Lesson 2 - Basic Concepts and Characteristics of Entrepreneurship

LESSON 2:
Basic Concepts and

Characteristics of
Entrepreneurship
Prepared by: Tito, Almalyn Joy A.
Lesson Objectives:
 Discuss the Concepts of a working entrepreneur
 Apply the good characteristics of an entrepreneur
 Suggest ways and means on how to transform

yourself into a successful entrepreneur
Concept of Entrepreneurship
The word “entrepreneur” is derived from the French verb
en t er p r en d r e , w h i c h m e a n s ‘ t o u n d e r t a k e ’ .
T h i s r e f e r s t o t h o s e w h o “ u nd e r t a k e ” t h e r i s k o f n e w
e n t e r p r i s e s . A n e n t e rp ri s e i s c r e a t e d b y a n e n t r e p r e n e u r . T h e
process of creation is called “entrepreneurship”.
Entrepreneurship is a process of actions of an entrepreneur

who is a person always in search of something new and
e x p l o i t s s u c h i d e a s i n t o ga i n f u l o p p o r t u n i t ie s b y a c c e p t i n g
the risk and uncertainty with the enterprise.
Entrepreneurship is a process of actions of an entrepreneur who
is a person always in search of something new and exploits
such ideas into gainful opportunities by accepting the risk and
uncertainty with the enterprise.
Characteristics of
Entrepreneurship
1. Economic and dynamic activity :
It involves the creation and operation of an enterprise with a view to creating value
or wealth by ensuring optimum utilization of scarce resources. Since this value
creation activity is performed continuously in the midst of uncertain business
environment, therefore, entrepreneurship is regarded as a dynamic force.
2. Related to innovation
It involves a continuous search for new ideas. entrepreneurship is a continuous
effort for synergy (optimization of performance) in organizations.
Characteristics of
Entrepreneurship
3. Profit Potential :
It is the likely level of return or compensation to the entrepreneur for taking on the
risk of developing an idea into an actual business venture.” Without profit
potential, the efforts of entrepreneurs would remain only an abstract and a
theoretical leisure activity.
4. Risk Bearing
The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of
the creation and implementation of new ideas. New ideas are always tentative and
their results may not be instantaneous and positive.
Entrepreneurial
Process
Entrepreneurship is a process, a journey, not the
destination; a means, not an end.
To establish and run an enterprise it is divided into

three parts – the entrepreneurial job, the promotion,
and the operation. Entrepreneurial job is restricted to
two steps, i.e., generation of an idea and preparation
of feasibility report.
1. Idea Generation
a. Germination
This is like seeding process, not like planting seed. It is more like the
natural seeding. Most creative ideas can be linked to an individual’s
interest or curiosity about a specific problem or area of study.
b. Preparation
It is when creative people start a search for answers to the problems.
Inventors will go on for setting up laboratories; designers will think of
engineering new product ideas and marketers will study consumer
buying habits..
c. Incubation
This is a stage where the entrepreneurial process enters the sub-
conscious intellectualization. The sub-conscious mind joins the
unrelated ideas so as to find a resolution.
2. Feasibility Study
It is done to see if the idea can be commercially viable. It passes
through two steps:
a. Illumination
After the generation of idea, this is the stage when the idea is thought
of as a realistic creation. The stage of idea blossoming is critical
because ideas by themselves have no meaning.
b. Verification
This is the last thing to verify the idea as realistic and useful for
application. Verification is concerned about practicality to implement
an idea and explore its usefulness to the society and the entrepreneur.
Importance of
Entrepreneurship
1. Development of managerial capabilities
An entrepreneur studies a problem, identifies its alternatives, compares the alternatives in terms of
cost and benefits implications, and finally chooses the best alternative. This exercise helps in
sharpening the decision making skills of an entrepreneur.
2. Creation of Organization
Entrepreneurship results into creation of organizations when entrepreneurs assemble and coordinate
physical, human and financial resources and direct them towards achievement of objectives through
managerial skills.
Importance of
Entrepreneurship
3. Improving standards of living
By creating productive organizations, entrepreneurship helps in making a wide variety of goods and
services available to the society which results into higher standards of living for the people
4. Means of economic development

Entrepreneurship involves creation and use of innovative ideas, maximization of output from given
resources, development of managerial skills, etc., and all these factors are so essential for the economic
development of a country.
Types of Entrepreneur
1. Innovative Entrepreneur
These entrepreneurs have the ability to think newer, better and more economical
ideas of business organization and management. They are the business leaders and
contributors to the economic development of a country..
2. Imitating Entrepreneur
These entrepreneurs are people who follow the path shown by innovative
entrepreneurs. They imitate innovative entrepreneurs because the environment in
which they operate is such that it does not permit them to have creative and
innovative ideas on their own.
3. Fabian Entrepreneur
Those individuals who do not show initiative in visualizing and implementing new
ideas and innovations wait for some development which would motivate them to
initiate unless there is an imminent threat to their very existence.
4. Drone Entrepreneur
‘drone’ is ‘a person who lives on the labor of others’. Those individuals who are
satisfied with the existing mode and speed of business activity and show no
inclination in gaining market leadership. In other words, drone entrepreneurs are
die-hard conservatives and even ready to suffer the loss of business.
5. Social Entrepreneur
Social entrepreneurs drive social innovation and transformation in various fields
including education, health, human rights, workers’ rights, environment and
enterprise development.
INNOVATION
Functions ASSUMPTION OF RISK
of Entrepreneur
RESEARCH
DEVELOPMENT OF MANAGEMENT SKILLS
Functions OVERCOMING RESISTANCE TO CHANGE
of Entrepreneur
CATALYST OF ECONOMIC DEVELOPMENT

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LESSON 2:

Basic Concepts and

 Apply the good characteristics of an entrepreneur

 Suggest ways and means on how to transform

Entrepreneurship is a process of actions of an entrepreneur

To establish and run an enterprise it is divided into

4. Means of economic development

Functions ASSUMPTION OF RISK

Functions OVERCOMING RESISTANCE TO CHANGE

CATALYST OF ECONOMIC DEVELOPMENT

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