ENTREPRENEURSHIP

AND INNOVATION
INNOVATION
 The introduction of a new method, procedure,
custom, device, among others.
 It could be any of the following:
1. New products;
2. New process of production;
3. Substitution of a cheaper material in an unaltered
product;
4. Reorganization of production, internal function,
or distribution arrangement leading to increased
efficiency, better support for a given product, or
lower costs; or
INNOVATION
5. Improvement in instruments or methods of doing
innovation. Innovation may also be viewed as the last
stage in an important process consisting of the
following:
a. invention-which refers to the discovery or devising
of new products and processes;
b. Development-which refers to the process by which
the ides and principles generated from the stage of
invention are embodied in concrete products and
techniques; and
c. Innovation-which refers to the actual introduction of
a new product or process.
INNOVATION
Examples of successful innovations:
1. Cordless microphone
2. Microwave oven
3. Cellular phone
4. Kung fu fight scenes developed by Bruce Lee in the
movies
5. Karaoke music appliance
6. Use of Laser in the treatment of eye conditions
7. Use of computers by engineers and architects in the
design of buildings
Stages from a new venture to a
successful long-long-term enterprise
1. Prestart-up stage
2. Start-up stage
3. Early growth stage
4. Late growth stage
Stages from a new venture to a
successful long-long-term enterprise
1. Prestart-up stage-happens when the
entrepreneur starts to question the feasibility of
an idea, product or service.
2. The following activities are undertaken in the
start-up stage.
a. Formation of business
b. Generation of necessary capital
c. Purchase of facilities and equipment
d. Constructing prototype products
e. Testing the market
Stages from a new venture to a
successful long-long-term enterprise
3. Early growths stage follows after
establishing the feasibility
4. The late growth stage is the final stage
before the new venture matures into a
stable enterprise
Rewards for Successful
Entrepreneurship
Factors of production
1. Land
Rent-refers specifically to the price paid
per unit of time for the services of a
durable good, which, most often, refers to
land or buildings
Rewards for Successful
Entrepreneurship
Factors of production
2. Labor
Wages-determined on a piece rate basis
Salary- based on time-rate
3. Capital
Interest-is the compensation paid to owners
of invested capital
Factor of Production and Their Rewards
Factors of Economic Limiting factor for
Production Reward Rewards Received
Land Rent Supply and demand
Industry
Labor Interest rates/government
mandated rates
Wages/ Supply and demand
Capital
salary legislation
Entrepreneur profits Skill of entrepreneur
Innovation and Its Possible effects on Competing Firms
Entrepreneur Entrepreneur Entrepreneur
Year 1 introduce
innovative inactive inactive
product
Year 2 reap introduce
moderate innovative Inactive
profits Product
Reap introduce
Year 3 maximize
Moderate innovative
profits
profits Product
Reap
Year 4 Profits Maximize
Moderate
Decline profits
profits
Year 5 introduce
Profits Maximize
innovative
decline profits
product