SLM-Entrep-9-Quarter-2-1 (1) PDF

Republic of the Philippines Department of Education REGION III – CENTRAL LUZON SCHOOLS DIVISION OF TARLAC PROVINCE JOSEPHINE M. COJUANGCO NATIONAL TECHNICAL VOCATIONAL HIGH SCHOOL...

Republic of the Philippines Department of Education REGION III – CENTRAL LUZON SCHOOLS DIVISION OF TARLAC PROVINCE JOSEPHINE M. COJUANGCO NATIONAL TECHNICAL VOCATIONAL HIGH SCHOOL POBLACION NORTE, MAYANTOC, TARLAC COMPENDIUM OF NOTES IN ENTREPRENEURSHIP SPECIAL PROGRAM IN TECHNICAL-VOCATIONAL EDUCATION GRADE 9 Quarter 2 Week 1-8 Josephine M. Cojuangco National Technical Vocational High School (Formerly Mayantoc National Technical Vocational High School) Address: Poblacion Norte, Mayantoc, Tarlac Telephone No.: (045) 628-2173 Email Address: [email protected] Duration Quarter 2 Lesson 1 IDENTIFYING BUSINESS OPPORTUNITIES Week 1-8 L.O. 1. IDENTIFY AND ANALYZE THE EXISTING PROBLEMS AND NEEDS IN THE COMMUNITY WHERE THERE ARE BUSINESS OPPORTUNITIES WORDS TO STUDY ❖ Environmental Scanning- is any of the various techniques through which images/information are recorded or gathered from conditions, situations and materials in the particular environment. ❖ Demography- is the statistical study of human population and its distribution. ❖ Individual Interest- is the skill or expertise of a person. ❖ Technology- means improved products or services. Is the system by which a society provides its members with those things needed or desired. ❖ Resources- are available money, equipment and facilities. ❖ Trend- is a practice or interest that is very popular for a short period of time ❖ Goods- are products that are bought and sold in the business ❖ Services- are work done for others as an occupation or business ❖ Industrial- is anything having to do with the business of manufacturing products; excludes utility, transportation, and financial companies IDENTIFYING BUSINESS OPPORTUNITY 1. The first place to identify business opportunities is the community. 2. Entrepreneur should know what product or service would do for their consumers. Will it fill a need? Will it enhance the consumers’ lives? Will it create a trend? 3. If one is not sure about what product or service to offer, consider the five categories of human needs. a. Physiological – food and clothing b. Safety – Educational service, medical service c. Social – Relaxation service, Communication service d. Esteem e. Self-actualization Business ideas A business venture starts with an idea. In coming up with a business idea, there are internal and external considerations to think about. Internal considerations include one’s personal goals and interest, ideas from one’s observations of daily living conditions, one’s educational background, and one’s skills and trainings. External consideration count government support and assistance and industry growth prospects. ENVIRONMENTAL SCANNING How to identify the needs of the community? The initial step in identifying the needs of the community is through environmental scanning. This can be done through: Interviews Sharing ideas with others Reading Observations Advertisement Factors that affect the Performance of the Business 1. Demographic Condition Demography is the study of human population in terms of sizes, density, age, gender, race occupation and other statistics. Let us take age as an example: Baby Boomers (those born 1946-1964) are not so much interested in digital technology as compared to the members of Generation X (born 1965-1977) and Generation Y (born 1978-1994). Although Generation Y are younger and are more interested in digital technology of GenXers are presumed to have stable jobs giving them more purchasing power than members of Generation Y. Manufacturers may also make more affordable gadgets available to member of Generation Y. 2. Economic Conditions Affects consumers’ power and spending patterns. Changes in disposable income, fluctuations in the exchange rate, inflation (general increase in the prices of goods and services), and interest rates all affect the performance of a business. 3. Natural Environment A business needs natural resources as inputs. From time to time, the entrepreneur might experience a shortage of raw materials. There might also be increase of government intervention, like log ban in the logging industry. Natural disaster like typhoon, earthquakes, and volcanic eruptions might also affect supply of raw materials. 4. Technology Condition Technological developments have contributed much to faster and more efficient ways of doing business. Computers, the internet, and mobile phone are just few of the most recent technological developments that changed people’s lives over the past decade. 5. Political or Legal Condition Entrepreneurs must also be aware of laws that regulate business, like the E-Commercials Act of 2000, which regulates trading via online. The stability of the country’s political condition is also a factor to be considered. 6. Sociocultural Condition Religions, customs, traditions, and value shape culture. Culture dictates the kind of product and service people would prefer. 7. Competitors Business is war. Entrepreneurs must know their competitors so they can think of strategies to help them get ahead. One must know his or her competitors, their products and services, and their strategies to be able to win the battle in business.  8. Internal Environment One’s company including resources (finances, equipment and manpower), processes, management style, strategies, and organizational culture should also be taken into consideration. Questions to ask include: 1. Do you have a strong financial capability to support your strategies? 2. Are you doing the right approach to attract your target market? 3. Are you an effective leader? 4. Are your employees motivated? Of course, not all information is relevant to one’s business. Environmental scanning helps an entrepreneur screen information to anticipate and interpret changes in the business environment. He or she needs to consider the different aspects of the business environment. Without environmental scanning, one will find difficult to come up with strategies or appropriate actions in response to relevant issues in the environment. L.O. 2. SELECT APPROPRIATE BUSINESS OPPORTUNITIES BASED ON THE NEEDS OF THE COMMUNITY WORDS TO STUDY Strengths are the capital, knowledge, skill or other advantage that a firm has or can acquire over its competitors in meeting the needs of the customers. Weakness is a defect or shortcoming which increases the risk of a failure. Opportunity means a good position, chance, or prospect, as or advancement or success. Threat is an indication or warning of probable cause. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The environment plays an important role in determining the type of business to ne put up. Before putting up a business, it is important to conduct a survey of the probable customers, available supplies, and other types of business in the community. Make sure that your idea of a business is at par with or much better, in terms of product or service offerings, that the existing establishment in that locality. What is SWOT Analysis? SWOT Analysis is a planning tool used to understand the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business. 1. It helps you develop your career in a way that takes best advantage of your talents, abilities and opportunities in your community. 2. It helps you to focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available in your community. 3. The SWOT analysis is a very helpful tool in determining the validity of projects, products, services, or prospective business venture.  SWOT ANALYSIS FOUR FACTORS OR ELEMENTS SWOT ANALYSIS STRENGTHS WEAKNESSES OPPORTUNITIES THREATS What could you Where are the Is the business in improve? good What obstacles do demand in your opportunities you face? community? What should you facing you? What is your avoid? Is the product new What are the competitor doing in your community? What factors that you should be interesting would cause the worried about? Is it accessible to trends you are loss of your sales? all? aware of? Could any of your weaknesses seriously Will your company threaten your patronize it? business? Strengths – these are attributes or factors internal to the business venture that contribute to the business’ success. Weakness – these are factors or attributes internal to the business ventures that work against having a successful outcome. Opportunities - these are external of factors that may affect the business venture positively if one will use it to the business’ advantages. Threats – these are external elements or factors that may affect the business negatively.  INTERNAL Strengths Weakness GOOD BAD Opportunities Threats EXTERNAL Threats can also become opportunities. Forward-thinking entrepreneurs can harness threats and turn into opportunities that help their business grow more. For example, new technologies can be considered a threat by traditional business but can also become an opportunity for improving production and delivery or services. Example of SWOT Analysis: SARI-SARI STORE BUSINESS STRENGTHS WEAKNESSES You are the boss Lack of store Your goods serve as your management skills daily household stocks Lack of cooperation You can save based on among family members retail earning Lack of money handling You make a portion of skills your home more useful Relaxed attitude towards You make your pastime credit more worthwhile OPPORTUNITIES THREATS It enables you to become Higher capital money eligible for small loans required You get free stuff from Competition is tough distributors and dealers Poorer product quality You provide employment Very little profit gain The business enhances because the base cost is your mathematics skills also expensive  A FOOD BUSINESS STRENGTHS WEAKNESS Experienced workforce The establishment is old Adequate capital is and looks outdated. invested in the business There is limited space The business is in an area inside the premises, with much foot traffic. thereby limiting the number of costumers it can accommodate. OPPORTUNITIES THREATS There is strong support New methods of food from the local government production that are for small and medium better and more efficient enterprises to expand. are coming out. New technologies are available and are used by competitors. L.O. 3. THE 4 MAJOR BUSINESS ORGANIZATION FORMS Business organization is the single-most important choice you’ll make regarding your company. What form your business adopts will affect a multitude of factors, many of which will decide your company’s future. Aligning your goals to your business organization type is an important step, so understanding the pros and cons of each type is crucial. Your company’s form will affect: How you are taxed Your legal liability Costs of formation Operational costs There are 4 main types of business organization: sole proprietorship, partnership, corporation, cooperatives. Below, we give an explanation of each of these and how they are used in the scope of business law. SOLE PROPRIETORSHIP “Suppose you want to open your own sari-sari store that will need PHP10,000 to start and you used your PHP10,000 savings to start the said business. You are the sole owner of the said sari-sari store. This type of business is called sole/solo/single proprietorship.” The simplest and most common form of business ownership, sole proprietorship, is a business owned and run by someone for their own benefit. The business’ existence is entirely dependent on the owner’s decisions, so when the owner dies so does the business. Advantages of sole proprietorship: The owner keeps all the profits. The owner makes all the decisions. It is easy to form and operate. Disadvantages of sole proprietorship: Owner is 100% liable for business debts The life of the business is limited to the life of the owner. Once the owner dies, The business will cease to operate under the name of the proprietor. The amount of capital is limited only by the wealth of the proprietor. PARTNERSHIP “What if the needed amount to start your dream sari-sari store is PHP50,000 and you only have PHP25,000 cash savings. You ask Juan, your friend if he is willing to invest his PHP25,000 and become part owner of the sari-sari store.” A form of business owned by two or more persons. The details of the arrangement between the partners are outlined in a written document called articles of partnership. Profits are divided among partners based on their agreed sharing. The owner is called a partner. Advantages of Partnership: Shared resources provide more capital for the business Each partner shares the total profits of the company Higher capital because two or more persons will contribute to the common fund. It is easy to operate like a sole/single proprietorship Disadvantages of Partnership: Each partner is 100% responsible for debts and losses Partnership ends when any partner decides to end it. The profits are divided among the partners. A partner can be held liable for the acts of the other partners. CORPORATION “Assuming your dream is to open a grocery store and not just a sari-sari store but you will need PHP1,000,000 to start the said business. You have only PHP25,000, your friend Juan has PHP25,000, and your mother is willing to invest her PHP50,000, but still these are not enough to start your dream grocery store. Where will you get the money to raise the PHP1 million? You may consider setting up a corporation?” A corporation is a business organized as a separate legal entity (artificial person) under the corporation law with ownership divided into transferable shares of stocks Emphasize that it is the law (Corporation Code of the Philippines) that creates a corporation. The corporation begins its existence from the date the Articles of Incorporation is approved by the Securities and Exchange Commission (SEC). The SEC (Securities and Exchange Commission) is the government agency primarily tasked to regulate private corporations in the Philippines. The owners are called stockholders or shareholders. The word ‘Corporation/Incorporation/Corp./Inc.’ appears in the name of the entity. The voting rights of a shareholder is generally based on the percentage of ownership. The management of the business is delegated by the shareholders to the Board of Directors The ownership is divided into shares and the value of one share may be denominated at a smaller amount, for example at PHP10 per share. The proof of ownership is evidenced by a stock certificate. Advantages of Partnership: Can easily raise additional funds by selling shares of stocks to the public. Shareholders are not personally liable for the debts of the corporation. The extent of their liability is limited to their equity (ownership) in the corporation. Disadvantages of Partnership: It is relatively complicated to set up. Subject to several legal restrictions as listed in the Corporation Code of the Philippines COOPERATIVE “Assuming all the mothers in your barangay decided to open a sari-sari store where all the members can buy in cash or in credit. Some mothers were also taught how to sew dresses and bags as part of the project of the group. These bags are then sold to a certain company. Aside from that, the organization provides seminars to the members on various topics involving mothers and their roles. At the end of the year, the profits are distributed among the members based on their capital contribution. The amount of their purchases in the sari-sari store during the year is also computed and they receive something out of the profit/surplus based on their purchases. This form of business organization is called a cooperative.” A cooperative is a duly registered association of persons with a common bond of interest, voluntarily joining together to achieve their social, economic, and cultural needs. The owners are called members who contribute equitably to the capital of the cooperative. The members are expected to patronize their products and services. The word ‘cooperative’ appears in the name of the entity. This form of business organization is regulated by the Cooperative Development Authority (CDA). Advantages of Partnership: Enjoys certain tax exemption privilege Promotes the concept of sharing resources Disadvantages of Partnership: Limited distribution of surplus Requires continuous education programs for members. The members have active and direct participation in the business of the cooperative. L.O. 4. ORGANIZATIONAL STRUCTURE OF A BUSINESS An organizational structure is a system that outlines how certain activities are directed in order to achieve the goals of an organization. These activities can include rules, roles, and responsibilities. The organizational structure also determines how information flows between levels within the company. For example, in a centralized structure, decisions flow from the top down, while in a decentralized structure, decision-making power is distributed among various levels of the organization. Having an organizational structure in place allows companies to remain efficient and focused. An organizational chart is a diagram of the order of authority and relationships that exist in an organization. It is used to guide people in an organization to work harmoniously and efficiently. TYPES OF ORGANIZATIONAL STRUCTURES 1. Functional Structure This is referred to as a bureaucratic organizational structure and breaks up a company based on the specialization of its workforce. Most small-to-medium-sized businesses implement a functional structure. Dividing the firm into departments consisting of marketing, sales, and operations is the act of using a bureaucratic organizational structure. 2. Divisional or Multidivisional Structure Called the divisional or multidivisional structure, a company that uses this method structures its leadership team based on the products, projects, or subsidiaries they operate. A good example of this structure is Johnson & Johnson. With thousands of products and lines of business, the company structures itself so each business unit operates as its own company with its own president. 3. Flatarchy Structure Flatarchy, a newer structure, is the third type and is used among many startups. As the name alludes, it flattens the hierarchy and chain of command and gives its employees a lot of autonomy. Companies that use this type of structure have a high speed of implementation.  4. Matrix Structure The fourth and final organizational structure is a matrix structure. It is also the most confusing and the least used. This structure matrixes employees across different superiors, divisions, or departments. An employee working for a matrixed company, for example, may have duties in both sales and customer service. BENEFITS OF ORGANIZATIONAL STRUCTURES 1. Putting an organizational structure in place can be very beneficial to a company. The structure not only defines a company's hierarchy but also allows the firm to layout the pay structure for its employees. 2. By putting the organizational structure in place, the firm can decide salary grades and ranges for each position. 3. The structure also makes operations more efficient and much more effective. By separating employees and functions into different departments, the company can perform different operations at once seamlessly. 4. Clear organizational structure informs employees how best to get their jobs done. For example, in a hierarchical organization, employees will have to work harder at buying favor or courting those with decision-making power. In a decentralized organization, employees must take on more initiative and bring creative problem solving to the table. This can also help set expectations for how employees can track their own growth within a company and emphasize a certain set of skills—as well as for potential employees to gauge if such a company would be a good fit with their own interests and work styles. L.O.5. STEPS/PROCEDURE IN MAKING THE BUSINESS LEGAL WORDS TO STUDY ❖ Ownership means an exclusive right of a person to a business ❖ Authorization is the issuance of approval to operate ❖ Legalize means to be permitted by law ❖ DTI- Department of Trade and Industry ❖ DOLE- Department of Labor and Employment ❖ SSS- Social Security System ❖ SEC- Securities and Exchange Commission ❖ CDA- Cooperative Development Authority ❖ BPLO- Business Permit and Licensing Office Legality of your business venture is necessary to make your operation legal. The following pages shows some of the documents to be secured from the different governments agencies to run your enterprise legally. Without compliance with the legal requirements your business is considered illegal. These are documentary transactions between the owner of the business and the government. Agencies Accountable in Legalizing Business 1. Department of Trade and Industry (DTI) – registration or application of name and rights for the business either sole proprietorship or partnership or corporation. Sample Application Form Sample DTI Certificate 2. Securities and Exchange Commission (SEC) - The commission’s major functions include registration of securities, analysis of every registered security, and evaluation of the financial condition and operations of applicants for security issue. Corporations in the Philippines acquire their license from and are registered with the Securities and Exchange Commission. Partnerships and corporations head to this office when registering for their business names. Sample SEC Certificate 3. Social Security System (SSS) - register if you have five or more employees. a. For single proprietorships: SSS Form R-1 (Employer’s Data Record), SSS Form R-1A (Initial or Subsequent List Employees). b. For partnerships: SSS Forms R-1 and R-1A with articles of Partnership c. For corporations: SSS Forms R-1 signed by the corporation’s president or any of the officers or incorporators, Article of Incorporation.  Sample SSS R-1 Form 4. Bureau of Internal Revenue (BIR) is the taxing authority in the Philippines responsible for regulating taxation and collecting internal revenue taxes. You cannot operate your business without your business tax identification number (TIN). This agency is responsible in collecting taxes. This will help systematize your financial operation and payment of taxes. 5. Department of Labor and Employment - DOLE is the national government agency that is responsible for formulating policies and implementing programs in the field of labor and employment. The agency protects workers and their welfare by enforcing employment and labor laws. Sample application Form 6. Local Government (LG) - A Business Permit is sometimes also referred to as a Mayor’s Permit because it is processed at the City Hall – the office of the mayor.  Sample of Local Business Clearance as Issued and Signed by the Office of the barangay Captain Sample of Business Permit and License to be Issued by the Office of the Mayor 7. Philippine Health Insurance Corporation (PhilHealth) - Philippine government’s health care corporation. The responsibility of Philhealth is to give its members the basic health insurance and health care financing. SSS members are required to register for PhilHealth. 8.Cooperative Development Authority (CDA) For all cooperative: Article of cooperation and By-laws, Economic Survey, Bond Accountable Officers, capitalization. STEPS IN BUSINESS REGISTRATIONS: A. For Sole Proprietorship a. Register your name with DTI and obtain a DTI Certificate of Registration b. Obtain a Barangay Clearance from the local government unit (LGU) and a Mayor’s Permit from the Mayor’s Office where the business will be located c. Register with BIR to obtain a BIR Certificate of Registration d. If you will employ local employees, you need to register as an employer with the following agencies: SSS PhilHealth Pag-IBIG Fund B. For Partnership a. Most partnerships in the Philippines register with SEC, and the registration process is as follows: b. Reserve company name and register with SEC to obtain an SEC Certificate of Registration c. Obtain a Barangay Clearance from the local government unit (LGU) and a Mayor’s Permit from the Mayor’s Office where the business will be located d. Register with BIR to obtain a BIR Certificate of Registration and corporate tax number e. If you will employ local employees, you need to register as an employer with the following agencies: SSS PhilHealth Pag-IBIG Fund C. Domestic Corporation Generally, registering a domestic corporation in the Philippines has five steps: a. Register with SEC to obtain an SEC Certificate of Registration b. Obtain business permits from the local government unit (LGU) where the company will be located. c. Register with the BIR to obtain a BIR Certificate of Registration and corporate tax number d. If you will employ local employees, you need to register as an employer with the following government agencies: Social Security System (SSS) Philippine Health Insurance Corporation (PhilHealth) Home Development Mutual Fund (Pag-IBIG Fund) e. Apply for secondary licenses (if will register in a regulated industry) Since one's business will be his or her full-time pursuit in the years to come, one needs to register it with the corresponding government agencies to give it a legal personality. Purpose of Business Legalization 1. Identification - What's in a name? An official name would give one's business a distinct identity that would set it apart from other business enterprises. Just like individuals, businesses must be readily identifiable.  2. Credibility - A registered business would draw clients who refuse to deal with fly-by-night operators. Having a legal personality gives one's venture a sense of reliability. 3. Protection - A legal entity can bring a person or an institution to court if a case arises. Not so with an unregistered business which is operating illegally? 4. Government regulation - Business registration controls such public interests as tax collection, overpricing, and quality of goods and services. The data registered in different agencies are used to improve control measures. There are several benefits derived from registering your business with the government, as follows: 1. When you register your business with the Department of Trade and Industry, the certificate issued to you becomes your proof of business ownership. 2. The municipal license or Mayor’s Permit issued to you serves as an authorization for you to operate your business. 3. Your registration with the Bureau of Internal Revenue will help you systematize your financial operations and the payment of taxes. 4. If you have registered your business enterprise with Cooperative Development Authority (CDA) which is optional, you can enjoy the following privileges: a. Exemption from taxes and fees except from real property and capital gains tax, import duties and taxes, value- added tax on imported articles, taxes on income not arising from the CDA activity such as interest, royalties, prizes and dividends. b. Exemption of the CDA derived income from the computations of the owners or members in division. c. Exemption from any government rules and regulations on assets, income and activities directly connected with the services of CDA. It is a must to register your business for your own benefit and protection. When your business has been registered you are now ready to own your business and face challenges coming your way. References: Entrepreneurship 9 Manual Pinoy Entrepreneurs pages 86-87 https://kittelsoncarpo.com/business-registration/# https://www.investopedia.com/terms/o/organizational-structure.asp Prepared by: CHRISTINE S. CUARIO Subject Teacher