ENTREP REVIEWER.docx

***Figure 1. The Entrepreneurial Process of Creating New Venture*** **Essentials in Entrepreneur\'s Opportunity - Seeking** These are the basic foundation that the entrepreneur must have in seeking opportunities: **-Entrepreneurial mind frame.** -**Entrepreneurial heart flame.** -**Entrepreneur...

***Figure 1. The Entrepreneurial Process of Creating New Venture*** **Essentials in Entrepreneur\'s Opportunity - Seeking** These are the basic foundation that the entrepreneur must have in seeking opportunities: **-Entrepreneurial mind frame.** -**Entrepreneurial heart flame.** -**Entrepreneurial gut game.** ***Sources of Opportunities*** There are many ways to discover opportunities. Looking at the big picture, some have noticed the emerging trends and patterns for business opportunities. While others are trying to find out their target market. The following are some sources of opportunities: **1. Changes in the environment** a. [**Climate**] - the weather conditions. b. **[Natural resources]** - such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain **1.2 The Societal environment includes the various forces like** [a. **Political forces**] - includes all the laws, rules, and regulations that govern business practices as well as the permits, approvals, and licenses necessary to operate the business. [b. **Economic forces**] - such as income level and employment rate. c\. **[Sociocultural forces]**, customs, lifestyles and values that characterize a society. d\. **[Technological environment]** new inventions and technology innovations. **1.3 The Industry environment of the business includes:** [a. **Competitors**] [b. **Customers**] [c. **Creditors**] [d. **Employees**] [e. **Government**] [f. **Suppliers**] *For example, one factor in the physical environment that can easily change is the climate. The temperature is very high during summer but very low during the rainy season. An individual with entrepreneurial drive can be extremely imaginative and inventive in identifying opportunities. He/she can venture on a business that responds to the needs of the people during summer and rainy season.* **2. Technological discovery and advancement** For example, an individual with knowledge in repair and installation of a machine engine discovers additional engine parts that considerably reduce fuel consumption. **3. Government\'s thrust, programs, and policies** The priorities, projects, programs, and policies of the [government are also good sources of ideas]. **4. People\'s interest** 5\. **Past experiences** For example, an accountant who has learned the appropriate accounting and management skills and techniques in a prominent accounting firm can start his/her business venture by opening his/her own accounting firm. **Forces of Competition Model** It is also known as the ***\"five forces of competition\"***. An industry environment is a competitive environment. Regardless of what product or services you have, competition is always present. ***Competition*** - it is the act or process of trying to get or win something. For example, the prices are lower when there is a competition among the stores. *These are the five forces competing within the industry:* - **Buyers** - **Potential new entrants** - **Rivalry among existing firms** - **Substitute products** - **Supplier** **1. Buyers** The buyers [are the ones that pay cash in exchange for your goods and services.] One example is the influence of the price or in the bargaining strategy. The buyer has a strong and magnified bargaining power. The threat of its bargaining power will be less if the following factors are noticed: ***c. The cost of switching the supplier cost is minimal.*** ***d. The product represents a high percentage of the buyer\'s cost.*** ***e. The buyer purchases large portions of the seller\'s product or services.*** **2. Potential New Entrants** A new entrant [is defined as companies or businesses that have the ability to penetrate or enter into a particular industry.] For example, in the level of capital requirements, if the business requires huge capital, new entrants should decline to join the business. This gives a threat to the business. This can be noticed if there is the presence of the following factors: ***a. Substantial capital requirement*** ***b. Strict government policy*** ***c. Difficulty in accessing distribution channels*** ***d. Economies of scale*** ***e. High cost of product differentiation*** ***f. High switching cost*** **3. Rivalry among Existing Firms** Rivalry is [a state or situation wherein business organizations are competing with each other in a particular market.] For example, it depends on the marketing strategy of your competitor, like giving freebies and special offers. The intensity of rivalry among existing firms is characterized to the following factors: ***a. Diversity of rivals*** ***b. Number of competing firms*** ***c. Characteristics of the products or services*** ***d. Increased capacity*** ***e. Amount of fixed costs*** ***f. Rate of industry growth*** **4. Substitute Products** Substitute is one that [serves the same purpose as another product in the market]. For example, the consumers decide to use margarine as a substitute for butter. In case the price of butter increases, preferably the consumer will gradually switch to margarine. A substitute product can give a big threat in the industry environment if the following factors are noticed: ***a. Switching cost is low*** ***b. Preferences and tastes of the customers easily change*** ***c. Product differentiation is highly noticeable*** ***d. The quality of substitute products dramatically improves*** ***e. The price of substitute product is substantially lower*** **5. Suppliers** The Suppliers [are the one that provide something that is needed in business operations such as office supplies and equipment.] In an example where supplies and services being offered is unstable the intensity of the threat is strong in this kind of the competitive force in the industry. This can be noticed if there is the presence of the following factors: **a. The supplier has the ability for forward integration** **b. Suppliers in the industry are few, but the sales volume is high** **c. Substitute products are not readily available in the market** **d. The switching cost is very high** **e. The product or service is unique** ***What is Unique Selling Proposition*** (USP) and ***Value Proposition*** (VP)? This part allows the entrepreneur to prepare himself on how to advertise and sell his product even if it is similar to others. In this lesson, you will find out the answers and understand more about the market. **Value Proposition (VP)** is [a business or marketing statement that summarizes why a consumer should buy a company\'s product or use its service.] This statement is often used to convince a customer to purchase a particular product or service to add a form of value to their lives. In creating Value Proposition, entrepreneurs will consider the basic elements: ***Target Customer*** ***Needs/opportunity*** ***Name of the product*** ***Name of the enterprise/company*** There are many competitors in the market who establish superiority over other entrepreneurs. [Entrepreneurs should think of other alternatives to make their products better.] An important aspect in Value Proposition is that [it must be truthful and that it should establish credibility to the consumers]. Example: Potential value proposition is most common in small businesses of your locality. Aling Charing Sari-Sari Store opens only from 6:00 am to 6:00 pm, but Aling Charing noticed that there are customers who go to a nearby town to look for a convenience store at around 10:00 pm to 6:00 am. She believes that this is a great opportunity for her store to operate 24/7. In this example, the proposed value proposition is: \"Charing sari-sari Store, open 24/7\". The business describes a sari-sari store - a basic retail store. The assurance from this value proposition is because of the phrase \"open 24/7\", Aling Charing\'s sari-sari store opens 24/7, which makes it different from other competitors. **Unique Selling Proposition (USP)** - refers to [how you sell your product or services to your customer.] You will address the wants and desires of your customers. As an entrepreneur, you should think of marketing concepts that persuade your target customers. You may ask the following questions in doing this: What do the customers want? What brand does well? What does your competitor sell well? Some tips for the entrepreneur on how to create an effective unique selling proposition to the target customers are: - ***Identify and rank the uniqueness of the product or services character*** - ***Be very Specific*** - ***Keep it Short and Simple (KISS)*** As an entrepreneur, present the best feature of your product or service that is different from other competitors. In promoting your products or services, make sure that it is very specific and put details that emphasize the differentiator against the competitors. Keep it short and simple and think of a tagline that is easy to remember. Right now, the proposed unique selling proposition is: \"Charing sari-sari store, open 24/7\" Readers get confused between value proposition and unique selling proposition. [The two propositions are used to differentiate the products from competitors.] For example, Jollibee is known to have a Filipino taste burger. This brand has a unique selling point because of its tagline \"Langhap Sarap\" Unique Selling Proposition and Value Proposition are *[two of the most famous tools used to explain why prospect customers buy each product and service]*. Base on each definition, we learn that USP and VP are frameworks of each business industry. The two propositions are valuable for the entrepreneurs. Make sure that you\'re focusing on a solution that is a need, and make sure that you are targeting a customer segment that\'s large enough and cares enough about your solution so that you can build a viable business. After you understand the value proposition and the unique selling proposition, now it\'s time to understand the target market, customers requirement and market size. Understanding your market is critical in building your business model. **[There are three factors that will determine your customers.]** **A. Target Market** Market Targeting is a sage in market identification process that [aims to determine the buyers with common needs and characteristics.] Prospect customers are a market segment that an entrepreneurial venture intends to serve. In targeting a specific market, it will exclude people if it will not fit your criteria. Rather, target marketing allows you to focus your marketing money and brand message on a specific market that is more likely to buy from you than other markets. Choose a product that is more affordable, efficient, and effective to reach potential clients and generate business. Commonly used methods for segmenting the markets are follows.. ***1. Geographic segmentation*** - the total market is divided according to geographical location. - Variables to consider a\. Climate b\. Dominant ethnic group c\. Culture d\. Density (either rural or urban) ***2. Demographic Segmentation -*** divided based on consumers - Variables to consider a\. Gender b\. Age c\. Income d\. Occupation e\. Education f\. Religion g\. Ethnic group h\. Family size ***3. Psychological Segmentation*** - divided in terms of how customers think and believe - Variables to consider a\. Needs and wants b\. Attitudes c\. Social class d\. Personality traits e\. Knowledge and awareness f\. Brand concept g\. Lifestyle 4\. Behavioral Segmentation - divided according to customers\' behavior pattern as they interact with a company. - Variables to consider a\. Perceptions b\. Knowledge c\. Reaction d\. Benefits e\. Loyalty f\. Responses **B. Customer Requirements** Customer requirements are the [specific characteristics that the customers need from a product or a service.] There can be two types of customer requirements: *1. Service Requirement* *2. Output Requirement* **Service Requirement:** An [intangible thing or product that **cannot be touched** but the customer can feel the fulfillment]. There are elements in service requirement like on-time delivery, service with a smile, easy-payment etc. It includes all aspects of how a customer expects to be treated while purchasing a product and how easy the buying process goes. **Output Requirements:** [Tangible thing or things that **can be seen**.] Characteristic specifications that a consumer expects to be fulfilled in the product. Costumers will avail services as a product, then various service requirements can take the form of output requirements. For example, if the consumer hires a multi cab, then on-time arrival becomes an output requirement. Customer buys gadgets (phone speaker) the specification like the loudness and clarity are the output requirements. **C. Market Size** The [entrepreneur\'s most critical task is to calculate the market size, and the potential value that market has for their start-up business.] Market research will determine the entrepreneurs\' possible customers in one locality. ***What is Market Size?*** Market size is like a size of [the arena where the entrepreneurs will play their business]. It is the approximate number of sellers and buyers in a particular market. Companies are interested in knowing the market size before launching a new product or service in the area. ***In determining the market size, the entrepreneur will conduct a strategic marketing research from reliable sources using the following method***. The first step is to estimate the potential market - approximate number of customers that will buy the product or avail your services. The second step is to estimate the customers who probably dislike to buy your product or avail the services. The third step is for the entrepreneur to estimate the market share, that means plotting and calculating of the competitor\'s market share to determine the portion of the new venture. Market size becomes the most important factor if you ever need to raise funding for your business. **RELEVANCE OF ENTREPRENEURSHIP TO AN ORGANIZATION** ***1. Development of Managerial Capabilities*** - this means that one of the benefits an entrepreneur gets is to develop his managerial skills. ***2. Creation of Organizations -*** which means that because of entrepreneurship many organizations will exist. ***3. Improving Standard of Living*** - this means that entrepreneurship can lift economic status of an individual. ***4. Means of Economic Development -*** this means that not only the life of the entrepreneur is improved but also the society where the business is located. **Concept of Entrepreneurship** The word \"entrepreneur\" was derived from the **[French verb enterprendre]**, which means **[\"to undertake.\"]** This is pinpointing to those who \"undertake\" the risk of enterprise. ***The enterprise is created by an entrepreneur and the process is called \"Entrepreneurship.\"*** Entrepreneurs are innovators. They are willing to take the risks and generate unique ideas that can provide profitable solutions to the needs of the market and the society. **Factors Affecting Entrepreneurship** **1. Personality Factors which include:** **a. Initiative** - doing things even before being told. **b. Proactive** - which means he can classify opportunities and seize it. **c. Problem Solver** - which means he can retain good relations with other people. **d. Perseverance** - meaning he will pursue things to get done regardless of challenges. **e. Persuasion -** means that he can entice people to buy even if they don\'t want to. **f. A Planner** - he makes plans before doing things and does not fail to monitor it. **g. Risk-taker** - which means that he is willing to gamble but he will calculate it first. 2\. Environmental Factors which include political, climate, legal system, economic and social conditions and market situations. **[Common Competencies in Entrepreneurship]** **1. Decisive** - an entrepreneur must be firm in making decisions. **2. Communicator** - an entrepreneur must have a convincing power. **3. Leader** - an entrepreneur must have the charisma to be obeyed by his employees. **4. Opportunity seeker** - an entrepreneur must have the ability to be the first to see business chances. **5. Proactive** - an entrepreneur can control a situation by making things happen or by preparing for possible future problems. **6. Risk Taker** - an entrepreneur has the courage to pursue business ideas. **7. Innovative** - the entrepreneur has big business ideas and he does not stop improving and thinking of new worthwhile ideas for his business. **Core Competencies in Entrepreneurship** **1. Economic and Dynamic Activity -** Entrepreneurship is an economic activity because it involves the creation and operation of an enterprise with a view to creating value or wealth by ensuring optimum utilization of limited resources. **2. Innovative -** The entrepreneur constantly looks for new ideas, thus he needs to be creative. **3. Profit Potential** - The entrepreneur can be compensated by his profit coming from the operation. **4. Risk bearing -** The entrepreneur needs to gamble but wise enough to offset the risk. **Types of Entrepreneurs** ***1. Innovative Entrepreneurs*** - They are those who [always make new things by thinking of new ideas]. They have the ability to think newer, better and more economical ideas. ***2. Imitating Entrepreneurs*** - They are [those who don\'t create new things but only follow the ideas of other] entrepreneurs. ***3. Fabian Entrepreneurs*** - They are skeptical about changes to be made in the organization. [They don\'t initiate but follow only after they are satisfied.] ***4. Drone Entrepreneurs*** - They are [those who live on the labor of others]. They are die-hard conservatives even ready to suffer the loss of business. ***5. Social Entrepreneurs*** - They are those [who initiate changes and drive social innovation and transformation] in the various fields such as education, health, human rights, environment and enterprise development. **Career Opportunities of Entrepreneurship** **1. Business Consultant** - with the expertise of in the field of entrepreneurship, he can be a very good source of advices to other entrepreneurs and would be business men. **2. Teacher**- a graduate of an entrepreneurship can use his knowledge in teaching. **3. Researcher** - the entrepreneur can be employed as a researcher by an enterprise. **4. Sales -** the entrepreneurship graduate can apply as a salesman. **5. Business Reporter -** the entrepreneur being expert in the field, can be employed as a business reporter.