Entrepreneurship - Reviewer 1 PDF

**REVIEWER 1:** **Introduction to Entrepreneurship** - **Definition**: - \"Entrepreneur\" comes from the French word *entreprendre*, meaning \"to undertake.\" - Entrepreneurship involves creating an enterprise, taking risks, and innovating. **Relevance of Entrepren...

**REVIEWER 1:** **Introduction to Entrepreneurship** - **Definition**: - \"Entrepreneur\" comes from the French word *entreprendre*, meaning \"to undertake.\" - Entrepreneurship involves creating an enterprise, taking risks, and innovating. **Relevance of Entrepreneurship:** - Development of managerial skills. - Creation of organizations and businesses. - Improves the standard of living. - Drives economic development. **Key Competencies of Entrepreneurs:** 1. **Decisiveness** - Firm in decision-making. 2. **Communication** - Ability to persuade and convince. 3. **Leadership** - Charisma to inspire and manage teams. 4. **Opportunity Seeking** - Identifying and leveraging business opportunities. 5. **Proactivity** - Taking initiative and preparing for the future. 6. **Risk-Taking** - Courage to pursue and manage risks. 7. **Innovation** - Continuously improving and introducing new ideas. **Core Characteristics of Entrepreneurs:** - Initiative and problem-solving abilities. - Perseverance and determination. - Strong planning and organizational skills. - Innovativeness and adaptability. **Types of Entrepreneurs:** 1. **Innovative Entrepreneurs** - Creators of new ideas and products. 2. **Imitating Entrepreneurs** - Adopters of proven concepts. 3. **Fabian Entrepreneurs** - Resistant to change, act cautiously. 4. **Drone Entrepreneurs** - Conservative, resist change even if it leads to losses. 5. **Social Entrepreneurs** - Focus on societal improvements and transformations. **Factors Influencing Entrepreneurship:** - **Personality Factors**: - Initiative, problem-solving, risk-taking, and persuasion. - **Environmental Factors**: - Political climate, legal systems, economic conditions, and market dynamics. **Career Opportunities in Entrepreneurship:** - Business Consultant - Teacher - Researcher - Salesperson - Business Reporter **Key Concepts:** - **Economic Activity**: Entrepreneurship involves creating value and wealth. - **Profit Potential**: Entrepreneurs are rewarded through profits. - **Risk Bearing**: Entrepreneurs take calculated risks to succeed. **Introduction to Recognizing a Potential Market** - Recognizing potential markets involves identifying needs and problems within a community or target audience. - A business opportunity arises when these needs or problems are met with innovative products or services. - The entrepreneurial process starts with identifying opportunities, followed by creating solutions and establishing ventures. **Essentials of Entrepreneur's Opportunity Seeking** 1. **Entrepreneurial Mind Frame**: - Enables entrepreneurs to view challenges in a positive and optimistic light. - Critical for solving problems and turning difficulties into opportunities. - Example: Viewing a typhoon-prone area as an opportunity to sell disaster-preparedness kits. 2. **Entrepreneurial Heart Flame**: - Refers to the passion and determination that drive entrepreneurs to achieve their goals. - Passion fuels creativity and perseverance during challenging times. - Example: A bakery owner who experiments with new recipes to stay competitive. 3. **Entrepreneurial Gut Game**: - Relates to intuition and self-confidence in making bold decisions. - Helps entrepreneurs trust their instincts when opportunities are uncertain. - Example: Launching a product based on a hunch about customer demand. **Sources of Opportunities** 1. **Changes in the Environment**: - Opportunities often arise from shifts in external factors like: - **Physical Environment**: - *Climate*: High temperatures in summer create demand for cold drinks and ice cream. - *Natural Resources*: Availability of minerals and fertile lands can lead to agricultural or mining businesses. - *Wildlife*: Promotes eco-tourism or wildlife preservation projects. - **Societal Environment**: - *Political Forces*: New laws or regulations that affect business practices. - *Economic Forces*: Changes in income levels or employment rates that influence spending. - *Sociocultural Forces*: Shifts in values, traditions, or lifestyles (e.g., increased interest in fitness leads to demand for gyms). - *Technological Advances*: Innovations that create new markets (e.g., smartphone apps). - **Industry Environment**: - Competition, customer behavior, suppliers, and government policies. 2. **Technological Discovery and Advancement**: - Involves leveraging new inventions and technologies. - Example: E-commerce platforms allow small businesses to sell online. 3. **Government Thrust, Programs, and Policies**: - Government initiatives create opportunities, such as promoting green energy or banning harmful products. - Example: A ban on firecrackers encourages entrepreneurs to create alternative celebrations like light shows. 4. **People's Interests**: - Observing hobbies, trends, and preferences can reveal business ideas. - Example: Increased demand for plant-based diets opens opportunities for vegan restaurants or products. 5. **Past Experiences**: - Skills or expertise gained from previous jobs can inspire business ventures. - Example: A retired chef starting a catering service. **Five Forces of Competition Model** The competitive environment includes five forces that influence a business: 1. **Buyers (Customers)**: - Customers have bargaining power, influencing prices and quality. - Threats are reduced when: - Multiple suppliers are available. - Switching costs for buyers are high. - The product represents a small percentage of buyer costs. 2. **Potential New Entrants**: - Threats are higher when barriers to entry (e.g., capital requirements or government policies) are low. - Factors that discourage entry include: - High startup costs. - Economies of scale. - Brand loyalty. 3. **Rivalry Among Existing Firms**: - Intense competition occurs when many firms vie for the same customers. - Factors include: - Marketing strategies (discounts, freebies). - Fixed costs and industry growth rates. 4. **Substitute Products**: - Substitute goods pose a threat when: - Switching costs are low. - Alternatives are cheaper or higher quality. - Example: Margarine as a substitute for butter. 5. **Suppliers**: - Suppliers influence operations by controlling supply quality and pricing. - Threats increase when: - There are few suppliers. - Switching suppliers is costly. **Entrepreneurial Process** 1. **Creation of Entrepreneurial Ideas**: - Innovative concepts addressing a market's need or problem. - Example: Designing eco-friendly packaging to reduce waste. 2. **Identification of Opportunities**: - Recognizing trends and gaps in the market. - Example: Demand for remote learning tools during the pandemic. 3. **Opening of Ventures**: - Establishing a business to bring the idea to life. - Example: A small café focusing on locally sourced organic ingredients. **Key Concepts and Definitions** - **Opportunity Seeking**: - The process of evaluating and pursuing market-based activities beneficial to the business. - Example: Identifying a need for affordable housing in urban areas. - **Competition**: - The rivalry among businesses for market share. - Example: Coffee shops competing with aggressive pricing or unique beverages. - **Substitute Products**: - Goods or services that serve the same purpose as existing products. - Example: Using bamboo straws as substitutes for plastic ones. **Steps to Recognize a Potential Market** 1. **Conduct Environmental Scanning**: - Observe and analyze physical, societal, and industry environments. - Example: Researching demographics to understand consumer needs. 2. **Identify Market Needs and Problems**: - Look for gaps or underserved areas in the market. - Example: High demand for delivery services in rural areas. 3. **Propose Solutions**: - Brainstorm products or services addressing these needs. - Example: Offering digital payment systems where cash transactions dominate. 4. **Evaluate Feasibility and Profitability**: - Assess the potential for generating profit and meeting customer demands. - Example: A startup idea with low overhead costs but high demand. **Additional Tips** - Leverage trends and customer feedback to refine your business ideas. - Develop a business plan that includes market analysis and strategies for sustainability. - Continuously adapt to changes in the external environment. **RECOGNIZE AND UNDERSTAND THE MARKET** **1. Value Proposition (VP)** - A **marketing statement** explaining why a customer should choose a specific product or service. - Focused on the **value** it provides to customers\' lives. - **Basic Elements**: 1. Target customer 2. Needs/opportunities addressed 3. Product or service name 4. Enterprise or company name - **Example**: 1. *"Charing Sari-Sari Store: Open 24/7"* addresses the unmet need for nighttime convenience in the locality. **2. Unique Selling Proposition (USP)** - Describes **how you sell** your product or service by highlighting its uniqueness. - Answers questions like: - What do customers want? - What makes your product different from competitors? - **Tips for an Effective USP**: - Identify and rank product/service uniqueness. - Be specific. - Keep it short and simple (KISS). - **Example**: - Jollibee's tagline *"Langhap Sarap"* differentiates its Filipino-style burgers from competitors. **UNDERSTANDING THE TARGET MARKET** **Market Targeting** - The process of identifying a group of buyers with **common needs and characteristics**. - Focuses on maximizing marketing efforts for a specific audience. **Methods of Market Segmentation** 1. **Geographic Segmentation**: - Divides the market by location. - **Variables**: - Climate, ethnic groups, culture, rural/urban density. 2. **Demographic Segmentation**: - Based on personal characteristics. - **Variables**: - Age, gender, income, religion, family size, education. 3. **Psychological Segmentation**: - Focuses on how customers think and behave. - **Variables**: - Social class, personality, lifestyle, attitudes, brand concepts. 4. **Behavioral Segmentation**: - Observes customer interactions with the company. - **Variables**: - Perception, loyalty, reactions, benefits sought. **Customer Requirements** 1. **Service Requirements**: - Intangible needs such as **on-time delivery** and **easy payment options**. - Focuses on customer satisfaction through excellent service. 2. **Output Requirements**: - Tangible features expected from a product. - Example: - A phone speaker must have clear sound quality and durability. **Market Size** - Refers to the **total potential market** for a product or service. - **Steps to Calculate Market Size**: 1. Estimate the number of potential customers. 2. Identify customers who may dislike or avoid the product/service. 3. Plot and analyze competitors' market shares. - Important for: 1. Planning business scale. 2. Attracting investors or funding. **Comparison: Value Proposition vs. Unique Selling Proposition** **Aspect** **Value Proposition** **Unique Selling Proposition** --------------- -------------------------------------------- ------------------------------------------- **Focus** Highlights the value or solution provided. Emphasizes the product's uniqueness. **Objective** Answers why the product is beneficial. Differentiates from competitors. **Example** *"Convenience store open 24/7."* *"Only store open at night in the area."* **Important Terms** 1. **Service Requirement**: Customer expectations during the purchasing process. 2. **Output Requirement**: Tangible features and specifications of a product. 3. **Behavioral Segmentation**: Division based on customer interactions and responses. 4. **Market Size**: The potential scope of buyers and sellers in a given area. **Tips for Entrepreneurs** 1. Conduct thorough market research to understand target customers. 2. Use segmentation methods to narrow down marketing efforts. 3. Create clear and concise USPs and VPs to stand out. 4. Focus on customer satisfaction to build loyalty and reputation.