Lesson 1.

The Entrepreneurial Mind and Its Essential Characteristics

Entrepreneurs are those people or individuals with the skills and capabilities to see and evaluate
business opportunities. They are the ones who can strategically identify products or services needed by
the community, and have the capacity to deliver them at the right time and at the right place.

Entrepreneurs are agents of economic change; they organize, manage, and assume risks of a business.
Some of the good qualities of entrepreneurs are: opportunity-seeker, risk-taker, goal-setter, excellent
planner, confident problem-solver, hardworking, persistent and committed.

Entrepreneurship, on the other hand, is not just a simple business activity but a strategic process of
innovation and new product creation. Basically, entrepreneurship is both an art and science of
converting business ideas into marketable products or services to improve the quality of living.

When we say Entrepreneurial Mind, it is a specific state of mind which orientates human conduct
towards entrepreneurial activities and outcomes. When we say mind – it is the ability to think and
imagine.

So, Mindset is a way of thinking and opinions of a person. Or an entity from belief that we have, the
criteria are - expectations, attitude, habits, decisions, and opinions that we spend in looking at ourselves

Why an Entrepreneurial Mindset is Essential for Business?

Here are some of the reasons:

If you’re starting out in the business world, you might feel a little overwhelmed with all of the
information out there. You’ve probably been doing plenty of research, and you might’ve come across the
idea of an entrepreneurial mindset, which is, above all, a mindset that will help you to succeed in the
world of business. The essentials of an entrepreneurial mindset are, among other characteristics, the
lack of fear when it comes to innovation and taking risks, and the ability to take failures into stride. If you
consider yourself an entrepreneur, it’s important to know why entrepreneurial mindset is important for
business.

1. Thinking like an entrepreneur will help you right from the beginning

You have a plan for your business, you’ve figured out all the details, and you’re ready to start making
money, but it’s normal to feel worried or anxious about your new venture. Here’s where you should
begin to channel your inner entrepreneur! Creating that entrepreneurial mindset will help you to think
about what you’re doing and why. It will help you to know where you would like your business to lead
you, and what risks you’re willing to take to succeed. If you know the answers to these questions, you’ll
be ready to tackle all the challenges your new business throws at you.

2. An entrepreneurial mindset will help you in other areas of your life

Being willing to take risks and accept failure is a unique skill that isn’t relevant solely in the business
world. Incorporating an entrepreneurial mind set into your everyday life will help you to minimize the
importance of failure and rejection in your life. It will also help you to keep moving forward even when
things are difficult. Additionally, being able to plan ahead and foresee potential problems (a key part of
an entrepreneurial mind set) will help you to live a more organized, less stressful life. In turn, this will
help you to better run your business.

3. Having an entrepreneurial mindset will encourage creativity

You’ve started your business, and things are going well, for the most part. There’s just that one
problem… If you’re open to innovation and willing to take risks, you’ll be more likely to think outside the
box. If something isn’t working well, there may be more than one fix, and you shouldn’t always fall back
on the simplest or safest method. Critical thinking is the key to a successful business, and being willing to
find creative solutions even if it might mean more work will help your business greatly in the long run.

4. People trust others who seem to know what they’re doing

The old saying “fake it ‘til you make it” is especially true in business. If you do your best to think, feel,
and act like an entrepreneur, people will treat you like one. By channeling an entrepreneurial mind set,
you’ll be able to make new contacts with ease.

5. Thinking like an entrepreneur will enable you to take healthy breaks

Don’t overextend yourself as rest and relaxation are important. Successful entrepreneurs know that
focusing entirely on business is a sure-fire way to burn out. Go on an international trip. Relax and visit
new destinations. You might be surprised by the ideas and inspiration you can get by experiencing new
cultures. If you’re thinking like an entrepreneur, you’ll know that taking regular breaks will actually
benefit your business in the long run and that you needn’t feel guilty for indulging once in a while.

Incorporating the an entrepreneurial mindset into your everyday life will help you to minimize the
importance of failure and injection in your life

Essential Characteristics of the Entrepreneurial Mind

Creativity

It is the use of the imagination or original ideas, especially in the production of an artistic work. The
creative mind conceptualizes and designs a product that consumers find some use for. It likewise
produces a product that is pleasing to see, touch, smell, hear and taste. The seed of entrepreneurship is
the ability to see things differently. Whether it’s with new products or new processes, entrepreneurs are
driven by uncanny knack to see holes in the marketplace and devise innovations to fill them.

Suspicion of predictors

Entrepreneurs tend to labor under the assumption that data is the sole predictors of an outcome.
Especially in new markets and. with new products where data is largely interpretive or extrapolated,
entrepreneurs are undaunted by the typical predictors that may put off fainter hearts

Comfort with uncertainty.

Similarly, a distrust of prediction and analysis creates an atmosphere where . uncertainty rules. Indeed,
uncertainty is the very essence of entrepreneurship

Openness to Experimentation

A comfort with experimentation goes beyond educated trial and error. The ability to experiment with,
products, processes and outcomes, no matter where the results may lead, is the key element of this
quantity

Functional Humility

Egos can destroy the very best ideas. Entrepreneurs who are committed to solving a business problem or
reinventing a product or service display a functional humility.

Characteristics- a feature or quality belonging typically to a person, place, or thing and serving to identify
it. Ex. Trusting, sociable, fearless, risk taker

Attributes - a quality or feature regarded as a characteristic or inherent part of someone or something.

For example, someone might be labeled beautiful, charming, funny, or intelligent.

Trait - is an ingrained characteristic or habit that is difficult to learn or unlearn, like Shyness or
confidence. Skills- are things you've learnt through work, training or education, or general life
experience.

Lifestyle (entrepreneurship) - means you create a business around the kind of lifestyle you want. It's not
that you work in your business and then come home and live. For example Professional blogging. Many
bloggers now make their living through blogging
UNIT 2: Inside the Entrepreneurial Mind: From Ideas to Reality
Lesson 1. Creativity, Innovation, and Entrepreneurship

To create a value in the marketplace, creativity and innovation is applied to solve problems people face
everyday and to give opportunities in the industry. Let's learn more about these terms as we go on with
the lesson.

Creativity is the ability to generate something from nothing. It utilizes new ideas to discover new ways of
looking at problems and opportunities. Moreover, innovation is the ability to apply creative solutions to
problems or produce opportunities to enrich the lives of people. Having a great idea is not enough, thus
turning the idea into a tangible product, service or business venture is the first step for an entrepreneur
to succeed.

The result of applying creativity and innovation to the needs and opportunities in the marketplace in a
disciplined and systematic process is called Entrepreneurship. It involves satisfying the needs of a
customer or solving their problems by applying new ideas and new insights to create a product or a
service. In order to achieve successful entrepreneurship, a consistent effort on applying creative ideas for
a purpose in the marketplace should be done.

Entrepreneurship requires business owners to be bold enough to try their new ideas, flexible enough to
throw aside those that do not work, and wise enough to learn about what will work based on their
observations of what did not. Let’s learn more about creativity, the creative process, and methods of
enhancing creativity.

Creativity—A Necessity for Survival

Creativity is not only an important source to build a competitive advantage, it is also necessary to survive
in a fiercely competitive global economy. In order to develop creative solutions to modern problems,
entrepreneurs should go beyond what has worked in the past. Furthermore, they should be on guard
against traditional assumptions and perspectives about how things are supposed to be. In other words,
they must change their perspectives, looking at the world in new and different ways. Self-imposed
mental constraints and other paradigms people build over time will kill creativity. A paradigm is a
preconceived idea of what the world is, what it should be like, and how it should operate. Being able to
maintain a creative mindset, not being satisfied with the current solution to the problem but seeks for
improvement, will help an entrepreneur survive in the competing market.

Can creativity be learned?

By overcoming paradigms and by suspending conventional thinking long enough to consider new and
different alternatives, one can be creative.

Creative Thinking

The human brain develops asymmetrically, and each hemisphere tends to specialize in certain functions.
The hemispheres are divided into left and right. Left-brained individuals are usually guided by linear and
vertical thinking. They usually handle language, logic, and symbols much better. They also process
information in a step-by-step fashion. Meanwhile, right-brained individuals are often referred to as
“Creative Thinkers”.

The following are the qualities of a right-brained individuals:

● Always ask, “Is there a better way?”

● Challenge custom, routine, and tradition

● Reflective

● Play logical games

● Has an perspective that there may be more than one “right” answer
● Consider mistakes as pit stops on the way to success

● Has the ability to relate unrelated ideas to a problem

In entrepreneurship, both the left and right hemispheres of the brain are used. The rightbrained thinking
draws in divergent reasoning, the ability to create a multitude of original diverse ideas. While the left -
brained thinking counts on convergent reasoning, the ability to evaluate multiple ideas and to choose
the best solution to a problem.

Lesson 2. How to enhance Individual creativity and its Barriers Enhancing Individual Creativity

Just as entrepreneurs can cultivate an environment of creativity by using their own techniques. These
are some of the as follows:

➢ Allow yourself to be creative. As we have seen, one of the biggest obstacles to creativity occurs when
a person believes that he or she is not creative. Giving yourself the permission to be creative is the first
step toward establishing a pattern of creative thinking. When it comes to creativity there no stupid ideas.
➢ Give your mind fresh input everyday. To be creative your mind needs stimulation. Do something
different each day.

➢ Observe the products and services of other companies, especially those in completely different
markets. Creative entrepreneurs often borrow ideas from companies that are in businesses totally
related to their own.

➢ Recognize the creative power of mistakes. Innovations sometimes are the result of serendipity
finding something, else, and sometimes they arise as a result of mistakes. Creative people recognize hat
even thei errors may lead to new ideas, products and services.

➢ Notice what is missing. Sometimes entrepreneurs spot viable business opportunities by noticing what
is missing. The first step is to determine whether a market for the missing product or service actually
exists, which is one of the objectives in building a business plan.

➢ Keep a journal handy to record your thoughts and ideas. Creative ideas are too valuable to waste so
always keep a journal nearby to record then as long as you get their.

➢ Listen to other people. No rule of creativity says that an ideas has to be your own. Sometimes the
best business ideas come from someone else, but entrepreneurs are the one to act on them.

➢ Listen to customers. Some of the best ideas for new products and services or new application of
existing products or services come from a new company’s customers. Entrepreneurs who take time to
listen to customers often receive ideas they may never have come up with on their own.

➢ Talk to a child. As we grow older, we learn to conform to society’s expectations about many things,
including creative solutions to problems. Children place very few limitations on their thinking; as a result,
their creativity is practically boundless.

➢ Do something ordinary in an unusual way. Experts say that simply doing something out of the
ordinary can stimulate creativity and improve dramatically the ability to develop new and innovative
ideas.

➢ Do not through away seemingly bad ideas. Some creative ideas prove to be impractical, too costly, or
to silly to work. Creative entrepreneurs do not discard these seemingly had ideas. Instead they ask, What
part of this idea can I build on?

➢ Read books on stimulating creativity or take a class on creativity. Creative thinking is technique that
anyone can learn . Understanding and applying the principles of creativity

➢ Take some time off . Relaxation is vital to the creative process.

➢ Be persistent. Persistence and “don’t quit” attitiude for entrepreneurs is a secret for success.

Barriers to Creativity
Among the limitless barriers to creativity, in his book, A Whack on the Side of the Head, Roger von Oech
stated 10 “mental locks” that limit an individual’s creativity:

1. Searching for the one “right” answer

- ingrained in most educational systems is the assumption that there is one “right” answer to a problem.

2. Focus on “being logical”

- Logic is a valuable part of the creative process, especially when evaluating ideas and implementing
them. However, in the early imaginative phases of the process, logical thinking can restrict creativity.
Focusing too much effort on being logical also discourages the use of one of the mind’s most powerful
creations: intuition.

3. Blindly following the rules

- Sometimes, creativity depends on our ability to break the existing rules so that we can see new ways of
doing things.

4. Constantly being practical

- Suspending practicality for a while frees the mind to consider creative solutions that otherwise might
never arise.

5. Viewing play as frivolous

- A playful attitude is fundamental to creative thinking.

6. Becoming overly specialized

- Creative thinkers tend to be “explorers,” searching for ideas outside their areas of specialty.

7. Avoiding ambiguity

- Ambiguity can be a powerful creative stimulus; it encourages us to “think something different.”

Avoiding it will not let us that something should be identified in a situation.

8. Fearing looking foolish

- New ideas rarely are born in a conforming environment.

9. Fearing mistakes and failure

- Creative people realize that trying something new often leads to failure; however, they do not see
failure as an end. It represents a learning experience on the way to success.

10. Believing that “I’m not creative”

- A person who believes he or she is not creative will, in all likelihood, behave that way and will make
that belief come true.

Lesson 3. Creative Process and Techniques for Improving

Step 1: Preparation

- This step involves getting the mind ready for creative thinking. Preparation might include a formal
education, on-the job training, work experience , and taking advantage of other learning opportunities

Step 2: Investigation

- This step requires developing a solid understanding of the problem or situation , decision on hand. To
create new ideas and concepts in a particular field , an individual first must study the problem and
understand its basic components.

Step 3: Transformation
- Transformation involves viewing the similarities and the differences in the information collected. This
phase requires two types of thinking: convergent thinking, and divergent thinking.

● Convergent Thinking

○ The ability to see the similarities and the connections among various and often diverse data
and events.

● Divergent Thinking

○ The ability to see the differences among various data and events.

Step 4: Incubation

- The subconscious needs time to reflect on the information collected. To an observer, this phase of the
creative process would be quite boring; it looks as though nothing is happening. Incubation occurs while
the individual is away from the problem, often engaging in some totally unrelated activity.

Step 5: Illumination

- This phase of the creative process occurs at some point during the incubation stage when a
spontaneous breakthrough causes “the light bulb to go on”. It takes place after five minutes or five years.
In the illumination stage, all the previous stages come to produce the ‘’Eureka factor’’ - the creation of
the innovative idea.

Step 6: Verification

- Validating the idea as accurate and useful, for entrepreneurs, may include conducting experiments,
running simulations, test marketing a product or service, establishing small-scale pilot programs and
other activities designed to verify that the new idea will work and is practical to implement.

- At this phase, appropriate questions to ask include the following:

● Is it really a better solution to a particular problem or opportunity? Sometimes an idea that appears to
have a bright future in the lab or on paper dims considerably when put to the test of reality.

● Will it work?

● Is there a need for it?

● If so, what is the best application of this idea in the marketplace?

● Does this product or service idea fit into our core competencies?

● How much will it cost to produce or to provide?

● Can we sell it at a reasonable price that will produce adequate sales, profit, and return on investment
for our business?

Step 7: Implementation

- The focus of this step is to transform the idea into reality. Plenty of people come up with creative ideas
for promising new products, but most never take them beyond the idea stage. What sets entrepreneurs
apart is that they act on their ideas.

Techniques for Improving the Creative Process

Now that you’ve learned the process for creative thinking, the following are the techniques to improve
the creative process:

● Brainstorming
- A creative process in which a small group of people interact with very little structure with a goal is to
create a large quantity of new and imaginative ideas

- It should have an open, uninhibited atmosphere that allows the members of the group to “free-wheel”
ideas

- Refer to this video to give you tips on how to have a successful brainstorming session: The trick to
successful brainstorming - Insights for Entrepreneurs

● Mind-mapping

- It is an extension of brainstorming

- A graphical technique that encourages thinking on both sides of the brain, visually displays the various
relationships among ideas, and improves the ability to view a problem from many sides.

- To create a mindmap you can refer to these videos: Creating a Mind Map

- Skillshare and Mind Mapping Explained and Demonstrated in Five Minutes!

● Rapid prototyping

- Rapid prototyping transforms an idea into an actual model will point out flaws in the original idea and
will lead to improvements in its design.

- The three principles of rapid prototyping are the three R’s: rough, rapid, and right. Models do not have
to be perfect; in fact, in the early phases of developing an idea, perfecting a model usually is a waste of
time. The key is to make the model good enough to determine what works and what does not.

- To learn more about rapid prototyping, you can refer to this video: Rapid Prototyping: Sketching |
Google for Startups

SUMMING UP

Creativity is the ability to generate something from nothing. It utilizes new ideas to discover new ways of
looking at problems and opportunities. While, innovation is the ability to apply creative solutions to
problems or produce opportunities to enrich the lives of people. Creativity is not only an important
source to build a competitive advantage, it is also necessary to survive in a fiercely competitive global
economy. In order to develop creative solutions to modern problems, entrepreneurs should go beyond
what has worked in the past.

In entrepreneurship, both the left and right hemispheres of the brain are used. The right-brained
thinking draws in divergent reasoning, the ability to create a multitude of original diverse ideas. While
the left-brained thinking counts on convergent reasoning, the ability to evaluate multiple ideas and to
choose the best solution to a problem.

Among the limitless barriers to creativity that limit an individual’s creativity are the following: a)
Searching for the one “right” answer b)Focus on “being logical” c) Blindly following the rules d)
Constantly being practical e) Viewing play as frivolous f) Becoming overly specialized g) Avoiding
ambiguity h) Fearing looking foolish i)Fearing mistakes and failure, and j) Believing that “I’m not creative”

The following steps are what a Creative Process will take:

Step 1: Preparation

Step 2: Investigation

Step 3: Transformation

● Convergent Thinking
 ○ The ability to see the similarities and the connections among various and often diverse data
and events.

● Divergent Thinking

○ The ability to see the differences among various data and events. Step 4: Incubation Step 5:
Illumination Step 6: Verification Step

7: Implementation

After learning the process for creative thinking, the following are the techniques to improve the
creative process such as brainstorming, mind mapping and rapid prototyping.

UNIT 3. CREATING AN ENTERPRISES

Lesson 1. Forms of Business Organizations

”Huwug umutang para lang sabihin na naka angat na sa buhay Dahil ang pagiging masinop sa
pera ang totoong sikreto sa buhay”

Business organizations are important in the economy. Their main goal is to attract customers,
and to consequently earn profit. Businesses provide for their needs, wants, and demand of the economy.
The business sector is also the largest contributor of revenue to an economy.

It is important that the business owner seriously considers the different forms of business
organization types such as sole proprietorship, partnership, and corporation. Which organizational form
is most appropriate can be influenced by tax issues, legal issues, financial concerns, and personal
concerns. For the purpose of this overview, basic information is presented to establish a general
impression of the business organization.

Business and government work together for progress and development. Businesses pay the
necessary taxes to the government, and in return the government provides the proper infrastructure,
such as electricity, water, roads and highways, communication, railways, and etc. These factors are
essential in improving the efficiency of operations in business sector.

FORMS OF BUSINESS ENTERPRISES

Single or Sole Proprietorship

Single or Sole Proprietorship is a form of business owned by a single person, known as the
proprietor. Because one person can organize it, it is the easiest enterprise to set up. Most of the
country’s businesses belong to single proprietorship. The bulk of self-employed people are single
proprietors, and these include informal or unorganized sector.

Organizing a Sole Proprietorship

• Register the business name (Department of Trade & Industry)

• Pay the municipal licenses to the local government.

• Apply for VAT or non-VAT number

• Register with the BIR the books of accounts (simplified bookkeeping records or journals and
ledger) and the business forms to be used (sales invoices, cash sales invoices, official receipts, etc.)

Advantages

1. Ease of formation and dissolution. Establishing a sole proprietorship can be as simple as

printing up business cards or hanging a sign announcing the business. Taking work as a contract
carpenter or freelance photographer, for example, can establish a sole proprietorship. Likewise, a sole
proprietorship is equally easy to dissolve.
 2. Typically, there are low start-up costs and low operational overhead.

3. Ownership of all profits.

4. Sole Proprietorships are typically subject to fewer regulations.

5. No corporate income taxes. Any income realized by a sole proprietorship is declared on the
owner’s individual income tax return.

Disadvantages

1) Unlimited liability. Owners who organize their business as a sole proprietorship are personally
responsible for the obligations of the business, including actions of any employee representing the
business.

2) Limited life. In most cases, if a business owner dies, the business dies as well.

3) It may be difficult for an individual to raise capital. It’s common for funding to be in the form
of personal savings or personal loans.

4) Limited ability to expand. This is due to the business 'limited capital. In be most cases,
operations are limited only to areas in which the sole proprietor has expertise. Not all proprietors are
flexible, this is what is required in business expansion.

Example of Sole Proprietorship

o Side walk vendor Owner of Sari-sari store

o Offer Tutoring Services Shoe Cleaner

Partnership

Partnership is a business organization that is an association of at least two or more persons who
agree to place money, property or of Industry in a common fund with the aim of sharing the profits
among themselves. In addition, a partnership agreement can be oral or written, although Philippine law
requires a written agreement when real property is involved, or when a limited partnership is being
established.

Organizing a Partnership

• Register the business name (Department of Trade Industry).

• Have the partnership agreement (Articles of Co-partnership) notarized and registered with the
SEC. • Obtain a tax identification number for the partnership from the BIR.

• Obtain pertinent municipal licenses from the local government.

• 。Obtain the VAT or non-VAT number from the BIR.

• Register books of accounts (simplified bookkeeping records or journals and ledger) and the
business forms to be used (sales invoices. Cash sales invoices, official receipts, etc.)With the BIR.

Advantages of a partnership

The following are the advantages of partnership:

1. Easy to form. The requirements are technically the same with sole proprietorship. The only
additional in the requirement is the partnership agreement. Unlike a corporation. There are lesser
requirements to accomplish in forming and maintaining a partnership business.

2. Flexibility of operations. There are only few owners in a partnership business. That is why if
there are certain concerns that need to be addressed, there is no delay in decision making because it can
easily be solved by the partners. Agreements and resolutions as to business matters are immediately
decided by the partners.
 3. Efficiency in operations. Simply put. “Two heads are better than one. There is better
management because of the presence of more participants in the operation of business. With the
presence of the partners, more ideas will are also applied in the operation of the business.

4. Partners are expected to have great interest in the operation of the partnership. Partners have
their own areas of interest and responsibility, which helps in the smooth operation of the business. The
unlimited liability of the partners also encourages their interest in participating in the venture.

5. Possibility of bigger resources. Financial institutions may extend bigger loans to partnerships
considering the combined resources of the partners. Thus, more capital can be used in production.

The following are the disadvantages of partnership:

1. Partners have unlimited liability for partnership debts. This is one of the identical
disadvantages of single proprietorship and partnership. Partners face unlimited liability for partnership
debts. Partners may not only put their combined money and property at risk, but also their individual
assets as well.

2. It has a limited life or it lacks stability. Partnership is unstable. Being a contract between the
partners, it is dissolved based on their agreement, or upon the withdrawal, incapacity or death of a
partner, or for other causes which terminates a contract.

3. Limited ability to raise capital. The amount of capital depends on how much can be
contributed by the partners. Thus, there is also limitation to raise funds for the business.

4. Conflicts and quarrels between among partners. Conflicts or quarrels are the main reason why
partnership is unstable. Rules, regulations policies, number of hours in the area, responsibility, decision
making agreements and profit distribution are just some cause of conflicts and quarrel between the
partners.

Corporation

Section 2 of the Corporation Code defines a corporation as follows:

＂A corporation is an artificial being created by operation of law having the right of succession
and the powers, attributes and properties expressly authorized by aw or incident to its existence"(private
corporations are governed by the Corporation Code of the Philippines, per Batas Pambansa Blg.68).

A corporation is a form of business organization in which the owners (known as: stockholders)
have an undivided ownership share in the assets of the corporation upon its dissolution; and a share in
its profits corresponding to the amount of shares of stock which they own.

A corporation has specific objectives in carrying out the business, in accordance with a charter
or articles of incorporation. This charter is a written document containing the names of the original
incorporators, their initial share in stockownership, and the objectives and activities of the corporation.
Below are some examples.

SAN MIGUEL

TOTAL

JOLLIBEE

Organizing a Corporation

• Verification of corporate name with SEC.

• Drafting and execution of the Articles of Incorporation

• Deposit of cash received for subscribed shares of stocks in a banking institution in the name of
the temporary treasurer.in trust for an • Credit of the corporation.

• Filling of the Articles of Incorporation together with the following:

 o Treasurer's affidavit o Statement of assets and liabilities of the proposed corporation.

o Authority to verify bank deposits o Certificate of deposit of cash paid for subscription

o Personal information sheet of the incorporators

o Commitment to change corporate name if it is found similar to another corporate name

• Payment of filing and publication fees

• Issuance by SEC of the certificate of incorporation

• Registration of the corporate name with the DTI.

• Obtaining municipal licenses from the local government

• Obtaining the VAT or Non-VAT account number from the BIR

• Registration with BIR of books of accounts and accountable forms.

Contents of Articles of Incorporation (Section 14 of the Corporation Code)

The following are the contents of Articles of Incorporation as provided under Section 14 of the
Corporation Code:

• Name of the corporation

• The specific purpose or purposes for which the corporation is being incorporated.

• The place where the principal office of the corporation is to be located.

• The term for which the corporation is to exist

• The names, nationalities and residences of the incorporators.

• The number of directors or trustees, which shall not be less than five（5) nor more than fifteen
(15).

• The names, nationalities and residences of the directors or trustees.

• If it is a stock corporation, the amount of its authorized capital stock in

• Lawful money of the Philippines, the number of shares into which it is divided. Together with
its values on par.

• If it is a non-stock corporation, the amount of its capital, the names,

• Nationalities and residences of the contributors and the amount contributed by each.

• Such other matters as are not inconsistent with law and which the incorporators may deem
necessary and convenient.

Advantages of corporation:

The following are the advantages of a corporation:

1. It has a legal capacity. The presence of articles of incorporation granting the corporation a
separate juridical personality.
2. It has Continued and more or less permanent existence. The life span of a corporation is 50
years, and subject to renewal for another 500 years. The death or withdrawal of some
officers, stockholders or members does not affect the life of the corporation.
3. Management is centralized. The corporation's management is centralized, and lodged with
the board of directors or trustees. The board is the decision-making body of the corporation.
 It is also centralized because the corporation is always guided by the provisions contained in
the articles of incorporation.
4. It has the most efficient management. The creation, organization, management and
dissolution processes of a corporation are standardized, in spite of its huge resources and
largeScale operation. All these are primarily governed by the Corporation Code of the
Philippines, and secondarily provided for under the articles of incorporation.
5. Shareholders have limited liability. In case the corporation becomes bankrupt, only capital
contribution of the shareholders/members are affected. The personal properties of the
stockholders of a corporation are excluded from financial claims of creditors of the
corporation.
6. Shareholders' freedom. Shareholders are not general agents of the corporation and can
transfer their shareholdings without the consent of other shareholders.
7. Ability to raise more capital. Corporation has the ability to raise more capital, allowing it to
undertake more expansive financial ventures. It has the most effective means of raising
money capital for its operations-selling stocks and bonds. Stocks are certificates of
ownership while bonds are certificates of indebtedness.

Disadvantages of corporation

The following are the disadvantages of a corporation:

1. Complicated to maintain and not easy to organize. Aside from complying with capital requirements,
there are many paper works involved in securing a charter. It also takes a longer time to have an approval
from the SEC.

2. Governmental intervention. It is subject to a greater degree of governmental control and supervision.

The government is keen in all the operations of a corporation like tax dues, creation of commodities and
employment. It is also subject to annual and/or quarterly reportorial requirements.

3. Subject to higher tax. It is subject to higher income tax rate. Corporate income tax is fixed at 309%,
whereas for individuals, the rates range from 0% to 32%. With the progressive tax system by the
government, given the huge revenue of the corporation, they are required to pay higher percentage of
tax.

4. It has limited powers. A corporation is guided by the articles of incorporation. Thus, its operations can
only revolve within the activities expressly or impliedly allowed by its articles.

5. Abuses of corporation officials. Corporate directors and officials may abuse their powers, especially
because of the minimum supervision of stockholders.

6. Some corporation are engaged in questionable activities. Some corporations engaged in questionable
activities just only to pursue their own interest which is to earn profit, regardless of hurting others in the
process. For example, they sell worthless securities, sell substandard goods or pollute the environment.
In short, they do not comply with their social responsibility.

7. There is a very impersonal or formal relationship between the officers and employees of a
corporation. In sole proprietorship and partnership, everybody knows everybody; while in a corporation,
it is possible that stockholders, as well as officers and directors, are not familiar with each other

Classifications of Corporation

Based on nature of its capital

Based on purpose

Based on relation to another corporation

Based on situs of incorporation

Based on whether they want to open in public or not

Voting in a Corporation

In a stock corporation, the manner of voting is called cumulative voting-where a stockholder is entitled
to cast votes equal to the number of shares he owns multiplied by the number of directors or trustees to
be elected.

In a non-stock corporation, every member may cast as many votes as there are trustees to be elected
but may not cast more than one vote for one candidate, unless cumulative voting is authorized under
the articles of incorporation.

Categories of Shares of Stocks

1. Common stock

Common stock represents the basic issue of shares, and has all the basic rights of a share of stock so
that it is often referred to as the basic ownership in a corporation.

2. Preferred stock
Preferred stock is a type of stock having certain preferences over common stock. These
preferences may be in the distribution of dividends and/or corporate assets, upon dissolution of
the corporation. If dividends have been declared by the company, the preferred stockholders are
prioritized to receive it first.
3. Class A shares
These are the available stocks offered to Filipino shareholders.

4. Class B shares
These are the available stocks offered to foreign investors.
5. Par Value shares.
This refers to shares of capital stock that have been assigned a definite or fixed value in the
articles of incorporation. So as to fix its minimum subscription or original issue price.
6. No par value shares
No par values are shares which have not been assigned a definite or fixed value.
7. Founders' shares
Founder's shares are those classified, as such in the articles of incorporation and may be given
certain rights and privileges not enjoy by other stockholders. It is usually given to incorporators-
the formators of the corporation

Dividends
It is also called as the distributed profits of the corporation. It represents the corporation's profit,
which are distributed to stockholders according to the proportionate interest of their
shareholding.
Kinds of Dividends
1. Cash - This is paid in cash to the stockholders.
2. Property - This is in the form of non-cash assets of corporation.
3. Stock - This is the dividend in the form of stocks of the issuing corporation.
4. Scrip - The dividend in the form of promissory notes indicating the kind of benefits the
stockholders shall be entitled to receive in the future (cash, non-cash, stock or some other form
of dividend).
5. Bond - This is in the form of bonds of the company
6. Liquidating - This refers to return of capital by a corporation
 Cooperatives
Under the Presidential Decrees No. 175, a cooperative is defined as follows: “Only organizations
composed primarily of small producers and consumers who voluntarily join together to form
business enterprises which they themselves own, control and patronize.” The government in its
effort to promote the organization of more cooperatives throughout the country has extended
several powers and privileges (like tax exemptions) to cooperatives.

The Cooperative Code of the Philippines was created in 1990. By virtue of Republic Act No.
6938, which serves as the legal basis for the operation of all cooperatives in the country.

Principles of Cooperatives
Every cooperative shall conduct its affairs in accordance with Filipino culture and experience and
the universally accepted principles of cooperation. Which include the following

1. Open and voluntary membership. Membership in a cooperative shall be voluntary and

available to all individuals regardless of their social, political, racial or religious background or
beliefs.

2. Democratic control. Cooperatives are democratic organizations. Their affairs shall be

administered by persons elected or appointed in a manner agreed upon by the members.
Members of primary cooperatives shall have equal voting rights on a one-member-one-vote.

3. Limited interest on capital. The share capital shall receive a strictly limited rate of interest.

4. Division of net surplus. Net surplus arising out of the operation of a cooperative belongs to its
members and shall be equitably distributed for cooperative development, common services,
indivisible reserve fund, and for limited interest on capital and/or patronage refund, in the
manner provided in the Code and in the articles of cooperation and by-laws.

5. Cooperative education. All cooperatives shall make provision for the education of their
members, officers and employees and of the general public based on the principles of
cooperation.

6. Cooperation among cooperatives. All cooperatives, in order to best serve the interest of their
members and communities, shall actively cooperate with other cooperatives at local, national,
and international levels.

Objectives of a Cooperative
The primary objective of every cooperative is to provide goods and services to its members, and
thus enable them to attain increased income and savings, investments, productivity, and
purchasing power and promote among them equitable distribution of net surplus through
maximum utilization of economies of scale, cost- sharing and risk-sharing without, however,
conducting the affairs of the cooperative for eleemosynary or charitable purposes. As provided
under the Cooperative Code, a cooperative shall provide maximum economic benefits to its
members; teach members efficient ways of doing things in a cooperative manner; propagate
cooperative practices and new ideas in business and management; and allow the lower income
groups to increase their ownership in the wealth of this nation.

Similarities between a cooperative and a corporation

Factors of production are privately owned and managed. They both depend on business
efficiency to survive in a competitive market. Also, their activities and operations are regulated
and supervised by the government. Lastly, they both enjoy a reasonable degree of economic
freedom.

Differences between a cooperative and a corporation

A cooperative is primarily organized for service while a corporation's purpose is mainly for
profit. Membership in a cooperative is open and voluntary while in a corporation, membership is
restricted. Management of a cooperative is more democratic. It is one man one vote, with no
proxy voting. In the case of a corporation, it is one share, one vote and more shares, more votes.
Moreover, savings or net profits are refunded to the members of a cooperative on the basis of
their individual patronage, while in a corporation; profits are distributed to stockholders on the
basis of the number of shares.

Lesson 2. Identifying Business Opportunities In the Environment

Hindi lahat ng oportunidad ay nakikita minsan kailangan mismo and dapat lumikha nito”

Introduction
here are many business opportunities for an individual with a creative mind. All business
starts with an idea, and it is said that creativity, through innovativeness and the capacity of
bringing something new in the market, spells the difference between a traditional businessman
and an entrepreneur. A smart entrepreneur may decide to have a small or large business, but it
is important to follow the process of identifying and evaluating the various options in generating
ideas that can be transformed into a profitable business endeavor.

Entrepreneurial Activities
Business activities are concentrated in cities and other urban communities. The primary reasons
are that more buyers, more incomes more facilities are located in the said heavily populated
areas. Apparently, there are more business competitors in the cities. This means it would be very
difficult for a newcomer to penetrate the markets .But for real entrepreneurs such difficult
situation provides a challenge. Hence, they are encouraged to explore marker opportunities. It is
natural for buyers to look for goods and services which offer better quality, lower price and more
conveniences. Precisely, these are the basic features of consumer satisfaction which
entrepreneurs can develop. In our country. There are several marketing innovations of goods and
services. Like the express teller of banks, 24-hour service of some grocery stores. And home
delivery service of food items.

The Sears story

In the United States, Sears, Roebuck Corporation. Introduced mail-order selling. The farmers
comprised its first market. Julius Rosenwald studied the specific needs of the farmers in 1895.At
that time, the American farmers were isolated from the channels of distribution of goods and
services. Since individual farmers had low purchasing power, and were very far from trading
centers, they were neglected by businessmen. And Sears, Roebuck rose to the occasion.

To Sears, Roebuck, the untapped buying potential of the farmers as a group was a rich market. To
reach the farmers, Sears, Roebuck used the mail-order selling. It produced the goods that
satisfied the needs of the farmers. These were delivered to them in large quantities at low
prices, and with a guarantee or regular supply. And Sears made a policy of. “Your money back
and no question asked “if farmers were not satisfied. Gradually Sears, Roebuck became
successful. From a retail store, it expanded to other industries until it has acquired international
reputation and customers all over the world.

Business Opportunities in Rural Communities

 Our rural areas are abundant with ‘cheap raw materials and labor force. Yet these are
underdeveloped and have greatly contributed to poverty in the rural communities. Many rural
folks are unemployed or underemployed. This results to low level income among the people.
The productive resources in the rural sector are sleeping business potentials. Our raw farm
products can be a good source of agribusiness. Other raw materials. Can be transformed into
toys, hats, bags, ‘slippers, decors, etc.
Senate President Neptali Gonzales has learned during his political campaigns throughout the
country that entrepreneurs in Davao are exporting cut flowers to Singapore; artisans in Cebu
have. elevated local stone craft to world-class status; piña-cloth weavers in Aklan have attracted
the attention of international fashion designers; the goldsmiths of Bulacan have created
jewellery that are admired even in a place as far as Dubai; and the automotive tinsmiths of
Pampanga get job orders from California. There are other small entrepreneurs who have
succeeded in selling their products to foreign markets. In a graduation speech before college
students in Pampanga, Senate President Gonzalez cited the importance of entrepreneurship.

＂ THE SEARCH FOR BUSINESS OPPORTUNITY

In selecting a business, option should not be based on luck and immature thinking, but on a
thorough evaluation and systematic process. Start by developing long and short lists of potential
business opportunities. Likewise, the resources, skills, and technology available in the
community are to be evaluated if these are not fully or efficiently utilized. In discovering
business opportunities, the following factors on resources have to be evaluated:

1. Markets. This refers to the number of prospective buyer’s competitors, the price, and the
quality of goods and services that have to be analyzed. Business opportunities exist in areas
where consumer satisfaction is weak or incomplete.

2. Individual Interests. Business interest of individuals should match business opportunities. For
example, if one is a good cook, he could venture in the food business.

3. Capital. This serves as the fuel that keeps the business operating. The availability of funds
should fit the type of business to organize.

4. Skills. The entrepreneur should have the proper skills in the business he is going to undertake

5. Suppliers of inputs. It is important that there are steady suppliers of raw material and other
inputs to the business.

6. Manpower. The success of any business also depends on the efficiency of its employees.

8. Technology. Entrepreneurs should be aware of the presence of technology to improve their

products or services, or introduce new innovations in the market.

Among the productive resources, people are the most important because they are the ones
who organize and manage the other productive resources such as money, materials, machine, and
manpower.

Other opportunity-seeking processes that can guide a prospective entrepreneur as to what

kind of business to establish are as follows:

1. Look at other successful businesses/entrepreneurs. Looking up at other entrepreneurs as a role

model that could be an inspiration, by doing what they have done or do it even better.

2. Respond to a problem area. The solution to a problem might be transformed into a business
venture.
3. Home-Based Business Option. These must not be taken for granted, for there are some big
businesses that started as a small business at home.

4. Linkage of Resources. The entrepreneur can produce his own input instead of buying them.

Through Market Research, the entrepreneur can be guided in identifying the profitable markets,
saleable products, the strengths and weaknesses of competitors, available resources, business risks,
trends in consumer tastes and preferences, better marketing strategies, proper business location,
new market opportunities, and realistic objectives. Location of the business is a key factor in
business success. In selecting a location, the population, income, competitor, government policies,
peace and order, and others are being considered. This requires a market survey.

To be able to translate business opportunities into profits, the SWOT (Strength, Weakness,
Opportunity, and Threat) Analysis is applied. These are tools for evaluating the strengths,
weaknesses, opportunities, and threats associated with a particular product or service. In knowing
this, the entrepreneur must be able to have an idea or a precautionary measure even before the
start of the business. Excellent knowledge about the life cycle of the products provides the
entrepreneur business opportunities to continuously start in business. The following are the
description of the various stages of a product life cycle. According to Fajardo, products have their
own life cycle. It is composed four stages: Introduction, Growth, Maturity, and Decline. Some
products have long product life cycle, while others have short. Here are the descriptions of various
stages of product life cycle, particularly as sales volume and profit.

• Introduction. If consumer awareness and acceptance of product are low, launch through the use of
marketing activities, which make the profit low due to cost of development and marketing activities.

• Growth. To meet the growing demand, product distribution is expanded. Sales rise rapidly as
product becomes popular.

• Maturity. Sales are still rising, but rate of increase has declined. At the latter part, a sale reaches its
peak, while profit begins to fall.
• Decline. There is a sharp fall in sales volume, while profit curve becomes almost flat or horizontal.
There is also decline in the number of competitors. The only survivors are those who specialize in
marketing the product. Once product is no longer profitable, it is eliminated from the market.

Entrepreneurs should be aware of the duration of each stage of the product life cycle. Fajardo
had emphasized in his book, Entrepreneurship, that excellent knowledge about product life cycle
provides entrepreneurs business opportunities to continuously stay in business.

Venturing into a business project demands a timely and clear decision as to which area or
business concern to deal with. In the selection process, one has to begin with choosing or focusing
on a particular business by category or sector.

1. The service-based business. Common examples of service- based businesses are consultancy,
barber shops, repair shops, beautyparlors, care giving, designing works, rendering professional
services, such as engineers, dentistry, medical doctor, and others where there is no need to
manufacture something.

2. Trading Or product-based business. This is a buy-and-sell transaction that can happen in your
storehouse, showroom, or any other structure less environment. Selling involves a lot or customer
contact and requires a great deal of persistence on the entrepreneurs 'part. An example of this is
putting up a grocery store, bakery products, or general construction materials.

3. Manufacturing business. This is a manufacturing or production- based business by creating a

product. Manufacturing can be as simple as creating hand-painted T-shirts or ceramic vases and now,
the most popular is candle making, which can be done in your home.

4. Licensed business opportunities. If you find some difficulties in launching a product or service, it
is a good idea to look for licensed business opportunities. Franchising is a business format somehow
very similar to licensed business operations.

5. Distributorship. This is where an independent entrepreneur, company, or individual enters into

an agreement or contract to offer, sell, or distribute a particular product, but is not entitled to use
the manufacturer's trade name as part of its own trade name. In our country, distributor represents
foreign companies who can sell products to dealers strategically located all over the country.

6. Rack Jobber. This involves an agent or buyer entering an agreement with a parent company to
market its goods to various stores by means of strategically located store racks.

7. Wholesalers. These sell the product of manufacturers or producers to retailers and other
distributors who have direct dealings with the end users or customers. 8. Subcontracting. This is a
familiar form of business format in the garments sector, as well as the shoe industry. This involves
signing up an arrangement with a major producer to complete a set of product components on a
pre-agreed price.

Lesson 3. Global Opportunities

Entrepreneurship is a common word nowadays but with the rise of globalization, global
entrepreneurship has also become a well-known word. Global entrepreneurship is the term used for
the entrepreneurs who operate on global level and businesses worldwide. Global entrepreneurship
plays a key role in businesses today as many entrepreneurs look for multinational corporations to
assess their leadership skills. Global entrepreneurship may have many challenges and opportunities
that are discussed in this paper along with the ways to face those challenges. It is essential for the
entrepreneurs to understand the global nature of the business and the environment they are
operating in, in order to be successful. Global entrepreneurship is advantageous as it can also be
taken by the corporate know-how and expertise which is available in other countries.
 As different companies have different labor markets and different set of ideas are present,
there can be more variations and more innovative ideas for business products and marketing. By
entering the field of global entrepreneurship, an entrepreneur enters the foreign lands to operate
their businesses there. This gives them the opportunity to have a good know-how of all the local
trends and demands that are present in that country’s consumer market. Moreover, it also gives the
chance to the entrepreneurs to be able to learn the systems of the foreign markets and learn the
tactics and strategies to compete in these markets.

THE NATURE OF INTERNATIONAL ENTREPRENEURSHIP

As more countries become market oriented and developed, the distinction between foreign
and domestic markets is becoming less pronounced. International entrepreneurship is the process of
an entrepreneur conducting business activities across national boundaries. It is exporting, licensing,
or opening a sales office in another country. When an entrepreneur executes his or her business in
more than one country, international entrepreneurship occurs.

THE IMPORTANCE OF INTERNATIONAL BUSINESS TO THE FIRM

International business has become increasingly important to firms of all sizes. The successful
entrepreneur will be someone who understands how international business differs from domestic
business and is able to act accordingly.

INTERNATIONAL VERSUS DOMESTIC ENTREPRENEURSHIP

Whether international or domestic, an entrepreneur is concerned about the same basic

issues-sales, costs, and profits. What varies is the relative importance of the factors being
considered. International entrepreneurial decisions are more complex due to uncontrollable factors
such as the following.

Economics

A domestic business strategy is designed under a single economic system. Creating a business
strategy for multiple countries means dealing with different levels of economic development and
different distribution systems.

Balance of Payments

A country's balance of payments affects the valuation of its currency. This economic variable will
affect how companies do business in other countries.

Political-Legal Environment Multiple

Political and legal environments create different business problems. Each element of the
international business strategy can potentially be affected by multiple legal environments. Laws
governing business arrangements also vary greatly in the 150 different legal systems and sets of
national laws.

Cultural Environment

The impact of culture on entrepreneurs and strategies is significant. Understanding the local
culture is necessary when developing worldwide plans.

Technological Environment

Technology varies significantly across countries. New products in a country are created based
on the conditions and infrastructure of that country. The first step in identifying markets is to analyze
data in the following areas:
1. Market characteristics.

2. Marketing institutions.

3. Industry conditions .

4. Legal environment.

5. Resources.

6. Political environment.

ENTREPRENEURIAL ENTRY INTO INTERNATIONAL BUSINESS

The choice of entry method depends on the goals of the entrepreneur and the company's
strengths and weaknesses.

Exporting

As a general rule, an entrepreneur starts doing international business through exporting.

Indirect exporting

Involves a foreign purchaser in the local market or using an export management firm. For
certain commodities, foreign buyers seek out sources of supply. Export management firms, another
indirect method, are located in many commercial centers.

Direct exporting

Through independent distributors or through one's own overseas sales office is another entry
method. An independent foreign distributor directly contacts foreign customers and takes care of all
technicalities. Entrepreneurs who do not wish to give up control over marketing can open overseas
sales offices and hire their own salespeople.

Enterprise development and competitiveness

Enterprise development in the context of competitiveness not only entails the ability to
produce products that can be accepted globally but also the level of support given to enterprises to
help them produce, innovate, and gain market access. While relatively mature and free, enterprise
development in the Philippines is beset with critical challenges. These challenges are found within
the context of pillars identified by the United Nations Development Programme in its report
Unleashing Entrepreneurship: rule of law, physical and social infrastructure, domestic macro
environment, and global macro environment; a level playing field, access to financing, and access to
skill development and knowledge.

If the challenges remain unresolved, gaps in enterprise development have the potential to
thwart the country’s competitiveness and ability to effectively function within global product.