
o Best Practices
o Competitive Advantages
- Finding Advantages through:
a. Company Product Features
b. Competitor Product Features
c. Reason to Believe

2. CHANGE
• Adapt to change
• Anticipate change (Fads and Trends)
• Create change (Start a trend)

3. PROBLEM
- Wei-Chi “Crisis”
(Danger + Crucial Point; When something changes)
1. Choose customer SEGMENT
2. Identify customer JOBS
3. Identify customer PAINS
4. Identify customer GAINS
5. PRIORITIZE JOBS, PAINS, AND GAINS
HOW CAN WE SAY THAT THE OPPORTUNITY IS RIGHT FOR YOU?
3 LEVELS OF ASSESSMENT:
1. Is it saleable?
2. Is it doable?
3. Is it sustainable?

Analyzing & Selecting the Launching & Developing the

Identifying Opportunities
Opportunity Enterprise

OPPORTUNITY
DISCOVERY EVALUATION IMPLEMENTATION
5. Forming the enterprise
1. Discovering your
3. Evaluating the idea as a to create value
entrepreneurial
business opportunity
potential
6. Implementing the
4. Investigating & entrepreneurial strategy
2. Identifying a problem
gathering the resources
and potential solution
7. Planning the future

BUSINESS IDEA DEVELOPMENT/IDEATION

BUSINESS IDEA – a short and precise description of the basic operation of an intended business
3 TYPES OF BUSINESS IDEAS

• OLD IDEA
- here an individual copies an existing business idea from someone

• OLD IDEA WITH MODIFICATION

- The person accepts an old idea from someone and then modifies it in some way to fit a potential
customer’s demand

• NEW IDEA
- Involves the invention of something new for the first time
BUSINESS IDEA IDENTIFICATION
All business ideas are not of equal worth. Therefore, to identify promising business idea among others, it is important
to recognize the following:
1. The Need: Will your Business fulfill for the Customer’s Satisfaction?
2. Good or Service: Will your Business sell?
3. Identifies Potential Customer
4. Relation between Business and Environment
Every business idea should be based on knowledge of the market and its needs. The market differs from place to
place, depending on who lives in the area, or how they live and for what goods or services they spend their money
METHODS FOR GENERATING BUSINESS IDEAS
1. Learn from successful business owners 6. Structure brainstorming
2. Draw from experience 7. Problem inventory analysis
3. Survey your local business area 8. Free association
4. Scanning your environment 9. Forced relationships
5. Brainstorming 10. Attribute listing
DIFFERENCE OF BUSINESS OPPORTUNITIES FROM IDEAS
The difference between an idea and an opportunity is that an opportunity is the possibility of occupying the market
with a specific innovative product that will satisfy a real need and for which customers are willing to pay but the idea
is al about opinions about anything we can have
ENTREPRENEURIAL CREATIVITY – the ability to generate alternatives or to see things uniquely does not occur by
change; it is linked to other, more fundamental qualities of thinking, such as flexibility, tolerance of ambiguity or
unpredictability, and the enjoyment of things heretofore unknown.
CREATIVITY – the development of ideas about products, practices, services, or procedures that are novel and
potentially useful to the organization
STEPS IN THE CREATIVE PROCESS:
1. Opportunity or problem recognition
2. Immersion
3. Incubation
4. Insight
5. Verification and Application
BARRIERS TO CREATIVITY:
1. Searching for the one ‘right; answer 6. Becoming overly specialized
2. Focusing on being logical 7. Avoiding ambiguity
3. Blindly following the rules 8. Fearing looking foolish
4. Constantly being practical 9. Fearing mistakes and failure
5. Viewing play as frivolous 10. Believing that ‘I’m not creative’
ENVIRONMENTAL STIMULANTS FOR CREATIVITY:

• Freedom • Recognition
• Good Project Management • Sufficient Time
• Sufficient Resources • Challenge
• Encouragement • Pressure
• Various Organizational Characteristics

THE CONCEPT AND IMPACT OF INNOVATION

INNOVATION
- It is the implementation of new ideas at the individual, group, or organizational level
- Process of intentional change made to rate value by meeting opportunity and seeking advantage
4 DISTINCT TYPES OF INNOVATION

• INVENTION – the creation of a new product, service or process

• EXTENTION – the expansion of a product, service or process
• DUPLICATION – replication of an already existing product, service, or process
• SYNTHESIS – the combination of existing concepts and factors into a new formulation
STEPS OF INNOVATION PROCESS
1. IDEA GENERATION AND MOBILIZATION – new ideas are created during idea generation

2. ADVOCACY AND SCREENING – help to evaluate the feasibility of a business idea with its potential problems
and benefits

3. EXPERIMENTATION – tests the sustainability of ideas for an organization at a specific time

4. COMMERCIALIZATION – develops market value for an idea by focusing on its impact

5. DIFFUSION AND IMPLEMENTATION – the company-wide acceptance of an innovative idea, and

implementation sets up everything needed to develop the innovation
ENTREPRENEURSHIP = CREATIVITY + INNOVATION
Creativity and innovation in entrepreneurship link by which creativity is the intellectual activity to create new ideas
while innovation is the action taken to transform the new ideas into result

IMPACT OF INNOVATION IMPACT OF INNOVATION IN BUSINESS

1. Innovation helps organizations grow

1. Improves sales and customer
2. Innovation keeps organizations
relationship
relevant
2. Reduce your waste and costs
3. Innovation helps organizations
3. Boost your market position
differentiate themselves

MISCONCEPTIONS ABOUT INNOVATION

1. It requires us to be creative to succeed
2. Innovation is an end-goal where we produce a finished product or service
3. Innovation is all about coming up with new products and services that no one has ever thought of before
TRENDS AND ISSUES IN ENTREPRENEURSHIP – SUCCESSFUL ENTREPRENEURS
TRENDS AND ISSUES IN THE PHILIPPINE MARKET
1. THE PHILIPPINES BEFORE COLONIAL RULE
Historically, the Philippines has been at the center of trade and commerce
There are records of the existence of a state-like interconnected settlements/polities called Barangays, usually
situated around coastlines and riverbanks, using the bodies of water as an early highway system to facilitate trade
and travel.
PRESENCE OF EARLY INDUSTRIES/CRAFTS
o Cloth weaving
o Logging
o Mining
UNEARTHED METALLURGY MATERIALS
o Cooking utensils
o Jewelry
o Inscriptions
SOCIETAL STRUCTURE
o Semi-slavery and semi-communal (Most of the archipelago)

▪ RAJAS and DATUS (LANDOWNERS) – responsible for large tracts of lands

▪ MAJARLIKAS – supervised those tracts of lands

▪ TIMAWA (TENANT FARMERS) – pays rent to the landowners in order to utilize the land for
agriculture and livestock purposes
 ▪ ALIPINS (NAMAMAHAY – SERFS & SAGUIGUILID – SLAVES) – work the land as laborers but did
not have a definite share of the harvest

o Feudal (prevalent in the Mindanao Islands)

▪ Moro Sultanates in Mindanao and Sulu – predominantly bigger than the barangays
o Primitive communal (Communities of Aetas and various nomadic groups)
▪ No private ownership of lands
▪ Community members subsist by engaging in fishing, hunting, gathering, and to some extent, a form
of proto agriculture involving wild and domesticated plants/crops

THE ARCHIPELAGO EVEN BEFORE THE SPANISH COLONIZATION, WERE ALREADY ESTABLISHED IN
THE EAST ASIA/SOUTHEAST ASIA TRADE NETWORK

Artifacts of Chinese origins, including textile, potteries, ceramics, and iron/bronze weaponry have been found in
archaeological digs dating to the time period. From 1300 AD, the coastal communities have very strong trade,
Indians, Arabs, and other Southeast Asian neighbors were trading goods and culture with the inhabitant of the
Philippines.
Merchants, tradesmen, craftsmen, and artisans in the period are responsible for spreading material and
immaterial culture through ideas from other cultures into new goods and trades.

2. THE COLONIAL PERIOD (COLONIAL PERIOD)

The arrival of Spanish expeditions to the archipelago signaled radical changes in Philippine society at the time.
Ferdinand Magellan, in service of Charles I of Spain discovered the islands in 1521.
The emergence of mercantilism and manufacturing in Europe fueled the age of exploration, with European states
in search of territories rich in raw materials. During this period, the Philippines became an even more prominent
station for trade between Spain and China, and even up to Europe. Serving as a maritime alternative to the highly
popular Silk Road.
GALLEON TRADE – brought countless riches Spain, while little to no benefit were derived from it by the natives.
Religion was used to pacify the inhabitants of the colonies from harboring dissent
ENCOMIENDA SYSTEM – established in order for Spanish elites to amass large tracts of agricultural land,
condemning land workers/farmers into servitude in order to work the land
Nonetheless, the wave of industrialization in Europe and North America opened the Philippines even more to
world trade, as the demands for raw material skyrocketed. The trends in global trade forced the Spanish
authorities to allow local businesses and industries to trade openly with other nations other than Spain.
The subsequent decline of the Manila Galleon Trade shifted development into domestic economy. While the
system of exploitation by the Spanish still exists, for the first time in centuries, the Philippines is starting to amass
enough economic power in order to push back against the colonizers.
The economic shift and the rise of Europe-educated Filipinos gave rise to the Filipino nationalist movement and
eventually turned into the Philippine revolution, an armed struggle against Spain for emancipation.
The revolution eventually succeeded against the Spanish colonizers, but not before they ceded the Philippines to
another colonizer, the Americans, for a price of 20 million dollars in the Treaty of Paris.
AMERICAN PERIOD
The United States, following an economic boom during the industrial period, emerged as a major power during
the 1900s. The Americans instituted reforms and policies that secured their interest in the Philippines, long after
their ‘colonial’ presence is gone. The new capitalist system ensured that the economy of third-world nations is
tied to the economy and trade with first-world nations.
Market trends shifted towards favoring goods and businesses that follows the trend in the Western world. Western
goods dominated and pushed back local businesses into obscurity.
The AMERICANIZATION of Filipino culture brought about similar trends in the market and consumption. The
American period is also intersected by the brief but brutal Japanese occupation during World War II.
Local industries were unable to cope better with the devastation brought upon by the war, unlike their foreign
counterparts. Further cementing the ‘supremacy’ of foreign goods in the market.
3. PRE-COLONIAL PERIOD
THIRD PHILIPPINE REPUBLIC
 With the re-establishment of the Commonwealth in 1945, the Philippines suffered through food and financial crisis.
The following year, the Philippines got its independence from the Americans, creating the Third Philippine
Republic.
The Roxas Administration would amend the 1935 Constitution with the Bell Trade Act, that would give American
citizens, businesses, and industries the right to utilize the country’s natural resources and raw materials in return
for economic rehabilitation support from the United States. Local businesses and Filipino products and services
would be put on the spotlight and prioritize under President Carlos P. Garcia’s “Filipino First” policy.
The administration would push for the patronization of local goods, businesses, products, and services. Policy-
wide import and currency controls were implemented to favor local industries and ventures. President Diosdado
Macapagal would continue with reforms and policies aimed at self-sufficiency of the Philippine economy.
Under his administration, the National Cottage Industries Development Authority (NACIDA) was established to
organize, revive, support, and promote the establishment of local cottage industries and encourage Filipino
entrepreneurs to push forward their ideas and ventures
MARCOS ERA
The 21-year period of Marcos regime was characterized by dramatic rise and fall of the Philippine economy.
The 1969 Philippine balance of payment crisis resulting from heavy government spending resulted in the shifting
of economic policy to favor the preference of the International Monetary Fund and the World Bank.
Extensive lending from commercial banks, accounting for about 62% of external debt, allowed the country’s GDP
to rise during the Martial Law period, despite numerous economic crises.
Under this economic plan, poverty incidence rose from 41 percent in 1965 to up to 58.9 percent in 1985. Higher
labor force participation and higher incomes of the rich helped masked the effects of these problems to outside
observers.
The problems of the period, exacerbated by the rapid growing income inequality led to broad social unrest that
would eventually overthrow the Marcos from power.
PHILIPPINES ONWARDS
The subsequent economy would rely heavily on foreign investors and the labor potential of the population. With
the latter giving birth to the Filipino diaspora community, whose remittances would serve as an important spine in
the Philippine economy until now.
The Philippines is signatory to many treaties and trade organizations such as General Agreements on Tariffs and
Trade (GATT), Asia-Pacific Economic Cooperation (APEC), and Association of South East Asian Nation
(ASEAN). The Philippines present economic system, as it stands, remains under a Western-oriented Capitalism.
It is a free-market system characterized by a mixture of private enterprise and centralized economic planning and
government regulation.
The Philippines present economic system, as it stands, remains under a Western-oriented Capitalism. It is a free-
market system characterized by a mixture of private enterprise and centralized economic planning and
government regulation.
The overreliance of the Philippine economy on other economies and global trade is highlighted at the onset of
the Covid-19 global pandemic.
Foreign Direct Investments (FDI) declined sharply, resulting in massive job loss and unemployment. The recent
crises, mainly resulting from the pandemic offered numerous challenges to Filipino consumers, businessmen,
and entrepreneurs. Leading to new trends and adjustments in the market.
With digital platforms taking the limelight over traditional brick and mortar stores. Even labor shifted towards digital
platform as a response to the extended period of quarantine and lockdowns brought about by the pandemic. The
future holds an uncertain path for the Philippine economy.
SUCCESSFUL ENTREPRENEURS
HOW TO BE A SUCCESSFUL ENTREPRENEUR?

• Being an entrepreneur means you are your own manager, as well as manager of others. Your skills need
to be extensive in order to be successful.

• An entrepreneur should be able to effectively manage people, a budget, operations and in some instances,
investors.
 • A successful entrepreneur must be able to make wise decisions about how he uses his time, continually
evaluating and prioritizing tasks according to relevance and importance. This means including short and
long-range planning and the ability to participate in economic forecasting and market research.

• ·To be successful, an entrepreneur has to make difficult decisions and stand by them. As a leader, they're
responsible for guiding the trajectory of their business, including every aspect from funding and strategy
to resource allocation.

• Being a successful entrepreneur means more than starting new ventures every other day. It means the
right attitude towards a business and the determination and grit to achieve success.

• Accepting rejection or constructive criticism can go a long way in making an entrepreneur successful.
Criticism shows what he or she is not doing properly or where change is needed. However, it must be
remembered that accepting criticism is a very important way of getting success
SUCCESSFUL ENTREPRENEURS IN THE PHILIPPINES
HENRY SY (SM GROUP OF COMPANIES: ON PERSEVERANCE)
“There is no such thing as overnight success or easy money. If you fail, do not be discouraged; try again.”
- Was a Filipino businessman and investor.
- He was the Philippines' richest man, gaining $5 billion in 2010, amid the global financial crisis.
- Sy, who died in 2019 at the age of 94, was survived by his family. Sy’s legacy lives on today in his many
SM malls and other acquired businesses.
- SM Supermalls is one of Southeast Asia’s biggest developers and the operator of 79 malls in the
Philippines, and 8 malls in China. SM publicly-listed company and is one of the largest integrated property
developers in Southeast Asia
TONY TAN, JOLLIBEE: ON FOCUSING ON THE BUSINESS
“We also had a goal: to take care of our customers and employees and to enjoy what we’re doing. Once we did all
these things, the profits would come.”
- Is a Filipino billionaire businessman
- Founder and chairman of Jollibee Foods Corporation, and the co-chairman of DoubleDragon Properties
- He bought an ice cream shop in 1975, but owing to low sales, he decided to add other items such as fried
chicken, fries, and burgers
- The first ever Jollibee branch was in Cubao, Quezon City which opened in 1975 as a Magnolia Ice cream
parlor. When Jollibee was incorporated in 1978, there were 7 branches in Metro Manila. The first
franchised outlet of Jollibee opened in Santa Cruz, Manila in 1979.
- The first ever Jollibee branch was in Cubao, Quezon City which opened in 1975 as a Magnolia Ice cream
parlor. When Jollibee was incorporated in 1978, there were 7 branches in Metro Manila. The first
franchised outlet of Jollibee opened in Santa Cruz, Manila in 1979.
SOCCORRO RAMOS, NATIONAL BOOKSTORE: ON FLEXIBILITY
“You have to adjust to the flow of business. If you’re not open to change, your business can’t move on. ”
- She is the co-founder of National Book Store, the largest bookstore chain in the Philippines.
- She began her career in publishing and retail as a salesgirl in a bookshop.
- With a capital of PHP200, she and her husband launched National Book Store in Escolta at the age of 19,
selling books and school supplies to children.
- The National Book Store now has around 3,000 employees. At the age of 98, Socorro Ramos is worth an
estimated USD3.1 billion, making her one of the country’s richest people.
- First National Bookstore in 1942
- Today, National Book Store has branches in more than 50 SM malls nationwide, with many coming more
soon. A number of book signings with international best-selling authors have also taken place in SM malls,
as well as events for local and global brands; including the National Children’s Book Reading Day in
partnership with SM Cares.
GREATEST INTERNATIONAL ENTREPRENEURS
BILL GATES (MICROSOFT)
- Co-founder of one of the largest software companies in the world – Microsoft.
- One of the richest men in the world. He has been credited with making personal computing accessible to
the masses. He is also a major philanthropist, donating billions of dollars to charitable causes through the
Bill & Melinda Gates Foundation.
JEFF BEZOS (AMAZON)
- Founder and CEO of Amazon – world’s largest online retailer
- Under Bezos’ leadership, Amazon has become one of the most successful companies in the world. Itis
now worth over $600 billion and employs over 560,000 people.
MARK ZUCKERBERG (FACEBOOK)
- Co-founder and CEO of Facebook – world’s largest social networking site.
- One of the youngest billionaires in the world. Zuckerberg showed an early interest in computers and
programming.
- He attended Harvard University, where he studies computer science.
- He later dropped out of Harvard to focus on Facebook full-time.
- Under his leadership, Facebook has grown into a global phenomenon with over 2 billion
BUSINESS OWNERSHIP AND ORGANIZATION
BUSINESS ORGANIZATION
- Is one or more businesses controlled in common by a person or group of people.
- An organization may have one or more businesses. A business may not have more than one organization.
WHY BUSINESS ORGANIZATION EXISTS?
1. Discovering what relevant prices are, and
2. The cost of negotiating and concluding a separate contract for each exchange transaction
TYPES OF BUSINESS ORGANIZATION

• SOLE PROPRIETORSHIP – form of business organization initiated, organized, owned or capitalized and
managed by a single person

• PARTNERSHIP – is an association of two or more business partners who co-own a business for the
purpose of making profits of the business according to the terms of the partnership agreement

1. GENERAL - business partners share unlimited liability for the debts and obligation of the company

2. LIMITED – partners will have unlimited liability, while others will have liability equal only to the
amount of their capital contribution

• CORPORATION – is an artificial being, invisible, intangible, and existing only in contemplation of law

1. Stock Corporation

2. Non-stock Corporation
ADVANTAGE AND DISADVANTAGE OF BUSINESS ORGANIZATIONS
SOLE PROPRIETORSHIP
ADVANTAGE DISADVANTAGE

• Simple to organize
• Unlimited personal liability
• Low start up capital
• Limited skills and capabilities of the sole
• Owner owns all profit
owner
• Total decision making
• Limited access to capital
• Easy to discontinue
• Lack of continuity for the business
• Good tax privileged

PARTNERSHIP
ADVANTAGE DISADVANTAGE

• Easy to establish
• Unlimited liability of at least one partner
• Complementary skills of partners
• Difficulty in disposing of partnership interest
• Division of profits
without dissolving the partnership
• Large pool of capital
• Lack of continuity
• Ability to attract limited partners
• Potential for personality and authority
• Little government regulation
conflict
• Flexibility

CORPORATION
ADVANTAGE DISADVANTAGE
• Cost and time involved the incorporation
• Limited liability of the stockholders
process
• Ability to attract capital
• Taxation
• Transferable ownership
• Legal restriction and regulatory red tape
• Larger pool of skills, expertise, and
• Potential loss of control by founders of the
knowledge
corporation
GENERAL REQUIREMENTS AND PROCEDURES FOR BUSINESS REGISTRATION
Whether you’ve chosen a sole proprietorship, partnership or corporation, you will need to sign your business up at
many government agencies.
All businesses are required to register their business with the City Government or the Municipal Government
A. LOCAL GOVERNMENT UNITS
• Barangay – A barangay clearance is a pre-requisite for the issuance of the local government business
permit
• City Government or Municipal Government (Mayor’s Permit)
BUSINESS PERMIT – a legal document that offers proof of compliance with certain city or state laws
regulating structural appearances and safety as well as the sale of products.
(EACH MUNICIPALITY HAS ITS OWN SET OF ORDINANCES)
B. OTHER PRIVATE GOVERNMENT AGENCIES
1. Secure Business Name with the SECURITIES AND EXCHANGE COMMISSION (SEC)
2. Open Corporate Bank Account
3. Register with the Securities and Exchange Commission (SEC)
SEC REQUIREMENTS
o Name reservation and payment form
o Notarized articles of Incorporation and By-laws
o Treasurer’s Affidavit
o Bank certificate of deposit or proof of Inward Remittance
o Duly accomplished SEC Form F-100 (for corporations with more than 40% foreign equity)

4. Register with the Bureau of Internal Revenue (BIR)

- After SEC registration, a company must obtain a taxpayer identification number (TIN), register its
books of accounts, and apply for authority to print official receipts from the Bureau of Internal
Revenue (BIR), the national taxing authority in the Philippines

5. Register with the Social Security System (SSS)

- Administers social security protection to workers in the private sector. Social security provides
replacement income for workers in times of death, disability, sickness, maternity and old age
REQUIREMENTS

a. Employer registration form (R-1)

b. Employment report form (R-1A)
c. SEC registration, Articles of Incorporation, and By-laws

6. Register with PhilHealth

- All employers are required to register their employees with this agency as stated in the New National
Health Insurance Act (RA 7875 / RA 9241).
REQUIRMENTS
a. Employer data record (ER1)
b. Report of Employee-Members (ER2)
c. SEC Registration, Articles of Incorporation, and By-laws

7. Register with PAG-IBIG

- Pagtutulungan sa kinabukasan: Ikaw, Bangko, Industriya at Gobyerno
PAG-IBIG PURPOSE – provide employees with housing, multi-purpose, and calamity loans
FINANCING THE VENTURE
FINANCING – process of funding business activities, making purchases, or investments.
It is a way to leverage the time value of money (TVM) to put future expected money flows to use for projects started
today.
CAPITAL – necessary fund that is used to operate a business in its day-to-day operations
CAPITAL REQUIREMENTS
CAPITAL is the sum of funds that your company needs to achieve its goals
DIFFERENT TYPES OF CAPITAL
1. WORKING CAPITAL – use this capital to pay for day-to-day business operations
2. DEBT CAPITAL – a business capital earns from taking out loans and debt
3. EQUITY CAPITAL – comes in several forms, including public equity and private equity
4. PUBLIC EQUITY – public companies have to follow a strict set of rules, which involve disclosing business
activity and financials to the public, since they have a vested interest in the company or may in the future
PUBLIC EQUITY INVESTING IS ATTRACTIVE BECAUSE…
1. LIQUIDITY
- Public shares of a company can easily be bought or sold on a public exchange within minutes or even
seconds. There’s little to no secondary market for private equity

2. TRANSPARENCY
- Public equity markets are heavily regulated, protecting investors against unforeseen risks

3. GROWTH
- Not all companies listed on public stock exchanges are successful, but they have to reach a certain level
of growth to go public. Over time and taken as a whole, the stock market tends to rise in value over time
PRIVATE EQUITY – a private equity fund pools capital from multiple investors to invest in a private company with
the goal of adding value. These funds are typically structured as limited partnerships, which means investors are
only liable for the amount they invest in the fund
TRADING CAPITAL – amount of money available to a company for purchasing and selling assets

CAPITAL GAIN CAPITAL LOSSES

- When your capital’s worth increases, you - Not every investment is going to be worth it
see a capital gain. in the end

- A capital gain occurs when your investment - With a capital loss, your investment is worth
is worth more than its purchase price less than its initial purchase price

SOURCE OF CAPITAL
Companies always seek sources of funding to grow their business. Funding, also called financing, represents an
act of contributing resources to finance a program, project, or need
SOURCES OF CAPITAL

• EARNED INCOME
- earned income includes all the taxable income and wages from working either as an employee or
from running or owning a business
• DIVIDEND INCOME
- Payments by a company to you as a reward for owning a share in the company
- Dividend payments are taxable and you must declare this income to Revenue
• INTEREST INCOME
- is the amount paid to an entity for lending its money or letting another entity use its funds
• BUSINESS INCOME
- May include income received from the sale of products or services
UNDERSTANDING IPO AND PROCESS OF IPO
An initial public offering (IPO) refers to the first time a company sells shares publicly. It is a form of equity financing.
While IPO process is when a private company first sells shares of stock to the public, this process is known as an
initial public offering (IPO).
IPO PROCESS STEPS:
STEP 1 – Hiring of an underwriter or investment bank STEP 5 – Creating a buzz by Roadshows
STEP 2 – Registration for IPO STEP 6 – Pricing of IPO
STEP 3 – Verification by SEBI STEP 7 – Allotment of Shares
STEP 4 – Making an application to the Stock Exchange
HOW DOES AN INITIAL PUBLIC OFFERING WORK?
Before an IPO, a company is considered private. As a pre-IPO private company, the business has grown with a
relatively small number of shareholders including early investors like the founders, family, and friends along with
professional investors such as venture capitalists or angel investors.

ADVANTAGE DISADVANTAGE

The company gets access to investment from the One disadvantage of going public is that IPOs are
entire investing public to raise capital. This facilitates expensive and the costs of maintaining a public
easier acquisition deals (share conversions) and company are ongoing and usually unrelated to the
increases the company’s exposure, prestige, and other costs of doing business.
public image which can help the company’s sales and
profits

DEALING WITH INVESTMENT BANKERS, RISKS OF GOING PUBLIC AND BORROWING FROM THE BANKS
Investment bankers help companies and other entities raise money for expansion and improvement.
Investment banking has a reputation for being a highly paid but also highly-stressful profession.
A COMPANY TAKING THE IPO ROUTE IS MOST LIKELY TO BE EXPOSED TO RISKS SUCH AS:
a. Dissatisfied shareholders
b. Confidentiality and trade secret concerns
c. Insider trading by the directors
d. New stakeholders constantly judging the company’s performance
THE C’S OF CREDITS AND BORROWING SOMEONE ELSE’S MONEY
1. CHARACTER
- Character, more specifically refers to credit history, which is a borrower’s reputation or track record
for repaying debts.
- Improving your 5 C’s Character Prospective borrowers should ensure that credit history is correct
and accurate on their credit report. Adverse, incorrect discrepancies can be detrimental to your credit
history and credit score. Consider implementing automatic payments on recurring billings to ensure
future obligations are paid on time.

2. CAPACITY
- Capacity measures the borrower’s ability to repay a loan by comparing income against recurring
debts and assessing the borrower’s debt-to-income (DTI) ratio.
- Improving your 5 C’s: Capacity you can improve your capacity by increasing your salary or wages or
decreasing debt. A lender will likely want to see a history of stable income

3. CAPITAL
- Leaders also consider any capital that the borrower puts toward a potential investment. A large
capital contribution by the borrower decreased the chance of default.
- Improving you 5 C’s: Capital is often obtained over time and it might take a bit more patience to build
up a larger down payment on more purchases

4. COLLATERAL
- It can help a borrower secure loan. It gives the lender the assurance that if the borrower defaults on
the load, the lender can get something back by repossessing the collateral

5. CONDITIONS
- In addition to examining income, lenders look at the general conditions relating to the loan. This may
include the length of time that an applicant has been employed at their current job, how their industry
is performing, and future job stability
- Improving your 5 C’s: Many conditions such as macroeconomic, global, political, or broad financial
circumstances may not pertain specifically to a borrower. Instead, they may be conditions that all
borrowers may face
PRODUCTION OF GOODS AND SERVICES
THE CONCEPT AND FACTORS OF PRODUCTION
PRODUCTION – the step-by-step conversion of one form of material into another form through a chemical or
mechanical process to create or enhance the utility of the product to user

INPUT:
TRANSFORMATION PROCESS:
• Men
• Product design OUTPUT:
• Materials
• Product planning • Products
• Machines
• Production control • Services
• Information
• Maintenance
• Capital

CONTINUOUS:
• Inventory
• Quality
• Cost

TYPES OF PRODUCTION PROCESS

• JOB SHOP PRODUCTION

- Characterized by manufacturing of one or few quantity of products designed and produced as per
the specification of customers within prefixed time and cost

• BATCH PRODUCTION
- Defined by American production and inventory control (APICS), “as formed of manufacturing in
which the job passes through the functional departments in lots or batches and each lot may have a
different routing

• MASS PRODUCTION
- Manufacturing of large quantities of standardized products, often using assembly lines or automated
technology

• CONTINUOUS PRODUCTION
- Is a flow production method used to manufacture without interruption.
- Continuous process or a continuous flow process because the materials, either dry bulk or fluids that
are being processed are continuously in motion
FACTORS OF PRODUCTION

• LAND is a broad term that includes all the natural resources that can be found on land, such as oil, gold
wood, water, and vegetation. Natural resources can be divided into renewable and non-renewable
resources

• LABOR refers to the effort that individuals exert when they produce a good or service. For example, an
artist producing a painting or an author writing a book. Labor itself includes all types of labor performed
for an economic reward, such as mental and physical exertion. The value of labor also depends on
human capital, which is determined by the individual’s skills, training, education and productivity

• CAPITAL refers to the money that is used to purchase items that are used to produce goods and
services. For example, a company that purchases a factory to produce or a truck that is purchased to do
construction are considered to be capital goods

• ENTREPRENEURSHIP a combination of the other three factors. Entrepreneurs use land, labor, and
capital in order to produce a good or service for consumers
COST OF PRODUCTION
- refers to the total cost incurred by a business to produce a specific quantity of a product or offer a
service. Production costs may include things such as labor, raw materials, or consumable supplies. In
economics, the cost of production is defined as the expenditures incurred to obtain the factors of
production such as labor, land, and capital, that are needed in the production process of a product
TYPES OF COSTS OF PRODUCTION
1. FIXED COSTS – expenses that do not change with the amount of output produced. This means that the
costs remain unchanged even when there is zero production or when the business has reached its
maximum production capacity

2. VARIABLE COSTS - costs that change with the changes in the level of production. That is, they rise as
the production volume increases and decrease as the production volume decreases. If the production
volume is zero, then no variable costs are incurred. Examples of variable costs include sales
commissions, utility costs, raw materials, and direct labor costs.

3. TOTAL COST – encompasses both variable and fixed costs. It takes into account all the costs incurred in
the production process or when offering a service

4. AVERAGE COST – refers to the total cost of production divided by the number of units produced. It can
also be obtained by summing the average variable costs and the average fixed costs. Management uses
average costs to make decisions about pricing its products for maximum revenue or profit.

5. MARGINAL COST - is the cost of producing one additional unit of output. It shows the increase in total
cost coming from the production of one more product unit. Since fixed costs remain constant regardless of
any increase in output, marginal cost is mainly affected by changes in variable costs. The management of
a company relies on marginal costing to make decisions on resource allocation, looking to allocate
production resources in a way that is optimally profitable.
HOW TO CALCULTAE THE COST?
The first step when calculating the cost involved in making a product is to determine the fixed costs. The next step
is to determine the variable costs incurred in the production process. Then, add the fixed costs and variable costs,
and divide the total cost by the number of items produced to get the average cost per unit.

PRODUCTION OF GOODS & SERVICES

MAKING PRODUCTION EFFICCIENCY YOUR GOAL
WHAT IS PRODUCTION EFFICIENCY?
- A measure that describes the conditions to produce goods at the lowest possible cost

- As a production manager, you should think about how to use inputs in the most cost-effective and
efficient way. You should always try improve productivity, which is simply the arithmetic ratio between
how much is made and how much of everything is used to make it
PLAN YOUR WORK
- If you do not plan and schedule your production properly, you will waste a lot of expensive production
time.
POTENTIAL PROBLEMS THAT MAY ARISE FROM LACK OF ADEQUATE PLAN:
1. Running out of raw material stocks just when you need them during production
2. Interruption of operation because the next machine or worker does not have a continuous supply
of in-process material from the preceding one
3. Work delay due to machine breakdown; and failure to deliver contracted products or services to
customers as scheduled
VITAL POINTS TO CUTDOWN ON WASTED TIME
1. Plan the delivery and supply level of materials and purchased parts so that you never run out of
stock
2. Plan the jobs to be done so that as soon as a worker has finished one job, there is another ready
for him
3. Plan your machine maintenance so that machines stop only when you want and do not break
down during production
PRODUCE QUALITY PRODUCT

• As a good businessman, you have the moral obligation to manufacture the product according to the
customer’s specifications or expectations at the price he can afford and at the time he needs it

• You should bear in mind that if the buyer is satisfied with the quality of your product, you can expect repeat
orders or continuous patronage from him. However, once your product is found to be defective or unable to
meet the customer’s specifications or requirements, then, that is the end of your supplier-buyer relationship

• Aside from keeping satisfied customers, maintaining product quality goes a long way in reducing the cost of
production and improving productivity

• By producing quality products, you will avoid incurring additional costs, reworks, or repairs. At the same
time, you will increase your productivity

• Quality is an essential part of the productivity formula

HOW TO DEVELOP AND IMPROVE PRODUCT QUALITY

1. Control manufacturing information
2. Control purchases and storage of raw materials
3. Control manufacturing process
4. Control finished products
5. Control measuring instruments and test equipment
6. Control corrective action
HOW TO CONTROL THE INVENTORY
The basic idea behind inventory control is to operate your business effectively with the least amount of stock. To be
able to do this, you should know:

• When to order
• How often to order
• How much to order
To be able to answer the above questions, you should know how to distinguish between basic stock goods and
seasonal goods because each kind is controlled in a different way

BASIC STOCK GOODS SEASONAL GOODS

These are goods that are either sold at as much as the These are goods that move quickly at some time and
same rate at all times or regularly used in production. slowly than the others.

e.g.: e.g.:
Food store: rice, flour, cooking oil Bookstore: notebooks (opening of classes)
Garments store: t-shirt, socks Garments store: umbrellas, raincoats (rainy season)
Furniture factory: plywood sheets, nails, screws

MARKETING CONCEPT & PHILOSOPHIES

A marketing idea that considers production, sales and customer satisfaction. The marketing philosophy is regarded
as very simple yet of utmost importance. At its very core is the concept of striving to satisfy the customer's needs
and wants, while at the same time achieving the organization's goals.
FIVE CONCEPTS OF MARKETING PHILOSOPHY:
1. PRODUCTION CONCEPT
- The consumers will favor products that are available and highly affordable. Meanwhile, the
management should therefore focus on improving production and distribution efficiency

2. PRODUCT CONCEPT
- The consumers will favor products that offer the most quality, performance, and innovative features
 3. SELLING CONCEPT
- The consumers will not buy enough of the organization’s products unless the organization
undertakes a large – scale selling and promotion effort

4. MARKETING CONCEPT
- Marketing philosophy that holds that achieving organizational goals depends on determining the
needs and wants of target markets and delivering the desired satisfactions more effectively and
efficiently than competitors do.

5. SOCIETAL MARKETING CONCEPT

- The organization should determine the needs, wants, and interests of target markets and deliver the
desired satisfactions more effectively and efficiently than competitors in a way that maintains or
improves the consumer’s and society’s well – being.
MARKET RESEARCH
- Involves gathering of data to learn more about the demographics of the target consumers so a business
can market itself more effectively and, ultimately, succeed in the market.
- Market Research helps to identify the trends, understand the target audience and market better, and to
achieve important goals of the business
TYPES OF MARKETING RESEARCH:

• Brand Research
• Marketing Campaign Evaluation
• Competitor Research
• Customer Segmentation Research
• Consumer Research
• Product Development
• Usability Testing
BENEFITS OF MARKETING RESEARCH:

• Segmentation and Targeting

• Positioning
• Product Improvement
MARKETING PLAN
- The planning process helps you to understand the different factors that may affect your success and
develop your plans in detail.
- This will help you to define your tactics for selling and help you start building up your online presence
from day one, giving you a head
DEVELOPING MARKETING PLAN:

• Analyze your market

• Set your goals and objectives
• Outline your marketing strategies
• Set your marketing budget
• Keep your marketing plan up-to-date
CONCEPT OF FAIR PRICING
FAIR AND REASONABLE PRICE
- The price point for a good or service that is fair to both parties involved in the transaction. This amount is
based upon the agreed-upon conditions, promised quality and timeliness of contract performance
FAIR PRICE IN FAIR TRADE
According to the World Fair Trade Organization, the height of the fair price is supposed to be calculated
based on:

• The minimum and estimated wages

• Current cost of the products,
• Costs of production,
• A fair profit for all members of the supply chain
O. Heino and A. Takala show that a price is considered fair if (O. Heino, A. Takala 2015, p. 855):

• Customers are ready to pay it, meaning it will be accepted by them

• It is based on what they consider morally right and equitable.
As inferred from the report (Kurz & Toebbens, 2012), there are three fundamental Pricing Principles:

• In Cost-Plus Pricing approach, the list prices are mostly driven by company’s own cost structures which
could possibly also be heavy on unwarranted overheads

• In Competitive Pricing, the list prices are mostly driven by competitor’s prices followed by own cost
structures. Customer’s ability and willingness to pay only seldom plays a role.

• In Value-Based Pricing, the list prices are mostly driven by the balanced consideration of all three variable,
namely, (a) Customer’s ability and willingness to pay, (b) Competitor’s price levels, and (c) Company’s own
cost structure and current price levels.
SERVICE PRICING
SERVICE PRICING - is the strategy you put in place to price out your services so they’re fair for your customers,
but also profitable for your business.
HOW TO PRICE SERVICES: YOUR 6-STEP GUIDE
1. Calculate your costs
• Direct costs (materials, labor, supplies)
• Indirect costs (rent, utilities, advertising, etc.)
2. Look at the market
3. Know your customers
4. Consider time invested
5. Come up with a fair profit margin
• Your profit margin is how much your business will bring in after subtracting the cost of goods sold
(COGS).
6. Charge an hourly or per-project rate
WHAT’S YOUR FAIR PRICE?
There isn’t one way to approach the pricing of services. It’s up to you to decide what your offerings are worth and
how they fit into the market you serve.
BUSINESS PLAN
- A business plan is considered to be an important device for any business.
- It is a document in writing which illustrates in detail the nature, objectives and financial position of a
business, particularly a new one and the way it will achieve its objectives.
- A business plan can also be prepared for an established business which is changing its area of
operation or applying for a business loan or funding request.
5 PRINCIPLES OF BUSINESS PLANNING
1. Do only what you’ll use
2. Business process is a continuous process, not just a plan
3. Assume constant change
4. Empower accountability
5. It’s planning not accounting
STAGES OF BUSINESS PLANNING
Professor Philip Kotler, author of marketing Management, said that there are four stages of business planning.
Businesses which have passed these stages are on their way to sophisticated planning. Many enterprises are
classified in each of these stages:
STAGE 1: UNPLANNED STAGE
STAGE 2: BUDGETING SYSTEM-STAGE
STAGE 3: ANNUAL PLANNING STAGE
STAGE 4: PLANNING STAGE
CRITERIA OF EFFECTIVE PLANNING

 The plan should state clearly its objectives. Such clear statement is necessary so that those who will be
involved in the execution of the plan will understand, believe, accept, and support it.

 The plan should provide measures for a satisfactory accomplishment of the objectives in terms of quantity,
quality, time, and cost. These help in delegating responsibility and measuring results.

 The plan should state the policies which should guide people in attaining the objectives.

 The plan should indicate what department or unit will be involved in accomplishing the objective. It may or
may not spell out the procedures for performing the required work.

 The plan should indicate the time which should be allowed for each activity. It may be necessary to establish
a target data for completing the activity.

 The plan should specify the required resources and their corresponding costs.

 The plan should designate the officers who will be held accountable for the accomplishment of the
objectives. Sufficient authority should be delegated to such officers/executives.
COMPONENTS OF BUSINESS PLAN
SWOT ANALYSIS
It helps you see how you stand out in the marketplace, how you can grow as a business and where you are
vulnerable. This easy-to-use tool also helps you identify your company’s opportunities and any threats it faces. The
process takes account of both the internal and external factors your company must navigate.

• STRENGTH
• WEAKNESS
• OPPORTUNITIES
• THREATS
OUTLINR OF BUSINESS PLAN
7 ESSENTIAL PARTS OF A BUSINESS PLAN
1. Executive Summary
2. Product and Services
3. Market Analysis
4. Marketing and Sales
5. Organization and Management
6. Financial Projections and Metrics
7. Appendix
IMPORTANCE AND SOME RULES TO OBSERVE IN BUSINESS PLAN
A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes
information about your product, marketing strategies, and finances.
When starting a business, having a well-thought-out business plan prepared is necessary for success. It serves as
the foundation of your business, helps guide your strategy, and prepares you to overcome the obstacles and risks
associated with entrepreneurship. In short, a business plan makes you more like to succeed.
10 REASONS WHY BUSINESS PLAN IS IMPORTANT

 To help you with critical decisions.

 To iron out the kinks
 To avoid the big mistakes
 To prove the viability of the business
 To set better objectives and benchmarks
 To communicate objectives and benchmarks
 To provide a guide for service providers
 To secure financing
 To better understand the broader landscape
 To reduce risk
3 RULES TO OBSERVE IN WRITING A BUSINESSPLAN
1. Make your plan short and concise
2. Use simple and understanding language
3. Do not over do anything
PLANNING AND ORGANIZAING IN MARKETING, PRODUCTION, ORGANIZATIONAL AND FINANCIAL
HOW TO REGUSTER YOUR BUSINESS AND OTHER REGISTERING AGENCIES
4 STEPS TO GET YOUR BUSINESS REGISTERED

 Register business name in DTI

 Get barangay clearance
 Acquire mayor’s permit
 Register in BIR
Register your business name in the Department of Trade and Industry (DTI)
- The Department of Trade and Industry (DTI) is where single proprietorship enterprises register and
secure their certificate of registration. Registering with DTI is imperative to ensure that you gain the right
to use your business name and give your enterprise a legal identity.
Register your business in the Bureau of Internal Revenue (BIR)
- The Bureau of Internal Revenue (BIR) is the government agency that assesses and collects all national
internal revenue taxes, fees, and all es. Corporations that seek to do business in Philippines must
register with BIR. Registering BIR is important as this will enable you to y print your official receipts,
formally er the Tax Identification Number (TIN), and er the books of accounts you need to er yearly.
Other registering agencies

• Securities and Exchange Commission

• Department of Labor and Employment
• Philippine Health Insurance Corporation
• Social Security System
• Cooperative Development Authority
• Home Development Mutual Fund
• Various Local Government Units
BASICS OF ACCOUNTING AND FINANCE
ACCOUNTING
- is the process of systematically recording, analyzing, and interpreting your business’s financial
information. Business owners use accounting to track their financial operations, meet legal obligations,
and make stronger business decisions.
- is a mix of tactical and analytical tasks. And it's not just recording transactions or doing taxes.
Accounting is thinking about what your financial records will mean to regulators, agencies, and tax
collectors.

ACCOUNTING AND FINANCE

Collecting evidence for

Collecting new financial Reviewing or updating
audits and other legal
data past records
proceedings
What do accountants do
everyday?
Forecasting and risk- Checking on compliance Making sure tax payments
assessment with relevant laws are on time

ACCOUNTING SKILLS

• Listening
• Time Management
• Organization
• Critical Thinking
 ACCOUNTING BOOKKEEPING

Analyze and advise business leaders about what to Record and organize financial data for a business
do with that data. They offer insights on taxes, legal
concerns, and growth. They prepare reports and
audits to communicate and present financial data.
These insights help businesses prepare for
unexpected shifts that happen as a business grows.

ACCOUNTING BASICS
INCOME STATEMENT
- shows your company’s profitability and tells you how much money your business has made or lost
BALANCE SHEET
- is a snapshot of your business’ financial standing at a single point in time.
- Also show your business’ retained earnings, which is the amount of profit that you’ve reinvested in your
business (rather than being distributed to shareholders)
PROFIT AND LOSS (P&L) STATEMENT
- Snapshot of your business’ income and expenses during a given time period (like quarterly, monthly, or
yearly). This calculation will also be reflected on your business’ schedule C tax document
CASH FLOW STATEMENT
- Analyzes your business’ operating, financing, and investing activities to show how and where you’re
receiving and spending money
BANK RECONCILIATION
- Compares your cash expenditures with your overall bank statements and helps keep your business
records consistent. (This is the process of reconciling your book balance to your bank balance of cash)
BASIC ACCOUNTING TERMS
DEBIT is a record of all money expected to come into an account
CREDIT is a record of all money expected to come out of an account
ACCOUNTS RECEIVABLE is money that people owe you for goods and services
ACCOUNTS PAYABLE is money that you owe other people and is considered a liability on your bal. sheet
ACCRUALS are credits and debts that you’ve recorded but not yet fulfilled
ASSETS are everything that your company owns – tangible and intangible
BURN RATE is how quickly your business spends money
CAPITAL refers to the money you have to invest or spend on growing your business
COST OF GOODS SOLD (COGS) is the cost of producing your product or delivering your service
DEPRECIATION refers to the decrease in your assets’ values over time
EQUITY refers to the amount of money invested in a business by its owners
EXPENSES include any purchases you make or money you spend in an effort to generate revenue
FISCAL YEAR is the time period a company uses for accounting
LIABILITIES are everything that your company owes in the long or short term
PROFIT – OR THE “BOTTOM LINE” is the difference between your income, COGS, and expenses
REVENUE is the total amount of money you collecting exchange for your goods or services before any
expenses are taken out

GROSS MARGIN (GROSS INCOME) total sales minus COGS – this number indicates your business’
Sustainability
ACCOUNTING PRINCIPLES
1. REGULARITY
- The working accountant is compliant with GAAP rules and regulations.
2. CONSISTENCY
- This principle states that the accountant has reported all information consistently throughout the
reporting process. Under the principle of consistency, accountants must clearly state any changes in
financial data on financial statements
3. SINCERITY
- The accountant provides an accurate financial picture of the company.
4. PERMANENCE OF METHODS
- All financial reporting methods should be consistent across time periods.
5. NON-COMPENSATION
- All financial information, both negative and positive, is disclosed accurately. The proper reporting of
financial data should be conducted with no expectation of performance compensation.
6. PRUDENCE
- Financial data should be presented based on factual information, not speculation
7. CONTINUITY
- This principle states the assumption that the company will continue operations.
8. PERIODICITY
- All accounting entries should be reported during relevant time periods.
9. MATERALITY
- Accountants should aim to provide full disclosure of all financial and accounting data in financial
reports.
10. UTMOST GOOD FAITH
- According to this principle, parties should remain honest in all transactions.
FINANCIAL MANAGEMENT - is strategic planning, organizing, directing, and controlling of financial undertakings
in an organization or an institute. It also includes applying management principles to the financial assets of an
organization, while also playing an important part in fiscal management.

FINANCIAL MANAGEMENT

Maintaining enough supply of funds Ensuring shareholders get good

for organization; returns on their investment;
The objectives involved in financial
management include:
Optimum and efficient utilization of Creating real and safe investment
funds; opportunities.

IMPORTANCE OF FINANCIAL MANAGEMENT

• Helps organizations in financial planning and acquisition of funds;

• Aids organizations to effectively utilize and allocate the funds received or acquired;
• Supports organizations in making critical financial decisions;
• Helps in improving the profitability of organizations;
• Increases the overall value of organizations;
• Provides economic stability.