Entrepreneurship Review PDF

Entrepreneurship teaches us to: 3. Profit Potential - meaning the entrepreneur can be compensated by his profit coming from the create opportunity...

Entrepreneurship teaches us to: 3. Profit Potential - meaning the entrepreneur can be compensated by his profit coming from the create opportunity operation. ensure social justice 4. Risk bearing - meaning the entrepreneur needs to instill confidence gamble but wise enough to offset the risk. stimulate the economy take risks Entrepreneurship plays a very important role in the economic fail and to persevere growth of a country. become creative, inventive and innovative It creates employment opportunities, new markets, Relevance of Entrepreneurship to an organization new products, and technologies. 1. Development of Managerial capabilities Entrepreneurship also establishes industrial 2. Creation of Organizations linkages, improve foreign exchange rates, and 3. Improving standard of living supply the economy with goods and services that 4. Means of economic development answer the customers’ needs and wants. Concept of Entrepreneurship RECOGNIZING POTENTIAL MARKET - WEEK 3 The word “entrepreneur” was derived from the French verb Marketing is all about identifying and fulfilling the needs of the enterprendre, which means “to undertake.” This is customer. The needs are basic human requirements. There pinpointing to those who “undertake” the risk of enterprise. are three important concepts in marketing: needs, wants, The enterprise is created by an entrepreneur and the proce and demands. Understanding your target market’s needs, who “undertake Entrepreneurship.” wants, and demands will help you better market your products. Needs are things that satisfy the basic Entrepreneurs are innovators, willing to take risks and requirements. And what distinguishes a want from demand is generate new ideas to make it unique and profitable whether the customer wants something specific but is willing solutions to the present-day problems. to pay for it. Consider consumer electronics, an item the customer wants to use but may not be able to afford. Common Competencies in Entrepreneurship Needs - “Needs” are the basic human requirements 1. Decisive - an entrepreneur must be firm in making that are needed to survive. These necessities decisions. include shelter, clothes, food and water. 2. Communicator - an entrepreneur must have a convincing power. Maslow’s hierarchy of needs, which categorizes needs into 3. Leader - an entrepreneur an entrepreneur must 5 levels starting from physiological needs at the bottom and have the charisma to be obeyed by his employees. going up to self-actualization needs. 4. Opportunity seeker - an entrepreneur must have the ability to be the first to see business chances. 1. Physiological Needs – Food companies (Nestle, 5. Proactive - controlling a situation by making things Pepsi, Coca Cola) to happen or by preparing for possible future 2. Safety Needs – Insurance companies (ICICI problems. Prudential, Tata AIG, HDFC Life) 6. Risk Taker - they have the courage to pursue what 3. Social Needs – Social networking sites (Facebook, is their business ideas. Twitter, Instagram) 7. Innovative - the entrepreneurs have big business 4. Esteem Needs – Luxury brands (iPhone, Mercedes) ideas and they do not stop improving and thinking of 5. Self-actualization needs – Non-Profit organizations new worthwhile ideas for their business. and NGOs (UNICEF, Teach for India) Core Competencies in Entrepreneurship Wants - The desire for products or services that are not necessary, but which consumer wish for. 1. Economic and dynamic activity - Humans have unlimited needs, and to satisfy them, Entrepreneurship is an economic activity because it people desire different things, like products or involves the creation and operation of an enterprise services and ways of doing things. Needs are with a view to creating value or wealth by ensuring something essential for your survival. Whereas optimum utilization of limited resources. wants are intangible and volatile – something you 2. Innovative - Entrepreneurs constantly look for new may desire but don’t need. As time passes, people ideas, thus he needs to be creative. change their wants accordingly. The desire for different things varies from culture to social class and from personality to personality. Marketers can  influence human wants by providing a wide range 1.3 THE INDUSTRY ENVIRONMENT OF THE of need-satisfying products. BUSINESS INCLUDES: a) Competitors Demands - When a customer is willing and able to b) Customers buy what they need or want, it becomes a demand c) Creditors for the organization. Want becomes demand when d) Employees supported by purchasing power. e) Government f) Suppliers OPPORTUNITY SPOTTING AND ASSESSMENT is the beginning process that is considered to be the most difficult. 2. TECHNOLOGICAL DISCOVERY AND In this stage the entrepreneur carefully assesses the ADVANCEMENT - A person with entrepreneurial opportunity (based on the trends, consumer needs, wants and interest sees the possibility of business opportunities demands including environmental factors) length, in any new discovery or because of the use of latest capitalization required, threats, profitability and calculation of technology. real and perceived value and if the opportunity is aligned to 3. GOVERNMENT 'S THRUST, PROGRAMS AND their personal goals and attributes. POLICIES - The priorities, projects, programs, and policies of the government are also good sources of Scanning the Marketing Environment - Is the starting point ideas. of any venture wherein it involves the understanding and 4. PEOPLE'S INTEREST - The interests, hobbies, and knowing in the intricacies if the macro environment, preferences of people are rich source of microenvironment, and internal environment. entrepreneurial ideas. 3S of Opportunity Spotting and Assessment - is a 5. PAST EXPERIENCES - The expertise and skills framework that most of the promising entrepreneurs use to developed by a person who has worked in a finally come up with the ultimate product or service suited for particular field may lead to the opening of a related specific opportunity. business enterprise. 1st STEP: SEEKING OPPORTUNITIES STEEPLED Analysis - explains how eight specific macro- environmental factors can influence a product, brand, 1. Changes in the Environment – entrepreneurial business, or location. It’s an acronym with each letter ideas arises when changes happen in the external representing a different environmental influence: environment. External Environment - refers to the physical SOCIAL - specifically the location of customers, environment, societal environment, and industry cultural ideals, and values — can impact business environment, where the business operates. success. TECHNOLOGICAL - The current, previous, and 1. 1 Physical environment future state of technology impacts businesses. ECONOMIC - how it affects small and large A. CLIMATE - the weather conditions. corporations. B. NATURAL RESOURCES - such as minerals, ENVIRONMENTAL - the impact companies are forests, water, and fertile land that occur in nature having on the environment and natural resources. and can be used for economic gain. POLITICAL - Government policies and regulations C. WILDLIFE - includes all mammals, birds, reptiles, LEGAL - Regulations must be followed by all fish, etc. that live in the wild. corporations. ETHICAL - The one factor you can influence. 1.2 THE SOCIETAL ENVIRONMENT: PESTEL DEMOGRAPHICS - focuses on more numerical and ANALYSIS straightforward characteristics, like population size, A. POLITICAL FORCES - includes all laws, rules age, and location. and regulations that govern business practices as INTERNAL / MICROENVIRONMENT refers to the well as the permits, approvals, and licenses environment within the business. necessary to operate the business. B. ECONOMIC FORCES - such as income level and a) Business Resources are assets or properties employment rate. owned or controlled by the business. can either be C. SOCIOCULTURAL FORCES – customs, tangible or intangible. lifestyles and values that characterize a society. Tangible Resources – are assets of the business that D. TECHNOLOGICAL ENVIRONMENT - new have physical appearance and form. inventions and technology innovations  Current Resources – are used, applied, or consumed forceful opportunity, to which they will devote their time and within a short period or one year. resources. Noncurrent or fixed Resources – are properties whose 3rd Step: SEIZING THE OPPORTUNITY usefulness or benefits extend beyond one year. Intangible Resources – are assets of the business that Opportunity Seizing is the last step in opportunity spotting do not have physical appearance of form. and assessment. A business without resources cannot exist and a ✓ the “pushing through” with the chosen opportunity. business with insufficient resources cannot sustain the Innovation - is the process of positively improving an existing operation. product or service. It is a key driver for economic growth. b) Business Culture is a collection of values, beliefs, Three (3) types of Innovations according to the degree of principles, and expectations learned and shared by distinctiveness: employees, founders, stakeholders, and members of the management. 1. Breakthrough innovation 2. Technological innovation ✓ reflects the overall image of the business to 3. Ordinary innovations the community. ✓ reflects the identity of the employees but WHAT IS A MARKET? not dependent on the culture of dominant MARKET as a PLACE - it is a place where two or more people employees in the business. can gather to facilitate the trade of goods and services. METHODS OF GENERATING IDEAS MARKET in ENTREPRENEURSHIP - it is the total of all the 1. Focused Group Discussion (FGD) - is conducted buyers and sellers in the area under consideration. by an entrepreneur with the assistance of a Available Market - Prospects who are willing and capable moderator to gather the views of selected consumers (have sufficient resources) buyers and have access to a on certain issues related to their buying behavior. particular market or service (www.businessdictionary.com). 2. Brainstorming - is an activity similar to an FGD, that allows the participants to share creative ideas using Defined as the number of people who are both willing the following rules: and capable of buying a particular product or service a. no destructive criticism or judgement is in a particular market (MBA) allowed; Potential market is the part of the market you can capture in b. wider ideas are accepted; the future. It includes the demographic groups that are not c. more ideas are preferred; and currently your customers but could become customers in the d. improvement of others’ ideas is allowed. future (Lake, L, 2019). 3. Market potential is the total demand 3. Brainwriting or Internet brainstorming - is exactly for a product in a given business environment (Bhasin, H., the same as brainstorming except that the channel 2018). used is not face-to-face, but in writing or online. 4. Problem inventory analysis - is similar to the FGD Target Market - Refers to a group of potential customers except that the participants are already given an to whom a company wants to sell its products and services. inventory of product or service problems. Target markets are generally categorized by age, location, - participants will just identify from the list given the income, and lifestyle. Defining a specific target market allows compelling problem(s) of a potential product or a company to home in on specific market factors to reach and service instead of generating ideas from them. connect with customers through sales and marketing efforts. (Kenton, W., 2019). 2nd STEP: SCREENING THE OPPORTUNITY Penetrated Market - A set of customers or clients who are Opportunity Screening is the process of cautiously selecting already using a particular product or service. A penetrated the best opportunity. The selection will depend on the market means that the potential users of a product or service entrepreneur’s internal intent and the external intent which are aware of it, and in many cases are active consumers of it. will address the compelling needs of the target market. (www.businessdictionary.com). Risk Appetite – refers to the entrepreneur’s tolerance of OPPORTUNITY - is an entrepreneur's business idea that can business risks. potentially become a commercial product or services in the The crafting of a business plan starts only when entrepreneurs future. already said NO to many opportunities and said YES to one ✓ IDEAS that have POTENTIAL Essentials in Entrepreneur’s Opportunity Seeking. These THESE ARE THE FIVE FORCES COMPETING WITHIN THE are the basic foundation that the entrepreneur must have in INDUSTRY: seeking opportunities: Buyers. The buyers are the ones that pays cash in Entrepreneurial mind frame. This allows the exchange to your goods and services. entrepreneur to see things in a very positive and Potential new entrants. A new entrant is defined optimistic way in the midst of a difficult situation. as the one who enters something. Being a risk-taker, an entrepreneur can find a Rivalry among existing firms. Rivalry is a state or solution when problems arise. situation in which people or groups are competing Entrepreneurial heart flame. Entrepreneur's driven with each other. passion, they are attracted to discover satisfaction in Substitute products. Substitute means anything that the act and process of discovery. Passion is the takes the place or function of another. great desire of an entrepreneur to achieve his/her Supplier. Suppliers are the ones that provide goals. something that is needed or wanted. Entrepreneurial gut game. This refers to the ability of the entrepreneur of being intuitive. This also BUSINESS PLAN. A comprehensive paper that details the known as intuition. The gut game also means situation analysis, objectives, strategies and tactics, and how confidence in one’s self and the firm believes that to monitor and control the enterprise. everything you aspire can be reached MARKETING PROCESS. Starts with identifying the SOURCES OF OPPORTUNITIES customers’ needs where you are tasked to create a meaningful value proposition. Changes in the environment VALUE PROPOSITION (VP) External environment refers to the physical environment, societal environment, and industry environment where the It simply states why a customer should buy a business operates. certain product or service. The major driver in customer purchase or service 1.1 The physical environment includes: availment. a) Climate - the weather conditions. UNIQUE SELLING PROPOSITION (USP) b) Natural resources - such as minerals, forests, water, and fertile land that occur in nature and can Refers to how you will sell the product or service be used for economic gain. to your customers. c) Wildlife - includes all mammals, birds, reptiles, It addresses the customers’ wants and desires. Form fish, etc., that live in the wild. of product or service characteristics, promotion strategies, and tactics, distribution centers and 1.2 The Societal environment includes the various forces supply chains, pricing, physical attributes or physical like evidence, human resources or human capital, and market positioning strategies. a) Political forces - includes all the laws, rules, and regulations that govern business practices as well as MARKETING RESEARCH is a comprehensive process of the permits, approvals, and licenses necessary to understanding the customers’ intricacies and the industry they operate the business. revolve in. b) Economic forces - such as income level and MARKET SIZE is simply the size/the arena where the employment rate. entrepreneur’s business will play. It is the approximation of c) Sociocultural forces - customs, lifestyles and the number of buyers and sellers in a particular market. values that characterize a society. MARKET SPACE OR MARKET UNIVERSE is the d) Technological environment - new inventions approximate number of customers that will buy the product and technology innovations or avail the service. (total market). e) Legal CUSTOMERS are said to be the “lifeblood of the business.” Customer requirements are specific features and COMPETITION is the act or process of trying to get or win characteristics that the customers need from a product or something. Competition in business is the contest or rivalry service. among the companies selling similar products and/or targeting MARKET INTELLIGENCE includes customer profiling, the same target audience to get more sales, increase drives the entrepreneur on what correct strategies and tactics revenue, and gain more market share as compared to others. to employ. MARKET SEGMENTATION is the process of grouping similar The key to observation is that the researcher must be keen or homogenous customers according to demographic, and accurate on what he or she really wants to observe-he psychographic, geographic, and behavior. or she must have a very clear objective. 1. DEMOGRAPHIC SEGMENTATION also called THE MARKETING MIX: 7PS OF THE MARKETING socioeconomic segmentation, is the process of The marketing mix is a widely accepted strategic marketing grouping customers according to relevant tool that combines the original 4Ps (product, place, price, socioeconomic variables for the business venture. promotion) with the additional 3Ps – people, packaging, and 2. PSYCHOGRAPHIC SEGMENTATION is a process process – in formulating marketing tactics for a product or of grouping customers according to their service. perceptions, way of life, motivations, and inclinations. 1. Product. A product is any physical good, service, or 3. GEOGRAPHIC SEGMENTATION simply grouping idea that is created by an entrepreneur or an customers according to their location. This is critical innovator in serving the needs of the customers in the analysis of the target market as this and addressing their existing problem. encompasses the cultures, beliefs, preferences, politics, and lifestyle of a certain geography. ✓ Tangible products these are the products that can be perceived by our senses; see, touch, It can be as small as a street, a village or a barangay. feel. 4. BEHAVIORAL SEGMENTATION is the process of ✓ Intangible products are goods sold by a grouping the customers according to their actions. company that are not physical in nature but can These behaviors are instigated by occasions, be felt indirectly. desired benefits, loyalty, and usage of products or availment of services. 2. Place. Place represents the location where the buyer and seller exchange goods or services. It is also In gathering data for market research, the following methods called as the distribution channel. are suggested. 3. Price. Price is the peso value that the entrepreneur INTERVIEWS - are conducted one on one with professionals assigns to a certain product or service after who can give detailed responses because of their knowledge considering its costs, competition, objectives, in the industry. positioning, and target market. The price is the There are three groups within target market to listen. amount or value that a customer gives up enjoying the benefits of having or using a product or service. 1. Existing customers – this group includes customers that recognized a problem and purchased TWO CLASSIFICATIONS OF COSTS a solution to solve that problem. 2. Evaluators – this group includes both customers ✓ Variable costs or controllable costs - these costs (competitive wins) and those that have selected the are directly proportional to the number of products competition (competitive losses) manufactured or to the number of services 3. Potentials – this group of customers that haven’t performed. purchased a type of product but have tried to solve ✓ Fixed costs or uncontrollable costs - these are the same problems through internal efforts. costs not directly proportional to the manufacturing of a product or to the performance of FOCUS GROUP DISCUSSION - interactive group setting with the service. a moderator, where a group of people/customers give face to face feedback. TYPES OF PRICING: SURVEY/RESEARCH - uses a written or online questionnaire ✓ Penetration pricing - this refers to setting a low to be completed by the person being surveyed, or a telephone price to increase market share, but the entrepreneur interview, or a personal interview. will eventually increase the price once the desired market share is achieved. OBSERVATION - one of the preferred and practical methods ✓ Skimming - this is the opposite of penetration pricing of generating ideas because the researchers document the where prices are initially high and then they are behavioral patterns of people or of objects or events without lowered to offer the product or service to a wider necessarily requiring them to participate in the research market. process. ✓ Competitive pricing - this refers to benchmarking prices with the competitors.  ✓ Economy Pricing - is a volume-based pricing strategy wherein you price goods low and gain revenue based on the number of customers who purchase your product. It's typically used for commodity goods, like generic-brand groceries or medications, that don't have the marketing and advertising costs of their name-brand counterparts. ✓ Product line pricing - this refers to pricing different products or services within a parallel product array using varying price points. ✓ Psychological pricing - this considers the psychology and positioning of price in the market. ✓ Premium pricing - this refers to setting a very high price to reflect elitism and superiority. ✓ Cost-based pricing - the basis of markup is the cost of sales. ✓ Cost plus pricing - the markup is based on a certain percentage of cost. 4. Promotion. Promotion refers to the complete set of activities, which communicate the product, brand or service to the user. The idea is to attract people to buy your product over others. Advertising, Personal Selling, Sales Promotion, Direct Marketing, and social media are examples of promotion. 5. People. They are the target consumers of the company. People are the ultimate marketing strategy. They sell and push the product. People are one of the most important elements of the marketing mix today. This is because of the remarkable rise of the services industry. 6. Physical Evidence. Physical appearance is the first distinction of a product. A product could be easily recognized by its appearance. 7. Positioning. When a company presents a product or service in a way that is different from the competitors, they are said to be “positioning” it. Positioning refers to a process used by marketers to create an image in the minds of a target market. BRAND NAME is a name, symbol, or other feature that distinguishes a seller's goods or services in the marketplace. Your brand is one of your greatest assets because your brand is your customers' over-all experience of your business. BRAND STRATEGY is a long-term design for the development of a popular brand in order to achieve the goals and objectives. A well-defined brand strategy shakes all parts of a business and is directly linked to customer needs, wants, emotions, and competitive surroundings.