Republic of the Philippines

Bacoor City Campus

Bacoor City, Cavite

Management Department
Bachelor of Science in Hotel Management
BSHM 90: Entrepreneurship in Tourism and Hospitality
Second Semester, AY 2020 – 2021

Prepared by:

JOHN DARREN H. LUBATON

Instructor

Reviewed by

JANICE A. NEALEGA, MBA MENVYLUZ S. MACALALAD,

MBA,LPT
Chairperson Campus Administrator
Module 2: Concept of Entrepreneurship

Before proceeding further, let us first understand the concept of entrepreneurship and its
importance to the economy. An entrepreneur is the sole owner and manager of his business.
Actually, the word translates to “the one who undertakes” in French.

From an economics point of view, an entrepreneur is the one who bears all the risk of a
business. And in return, he gets to enjoy all of the profits from the business as well. While
understanding the concept of entrepreneurship we will also learn about the importance of
entrepreneurs in the economy. They bring in new goods, services, technologies, etc. to the
market.

Who is an Entrepreneur?

The word entrepreneur is derived from the French word ‘Entreprendre’ which means to
‘undertake’, i.e., the person who undertakes the risk of new enterprise.

The New Encyclopedia Britannica defines an entrepreneur as “an individual who bears
the risk of operating a business in the face of uncertainty about the future conditions.”

What is Entrepreneurship?

Entrepreneurship is the propensity of mind to take calculated risks with confidence to

achieve a predetermined business or industrial objective.
 In substance, it is the risk-taking ability of the individual, broadly coupled with correct
decision-making.

Entrepreneur and Entrepreneurship

Entrepreneur Entrepreneurship

❖ Entrepreneurship is a process by which an

❖ Entrepreneur is a person who
entrepreneur is required to complete the
is a visualizer, creator, innovative process by initiating new
technology or idea or perception
innovator, decision maker, risk
taker and leader.
Definitions of Entrepreneurship

Entrepreneurship is a multifaceted activity and defined by different authorities in different ways.

Some of the definitions given by them are analyzed below:

1. Higgins B.: Entrepreneurship is meant the function of seeking investment and production
opportunity, organizing an enterprise to undertake a new production process, raising
capital, hiring labour, arranging the supply of raw materials, finding site, introducing a
new technique and commodities, discovering new sources of raw materials and selecting
top managers of day to day operations of the enterprise.

2. Schumpeter J.A: Entrepreneurship as defined essentially consists in doing things that

are not generally done in the ordinary course of business routine.

Concept of Entrepreneurship

Following approaches are used to explain the concept of entrepreneurship:

Economic Approach: Entrepreneurship is the process of initiating a new venture, organizing

the resources it requires and assuming the risks it entails.

The economist, Richard Cantillon remarked entrepreneur as a person who pays a

certain price for a product to resell it at an uncertain price thereby making decisions
about
obtaining and using resources while consequently assuming the risk of enterprise.
Sociological Approach:

Thomas Cocharan concluded in his study that the entrepreneur represents society’s
model personality. His performance depends upon his own attitudes towards his
occupation, the role expectations of sanctioning groups and the occupational
requirements of the job. Society’s values are the most important determinant of the

attitudes and role expectations.

Psychological Approach:

In this approach we can mention the concept developed by David McClelland.

According to David C McClelland, it is the high need for achievement which drives
people towards entrepreneurial activities. Achievement motive is basically measured
through child rearing practices which stress standards of excellence, material warmth,
self-reliance, training and low father dominance. Individuals with high achievement
motive tend to take keen interest in situations of high risk, desire for a concrete measure
of task performance.
 Thus, entrepreneurship is the end result of a complex and varying combination of
socioeconomic, psychological and other variables.

What are the 4 Types of Entrepreneurship?

It is classified into the following types:

1. Small Business Entrepreneurship-

These businesses are a hairdresser, grocery store, travel agent, consultant, carpenter, plumber,
electrician, etc. These people run or own their own business and hire family members or local
employees. For them, the profit would be able to feed their family and not make 100 million
business or take over an industry. They fund their business by taking small business loans or
loans from friends and family.

2. Scalable Startup Entrepreneurship-

This start-up entrepreneur starts a business knowing that their vision can change the world.
They attract investors who think and encourage people who think out of the box. The research
focuses on scalable business and experimental models, so, they hire the best and the brightest
employees. They require more venture capital to fuel and back their project or business.

3. Large Company Entrepreneurship-

These huge companies have defined life-cycles. Most of these companies grow and sustain by
offering new and innovative products that revolve around their main products. The change in
technology, customer preferences, new competition, etc., build pressure for large companies to
create an innovative product and sell it to the new set of customers in the new market. To cope
with the rapid technological changes, the existing organisations either buy innovation
enterprises or attempt to construct the product internally.

4. Social Entrepreneurship-
This type of entrepreneurship focuses on producing products and services that resolve social
needs and problems. Their only motto and goal is to work for society and not make any profits.

Characteristics of Entrepreneurship

Entrepreneurship is the oldest form of business organization. It is in fact entrepreneurs that

bring innovation into our economy with new products and services. They drive a nation’s
economy towards development and progress. Let us explore some of the traits and
characteristics of an entrepreneur.

As we look back in history we see the success stories of many accomplished and well-known
entrepreneurs. If you read about them, you will realize no two stories are the same.
Everybody has their own path to success. However, there are a few common traits and
characteristics that all successful entrepreneurs have in common. Let us take a look at a few
such traits.

1. Vision and Passion

An entrepreneur must have a very clear vision of his business. So he must have the ability to
plan out his long term and short term goals and objectives. He has to be able to map out his
future plans in an articulate and efficient manner.

Another very important trait necessary in an entrepreneur is that he must be passionate about
his work. Entrepreneurship is hard work and long hours, so he must be passionate about what
he is doing. Such passion can translate into hard work and success.

2. Innovative
One of the main characteristics of entrepreneurship is innovation. The entrepreneur looks for
the opportunity in the market and capitalizes on it.

He is the one who introduces new products and services in the market trying to fulfil customer
needs. The innovation can also be in a production process, new marketing strategy, innovative
advertising etc.

3. Risk Taker
A risk is an integral part of any new business. But it is an especially important factor in
entrepreneurship because here the entrepreneur bears the entire risk of the business. So it is
necessary that the entrepreneur has an adventurous and risk-taking personality.

4. Leader
One of the other important qualities of a successful entrepreneur is leadership. All good
entrepreneurs are good leaders.

They have the ability to motivate and lead their employees to success. They also have the
tenacity, knowledge, and skill to pull their businesses from a tight corner like good leaders.

5. Persistent
A good entrepreneur is always persistent by nature. A business is never an overnight success.
It takes immense hard work and also a little bit of luck.

But a persistent entrepreneur makes his own luck. He can create opportunities if they are not
presented to him. So a persistent entrepreneur that works tirelessly always has a greater
chance of success.
6. Ethical
Ethics and integrity are the cornerstones of any successful business in the long term. A
sustainable business cannot be run by someone with compromised morals.

So any credible business must have at its head an ethical entrepreneur who upholds the letter
of the law and the integrity of the business.

7. Competitive Spirit
The business world is a very cut-throat space. Thousands of new businesses are born and die
every day. So the competition is always going to be fierce and intense.

Such an environment is better suited to someone who is already competitive by nature and
thrives in such situations of pressure.

8. Resilient
And finally one of the most important traits in a successful entrepreneur is resilience. There is
no smooth straightforward path to success.

There will always be some failures and roadblocks in the way. So the entrepreneur has to be
resilient and steadfast in his pursuit of success.

Function of an Entrepreneur:

An entrepreneur is expected to perform the following:

1. Innovation
An entrepreneur is the key source of innovation and variation in an economy. It is actually one of
the most important tools of an entrepreneur's success. They use innovation to exploit
opportunities available in the market and overcome any threats.
So this innovation can be a new product, service, technology, production technique, marketing
strategy, etc. Or innovation can involve doing something better and more economically. Either
way in the concept of entrepreneurship, it is a key factor.

2. Risk taking
Entrepreneurship and risk-taking go hand in hand. One of the most important features of
entrepreneurship is that the whole business is run and managed by one person. So there is no
one to share the risks with.
Not taking any risks can stagnate a business and excessive impulsive risk-taking can cause
losses. So a good entrepreneur knows how to take and manage the risks of his business. But
the willingness of an entrepreneur to take risks gives them a competitive edge in the economy. It
helps them exploit the opportunities the economy provides.

3. Organisation
In entrepreneurship, it is essentially a one-man show. The entrepreneur bears all the risks and
enjoys all the rewards. And sure he has the help of employees and middle-level management,
yet he must be the one in ultimate control. This requires a lot of organization and impeccable
organizational skills.
An entrepreneur must be able to manage and organize his finances, his employees, his
resources, etc. So his organizational abilities are one of the most important elements of
entrepreneurship.

4. Business Decision/Vision
Vision or foresight is one of the main driving forces behind any entrepreneur. It is the energy that
drives the business forward by using the foresight of the entrepreneur. It is what gives the
business an outline for the future – the tasks to complete, the risks to take, the culture to
establish, etc.
All great entrepreneurs of the world that started with an entrepreneurship business are known to
have great vision. This helps them set out short term and long term goals for their business and
also plan ways to achieve these objectives.

5.Open-Minded- In a business, every circumstance can be an opportunity and used for

the benefit of a company. For example, Paytm recognised the gravity of demonetization and
acknowledged the need for online transactions would be more, so it utilised the situation and
expanded massively during this time.

6. Flexible- An entrepreneur should be flexible and open to change according to the

situation. To be on the top, a businessperson should be equipped to embrace change in a
product and service, as and when needed.

7. Know your Product-A company owner should know the product offerings and also be
aware of the latest trend in the market. It is essential to know if the available product or service
meets the demands of the current market, or whether it is time to tweak it a little. Being able to
be accountable and then alter as needed is a vital part of entrepreneurship.

Importance of Entrepreneurship:
● Creation of Employment- Entrepreneurship generates employment. It provides an
entry-level job, required for gaining experience and training for unskilled workers.
● Innovation- It is the hub of innovation that provides new product ventures, market,
technology and quality of goods, etc., and increases the standard of living of people.
● Impact on Society and Community Development- A society becomes greater if the
employment base is large and diversified. It brings about changes in society and
promotes facilities like higher expenditure on education, better sanitation, fewer slums, a
higher level of homeownership. Therefore, entrepreneurship assists the organisation
towards a more stable and high quality of community life.
● Increase Standard of Living- Entrepreneurship helps to improve the standard of living of
a person by increasing the income. The standard of living means, increase in the
consumption of various goods and services by a household for a particular period.
● Supports research and development- New products and services need to be researched
and tested before launching in the market. Therefore, an entrepreneur also dispenses
finance for research and development with research institutions and universities. This
promotes research, general construction, and development in the economy.