Module 2 - The Entrepreneurial Mindset PDF

Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City MODULE The Entrepreneurial Mindset The Entrepreneurial Minds...

Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City MODULE The Entrepreneurial Mindset The Entrepreneurial Minds 1|Page Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Table of Contents Table of References 3 Learning Outcomes 4 Learning Objectives 5 The nature of Entrepreneurship 6 How Entrepreneurs Think 7 Exercises 9 Background and Characteristics 10 Establishing Corporate Entrepreneurship in the Organization 11 Information on a New Entry 14 Entry Strategy For New Entry Exploitation 15 Sources of New Ideas 17 Methods of Generating Ideas 18 Activity 20 2|Page Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Table of References Entrepreneurship 10th Edition (Hisrich, 2017) 1 The Entrepreneurial Mindset 2 https://www.youtube.com/watch?v=Z5glndBr-cE Have an Entrepreneurial Mindset 3 https://www.youtube.com/watch?v=M8GjmmQdl8Y You should be able to complete this module including all the self- assessments, research works, assignments, and other performance tasks within three hours. 3|Page  Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Learning Outcomes Course Learning Module Learning Topic Learning Outcomes Outcomes Outcomes (CLO) (PLO) (TLO) CLO 3. Develop, utilize, employ, and apply entrepreneurial skills in managing business enterprises and/or TLO 3. Identify the Develop and corporate organizations; different characteristics, demonstrate the mindset and behavior mindset and behavior of CLO 4. Respond critically of an entrepreneur. an entrepreneur. by formulating possible Identify asses, and TLO 4. Acquire an courses of actions by evaluate Opportunity seeking analyzing various issues behavior. and problems in the entrepreneurial opportunities. Logistics, Supply Chain, and Business Transportation industries; 4|Page Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Learning Objectives To introduce the concept of Entrepreneurship. To describe the similarities structure of entrepreneurship, enable to apply mental leap. To introduce the Bricolage as a resource of entrepreneurs’ resourcefulness. To introduce effectuation as a way expert entrepreneurs sometimes think. To develop the dynamic of Cognitive adaptability. To identify the Background and Characteristics considering as an entrepreneur. Weave the procedure of establishing firm or business, either internally or frequently. 5|Page Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City The Nature of Entrepreneurship Entrepreneurship has an important role in the growth and creation of business, as well as the prosperity of regions and nations. It starts with the quite humble beginning of entrepreneurial actions begin at the nexus of a lucrative opportunity and an enterprising individual. Entrepreneur mindset is a set of perspective and values, a perspective which to give an impression, ideas and thought in a particular thing and values as an important role that allow them to achieve greatness. There some situations which new goods, services, raw material and a methods of organizing can be introduced and sold at greater than their cost of production were called Entrepreneurial Opportunities. For example, an Entrepreneurial Opportunity in (Entrepreneurship 10e) could stem from introducing an existing technological product used in one market to create a new market. Alternatively, an entrepreneurial opportunity could be creating a new technological product for an existing market or creating both a new product/service and a new market. The recurring theme is that an entrepreneurial opportunity represents something new. However, such possibilities require an enterprising individual or a group of enterprising individuals to recognize, evaluate, and exploit these situations as possible opportunities. 6|Page Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Therefore, Entrepreneurship Action through the creation products or processes into new markets are possible occur through newly created organization or within an established organization. It can also exist in uncertainty which has to be an understanding entrepreneurial action to assess amount of uncertainty perceived surround a potential opportunity and the individual’s willingness to bear with that uncertainty. To be an Entrepreneur is to act on the possibility that one has identified an opportunity whether it is worth pursuing or not, it involves the Entrepreneurial Thinking- individual’s mental processes of overcoming decision whether a signal represents an opportunity for someone is also an opportunity for them. How Entrepreneurs Think Entrepreneurs must often think and make decisions in uncertain environments where the stakes are high, time pressure are immense, and there is considerable emotional Investment. They think differently from nonentrepreneurs, also from decision environment. Given the nature of entrepreneur’s decision-making environment, he or she must sometimes; 1. Think Structurally Forming opportunity beliefs often requires creative mental leaps. It is launched from a source-one’s existing knowledge and thinking. An example of a creative mental leap is from knowledge about existing markets to a new technology that could lead to products/services that satisfy the markets. Consequently, it is an idea and connection between a product either new service, business model, or new technology and a target market that could benefit its introduction and where it can be introduced is aided by the superficial and structural similarities between the source and the destination. 7|Page Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Superficial similarities exist when the basic elements of the technology resemble the basic elements of the market. Structural Similarities exist when the underlying mechanisms of the technology resemble the underlying mechanisms of the market. 2. Bricolage We mean that some entrepreneurs make “Do by applying combinations of the resources at hand to new problems and opportunities.” This involves the experimenting, reframing repackaging, or tinkering the existing resources into another resource that were not originally designed or conceived and its creating a new Entrepreneurial Opportunity. You can read the situation example of bricolage in these references https://www.jstor.org/stable/30037207?seq=1 3. Effectuation As potential business leaders, you should have trained to think rationally and sometime, there is an alternate way of thinking. Professor Saras Sarasvathy (from Darden, University of Virginia) has found that entrepreneurs do not always think through a problem in a way that starts with a desired outcome and focuses on the means to generate that outcome. But sometimes, Entrepreneurs thinks take what they have and select among possible outcomes. Such a process is referred to Causal Process, but sometimes they used Effectuation Process. These example explained the idea of Causation and Effectuation. Imagine a chef assigned the task of cooking dinner. There are two ways the task can be organized. In the first, the host or client picks out a menu in advance. All the chef needs to do is list the ingredients needed, shop for them, and then actually cook the meal. This is a process of causation. It begins with a given menu and focuses on selecting between effective ways to prepare the meal. 8|Page Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City In the second case, the host asks the chef to look through the cupboards in the kitchen for possible ingredients and utensils and then cook a meal. Here, the chef has to imagine possible menus based on the given ingredients and utensils, select the menu, and then prepare the meal. This is a process of effectuation. It begins with given ingredients and utensils and focuses on preparing one of many possible desirable meals with them. B efore we continue to the next terminologies, I have here a simple exercise for you to think about the example given above. From the pictures below, how will you organize the task related to business and Identify which might be Causation and Effectuation? Money Sewing Machine _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ ____________________________________. 9|Page Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City F rom the idea above, now it’s your turn to give an example of causation and effectuation and discuss why. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _________________________________________________________. You are able to finish these task of about 30 minutes. God Bless! 4. Cognitive Adaptability Describes the extent to which entrepreneurs are dynamic, flexible, self- regulating and engaged in the process of generating multiple decisions frameworks focused on sensing and processing changes and uncertainty by leveraging prior entrepreneurial knowledge in their environments and the acting on them. Background and Characteristics Most people think that entrepreneurs are dropout and didn’t have a proper education but that’s not true at all. To evaluate the backgrounds and characteristics of an entrepreneur we should consider 3 things. Education Age Work History Education Although some may feel that entrepreneurs are less educated than the general population, research findings indicate that this is clearly not the case. Even general education is valuable because it facilitates the integration and accumulation of new knowledge, providing individuals with a larger opportunity set and assists entrepreneurs in adapting to new situations and 10 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City how entrepreneur play a major role in helping entrepreneurs cope with the problems they confront. Age According to the research, it is important to differentiate between Entrepreneurial age and Chronological Age. In terms of Chronological Age, they are initiating they Entrepreneurial Career between ages of 22 and 45; before and after these ages. The experience is one of the best predictors of success and a precious experience. Also, there are milestone ages every five years (25, 30, 35, 40, and 45) when an individual is more inclined to start an entrepreneurial career. Work History Can influence and initiate the decision to launch a new entrepreneurial venture, it also plays a role in the growth and eventual success of the new venture. Experience in the following areas is particularly important: financing, product or service development, manufacturing, and the development of distribution channels. Establishing Corporate Entrepreneurship in the Organization An organization wanting to establish a more entrepreneurial firm must implement a procedure for its operation and creation. Although this can be done internally, frequently it is easier to use someone outside to facilitate the process. This is particularly true when the organization structure is very traditional and has a record of little change and few products being introduced. To established corporate entrepreneurship, the organization. Top management should be committed Should identify ideas and general areas that top management is interested in. Should use cutting edges technology. Must train their workers. Should develop ways to get closer to their customer. Should be productive if have fewer resources. Should stablish a strong support network. 11 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Should have an appropriate reward to the performance system. And unsuccessful entrepreneurial unit should be eliminated. Generation of a new entry Opportunity It refers to: Offering a new product to an established or new market Offering an established product to a new market Creating new organization THE ENTREPRENEURIAL PERSPECTIVE Entrepreneurial Strategy represents the of decisions, actions and reaction that first generate and then exploit over time, a new entry in a way that maximize the benefits or newness and minimizes its costs. GENEREATION OF A NEW ENTRY OPPORTUNITY Resources as a Source of Competitive Advantage When a firm engages in a new entry, it is hoped that this new entry will provide the firm with sustainable competitive advantage. Understanding where a sustainable competitive advantage come from will provide some insight into how entrepreneurs can generate new entries that are likely to provide the basis for high firm performance over an extended period of time. Resources are the basic building blocks to a firm’s functioning and performance. A firm’s resources are simply the inputs into the production process, such as machinery, financial capital, and skilled employees. Market Knowledge Market knowledge refers to the entrepreneur’s possession of information, technology, know-how, and skills that provide insight into a market and its customers. Being knowledgeable about the market and customers enables the entrepreneur to gain a deeper understanding of the problems that customers have with the market’s existing products. If the entrepreneurship 12 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City possessed market knowledge, they are able to provides a solution to customers’ dissatisfaction. Technological Knowledge the entrepreneur’s possession of information, technology, know-how, and skills that provide insight into ways to create new knowledge. This technological knowledge might lead to a technology that is the basis for a new entry, even though its market applicability is unobvious. Assessing the attractiveness of a New Entry Opportunity The entrepreneur needs to determine whether it is in fact valuable, rare, and inimitable by assessing whether the new product and/or the new market are sufficiently attractive to be worth exploiting and developing. This depends on the level of information on a new entry and the entrepreneur’s willingness to make a decision without perfect information. Information on a New Entry Prior Knowledge and Information Search The prior market and technological knowledge used to create the potential new entry can also be of benefit in assessing the attractiveness of a particular opportunity. More prior knowledge means that the entrepreneur starts from a position of less ignorance about the assessment task at hand. That is, less information meds to be collected to reach a threshold where the entrepreneur feels comfortable making a decision to exploit or not to exploit. Window of Opportunity a simple explanation of a period of time when the environment is favorable for entrepreneurs to exploit a particular new entry with an existing product. but the window of opportunity may close, leaving the environment for exploitation unfavorable. An example of a window of opportunity closing is when another entrepreneur has entered the industry and erected substantial barriers to entry and to imitation. 13 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Comfort with Making a Decision under Uncertainty The trade-off between more information and the likelihood that the window of opportunity will close provides a dilemma for entrepreneurs. This dilemma involves a choice of which error they prefer to commit. Error of Commission Negative outcome from acting. The costs to the entrepreneur were derived from acting on the perceived opportunity. Error of Omission Negative outcome from not acting. The entrepreneur must live with the knowledge that he or she let an attractive opportunity slip through his or her fingers. Decision to Exploit or Not to Exploit the New Entry The decision to exploit or not to exploit the new entry opportunity depends on whether the entrepreneur has what she or he believes to be sufficient information to make a decision, and on whether the window is still open for this new entry opportunity. Assessment of a New Entry’s Attractiveness Determining whether the entrepreneur believes she or he can make the proposed new entry work. 14 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City ENTRY STRATEGY FOR NEW ENTRY EXPLOITATION Determining Whether they are the first to introduce a new product and/or the first to create a new market, these claims have some merit. Being first can result in a number of advantages that can enhance performance. These include: First movers develop a cost advantage. the first mover can begin movement down the “experience curve.” The experience curve captures the idea that as a firm produces a greater volume of a particular product, the cost of producing each unit of that product goes down. Costs are reduced because the firm can spread its fixed costs over a greater number of units (economies of scale) as well as learn by trial and error over time (learning curve) to improve products and processes. First movers face less competitive rivalry. Although first movers might initially have only a few customers, if they have correctly assessed the opportunity, the market will grow rapidly. Even though competitors will enter this growing market, the market share lost to new competitors will be more than compensated for by market growth. In fact, in the growth stage of the market, firms are more concerned with keeping up with demand than they are with taking actions, such as price cutting, to take market share from others. First movers can secure important channels. First movers have the opportunity to select and develop strong relationships with the most important suppliers and distribution channels. This may represent a barrier to those considering entry and may force those who do eventually enter to use inferior suppliers and distribution outlets. First movers are better positioned to satisfy customers. First movers have the chance to (1) select and secure the most attractive segments of a market and (2) position themselves at the center of the market, providing an increased ability to recognize, and adapt to, changes in the market. In some cases, they may even (3) establish their product as the industry standard. 15 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City First movers gain expertise through participation. First movers have the opportunity to (1) learn from the first generation of products and improve, for example, product design, manufacturing, and marketing; (2) monitor changes in the market that might be difficult or impossible to detect for those firms not participating in the market; and (3) build up their networks, which can provide early information about attractive opportunities. These learning opportunities may be available only to those participating in the market. In this case, knowledge is gained through learning-by doing rather than through observing the practices of others (vicarious learning). As illustrated by the scales in Figure 3.3, there are forces pushing toward first-mover advantages, but there are also environmental conditions that can push a first mover toward performance disadvantages. 16 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City SOURCES OF NEW IDEAS Some of the more fruitful sources of ideas for entrepreneurs include consumers, existing products and services, distribution channels, the federal government, and research and development. Consumers Potential and nascent entrepreneurs should always pay close attention to potential customers. This can take the form of informally monitoring potential ideas and needs or formally arranging for consumers to have an opportunity to express their opinions. The idea or need has to have a large enough market to support a new venture. Existing Products and Services Potential entrepreneurs should also establish a method for monitoring and evaluating competitive products/services on the market. Frequently, this analysis uncovers ways to improve on these offerings that may result in a new product/service that has more market appeal and sales and profit potential. Sam Walton, founder of Walmart, would frequently visit competitive stores focusing not on what the competitive store did badly, but rather on what they did very well, so he could implement a version of these ideas at Walmart. Jameson Inns established a policy whereby the manager of each of its inns (hotels) reported weekly on competitive hotels and their prices in their market areas. 17 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Distribution Channels Members of the distribution channels are also excellent sources for new ideas reflecting their familiarity with the needs of the market. Not only do channel members frequently have suggestions for completely new products, but they can also help in marketing the entrepreneur’s newly developed products. One entrepreneur found out from a salesclerk in a large departmental store that the reason his hosiery was not selling well was its color. By heeding the suggestion and making the appropriate color changes, his company became one of the leading suppliers of nonbrand hosiery in that region of the United States. Federal Government The federal government can also be a source of new product ideas in two ways. First, the files of the Patent Office contain numerous new product possibilities. Although the patents themselves may not be feasible, they can frequently suggest other more feasible product ideas. Several government agencies and publications are helpful in monitoring patent application. Research and Development The largest source of new ideas is the entrepreneur’s own “research and development” efforts, which may be a formal endeavor connected with one’s current employment or an informal one in a basement or garage. METHODS OF GENERATING IDEAS Even with a wide variety of sources available, coming up with an idea to serve as the basis for a new venture can still pose a problem, particularly since the idea is the basis for the business. The entrepreneur can use several methods to help generate and test new ideas such as focus groups, brainstorming, brainwriting, and problem inventory analysis. 1. Focus Group Groups of individuals providing information in a structured format. In addition to generate new ideas, the focus group is an excellent method for initially screening ideas and concepts. with the use one of several 18 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City procedures available the results can be analyzed and more quantitatively, making the focus group a useful method for generating new product ideas. 2. Brainstorming The brainstorming method stimulates people to be creative by meeting with others and participating in an organized group experience. Although most of the ideas generated by the group have no basis for further development, sometimes a good idea emerges. This has a greater frequency of occurrence when the brainstorming effort focuses on a specific product or market area. 3. Brainwriting Brainwriting is a form of written brainstorming. It was created by Bernd Rohrbach at the end of the 1960s under the name Method 635 and differs from classical brainstorming by giving participants more time to think than in a brainstorming session, where the ideas are expressed spontaneously. Brainwriting is a silent, written generation of ideas by a group of people. The participants write their ideas on special forms or cards that circulate within the group, which usually consists of six members. Each group member generates and writes down three ideas during a five-minute period. The form is passed on to the adjacent person who writes down three new ideas, and so on, until each form has passed all participants. A leader monitors the time intervals and can reduce or lengthen the time given to participants according to the needs of the group. Participants can also be spread geographically with the sheets rotated electronically. 4. Problem Inventory Analysis Problem inventory analysis uses individuals in a manner analogous to focus groups to generate new product ideas. However, instead of generating new ideas themselves, consumers in the group are provided with a list of problems in a general product category. 19 | P a g e Republic of the Philippines PHILIPPINE STATE COLLEGE OF AERONAUTICS INSTITUTE OF LIBERAL ARTS AND SCIENCES Piccio Garden, Villamor, Pasay City Here’s a little time as possible for reflection, contemplation or meditation. Create a Reflection Paper about the Three Chosen topics from the module content or click the video link about The Entrepreneurial Mindset concerned. Video No. 1: The Entrepreneurial Mindet https://www.youtube.com/watch?v=Z5glndBr-cE Video No. 2: Have an Entrepreneurial Mindset https://www.youtube.com/watch?v=M8GjmmQdl8Y 20 | P a g e