Nature and Type of Entrepreneurial Venture

NATURE AND TYPE OF
ENTREPRENEURIAL
VENTURE
Business Environment
Divided into two:
■ External or macro environment – divided into several
layers.
– Environmental scanning – is conducted to determine
the availability of raw materials, suitability of the
business to the location, cost involved, growth of the
industry, and the possible position of the business in
the market.
■ Internal or micro environment – is conducted to
determine the possible target market and the business
competency in taking advantage of available
opportunities.
Significant factors of entrepreneur
■Competency of the entrepreneur

■Competency of the business
• Entrepreneurial concepts and
principles
• Entrepreneurial Entrepreneurial
characteristics competency
• Entrepreneurial skills
What
business
to open?
• Scanning of the environment

• Physical environment
• Societal environment Business
competency
• Industry environment
• Internal environment
The Relationship of Entrepreneurial Competency and Business

Competency to Opening Business
1. Do I have the entrepreneurial competency to exploit the
business opportunity?
2. Have I critically scanned and evaluated the
environment to determine the:
a. Availability or sufficiency of raw materials
b. Suitability if the project to the location
c. Cost involved
d. Growth and barriers in the industry
e. Possible position of the business
f. Target customers
g. Required business competency?
Forms of Entrepreneurial Venture
■ Sole Proprietorship
■ Partnership
■ Corporation
■ Cooperative
Sole
Proprietorship
- is a business
venture
owned by on
person only
The characteristics of sole
proprietorship are as follows:
1.It is easy to form and manage
2.It is simple business operation
3.It has a limited pool of resources
4.Its growth is limited
5.The owner has unlimited liability.
Partnership - is a business venture that is
owned by two or more persons. The owners
are usually called partners.
■ The life of partnership is easily dissolved compared to a
corporation, particularly for the following reasons:
1. Death if one of the partners
2. Admission of a new partner in an existing
partnership
3. Personal insolvency of one of the partners
4. Permanent withdrawal of the investment of a partner
Corporation
■ formed by at least five but not more than fifteen persons.

■ Can either be stock or non-stock, profit of non-profit, and
domestic or foreign.
■ The person originally forming the corporation are called
incorporators.
■ A corporation is classified as a stock corporation when it is
authorized to issue shares of stock to stockholders.
■ A non-stock corporation, is not authorized to issue shares
of stock to the members.
Corporation
■ The owners of a stock corporation is called stockholders or
shareholders; while the owners of a non-stock corporation is called
members.
■ the certificate of stock is an evidence of ownership of a corporation.
■ A domestic corporation is organized under the laws of the
Philippines.
■ A foreign corporation is organized under the laws of the foreign
country but has the authority to operate in the Philippines.
■ Large businesses are usually organized as corporations. Its
management is entrusted to the board of directors who are elected
by and from its group of stockholders.
Nature of Entrepreneurial Venture
■ An entrepreneurial venture may also be

classified according to it nature.
■ The term nature simply refers to whether

the business is simply selling a product,
manufacturing a product, or rendering a
service to customers.
Nature of Entrepreneurial Venture
■ The classification of entrepreneurial venture
according to its nature are as follows:
1.Merchandising
2.Service
3.Manufacturing
4.Agriculture
5.Hybrid business
6.Special Corporation
Merchandising –
is engaged in the
buying and selling
of products or
goods.
■ There is no alteration
made in terms of physical
appearance, mechanical
parts, or chemical content.
■ It does not alter the
appearance of the product
purchased from the seller.
■ The entrepreneur engaged
in a merchandising venture
buys the product in a
certain form and sells it in
the same form.
Service - it provides services to
customers.
■ The primary source of income are the different services rendered or provided to
customers.
■ Service entrepreneurial ventures are classified as non-professional service and
professional service.
■ Non-Professional service ventures includes:
– Laundry shops, car repair shops, beauty parlors, educational institutions, and
banking institutions.
■ Professional service ventures includes:
– Law offices, medical clinics, and auditing and consultancy services.
Manufacturing venture – is a producer
of goods and products.
■ It is engaged in buying raw materials and supplies to be processed into finished
products.
■ The salient feature of manufacturing business is the conversion process of that take
place from the time a raw material is purchased up to the time it is sold as a finished
product.
■ Manpower, method, machine, materials, or the so called “four Ms” in production
operations, are applicable to manufacturing ventures such as furniture shops,
bakeshops, rattan factories, flour producers, and beverage companies.
Agriculture- an agricultural entrepreneurial venture is engaged in the production
of agricultural goods and animals.
■ It may sell its products as raw materials or as finished goods.

■ Entrepreneurial ventures engaged in mushroom production, potted ornamental
plants, hog fattening and dispersal, poultry products, and fishpond ventures are
examples of agricultural business.
Hybrid Business – possesses the characteristics and
nature of combined types of business entities.
■ It is inherent in the business to produce and sell goods and at the same time provide
services to customers.
■ Restaurants and fast-food chains are classified as hybrid businesses because their
very nature is to process and sell food and at the same time to provide excellent
services to customers.
■ Restaurants and fast-food chains have the attributes of a manufacturing business
and a service entity.
Special Corporation – special types of business may include cooperatives, joint
ventures and non-profit organizations.
WHAT BUSINESS TO
OPEN
■ There are no strict entrepreneurial rules in choosing the type and form of business to
open. However, after critically scanning the macro and micro business environments, the
entrepreneur must consider highly the following two important factors:
– Competency of entrepreneur and the competency of the business.
■ An entrepreneurial venture may either be a sole proprietorship, partnership, or a
corporation engaged in merchandising, manufacturing, or service.
■ Nevertheless, whatever type and nature of business venture is opened to exploit
different business opportunities, innovation or creativity defines the distinction between
an entrepreneur and an ordinary business person.
■ Thus, the concept of innovation or creativity must, in almost instances, be introduced
and practiced. An entrepreneur finds way to introduce innovation from the production
process to the marketing stage, while an ordinary businessperson simply imitates
business practices and procedures.
■ The concept of innovation or creativity can easily be practiced and highly noticeable in a
manufacturing operation since raw materials are transformed to finished goods through
the production process. Innovation can be introduced from the production phase up to
packaging and delivery.
PRODUCTION
SYSTEM
Three important elements in the
production system are:
1. The input
2. The transformation or production process, and
3. The output
PRODUCTION
INPUT OUTPUT
PROCESS
Input
the input includes the following:

1. Manpower
2. Materials
3. Machine
4. Design
5. Instructions
Production process – referred to as the transformation or conversion process, is the stage of production where the materials are transformed into the final product with the aid of
manpower and machine.
■ It involves the following activities:

1. Procurement or acquisition of raw materials and manufacturing supplies
2. Inspection of materials and supplies upon receipt at the receiving section
3. Storage of acquired materials and supplies
4. Issuance of materials and supplies to the production line
5. Inspection of materials and supplies to the production line
6. Rework or repair of defective goods
7. Transfer of finished goods to the storeroom
Output – it represents the final
products from the production process
and distributed to the customers.
FOUR M’S OF
PRODUCTION
Four Ms of Production
■ The most critical factors in the whole production system are the inputs and the
transformation process. Their quality determines the quality of the output.
■ It is also known as “garbage in, garbage out” or “GIGO” in the parlance of computer
technology.
■ The factors involved in the input and the production process are usually referred to
as the four Ms of production, namely, manpower, method, machine, and materials.
FOUR M’s
OUTPUT
• MANPOWER
• METHOD
• MACHINE
• MATERIALS
MANPOWER – simply refers to human workforce
involved in the manufacture of products.
■ It is considered as the most critical and important factor of production.
■ The entrepreneur must determine, acquire, and match the most qualified employees with the jobs at the most appropriate time
period.
■ Some of the manpower criteria that must be highly considered by the entrepreneur are as follows:
1. Educational qualifications and experience required for the job
2. Status of employment, whether permanent or temporary
3. Number of workers required for the job
4. Skills and expertise required for the job
5. Appropriate time the worker is needed
6. Conduct of background checking and issuance if requirements
7. Amount of salary or wages and other mandatory benefits
8. Availability of potential workers in the community.
METHOD – or production method refers to the process or technique of
converting raw materials to finished products.

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NATURE AND TYPE OF

■Competency of the entrepreneur

• Scanning of the environment

The Relationship of Entrepreneurial Competency and Business

■ formed by at least five but not more than fifteen persons.

■ An entrepreneurial venture may also be

■ The term nature simply refers to whether

■ It may sell its products as raw materials or as finished goods.

the input includes the following:

■ It involves the following activities:

■ It is considered as the most critical and important factor of production.

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