Ent 1st Quarter Reviewer - Entrepreneurship Concepts

**ENT 1ST QUARTER REVIEWER** **LESSON 1: CONCEPT OF ENTREPRENEURSHIP** Entrepreneurship is the process of discovering new ways of combining resources. Entrepreneur is someone who "creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth Enterpr...

**ENT 1ST QUARTER REVIEWER** **LESSON 1: CONCEPT OF ENTREPRENEURSHIP** Entrepreneurship is the process of discovering new ways of combining resources. Entrepreneur is someone who "creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth Enterprise is a company or business, often a small one. **EIGHT ENTREPRENEURSHIP THEMES:** 1\. The Entrepreneur -- The entrepreneur theme is the idea that entrepreneurship involves individuals with unique personality characteristics and abilities 2\. Innovation -- The innovation theme is characterized as doing something new as an idea, product, service, market, or technology in a new or established organization. 3\. Organization Creation -- The organization creation theme describes the behaviors involved in creating organizations. 4\. Creating Value --The attributes in this factor indicated that value creation might be represented by transforming a business, creating a new business, growing a business, creating wealth, or destroying the status quo. 5\. Profit or Nonprofit - While for-profit organizations are responsible for paying taxes based on their net income, nonprofit organizations are exempt from paying income tax. 6\. Growth - Success in business. 7\. Uniqueness --Uniqueness is characterized by attributes such as a special way of thinking, a vision of accomplishment, ability to see situations in terms of unmet needs, and a unique combination. 8\. The Owner-Manager -- Some of the respondents questioned by Gartner (1990) did not believe that small mom-and-pop types of businesses should be considered entrepreneurial. **4 ASPECTS OF AN ENTREPRENEUR** 1\. **Involves creation process.** Capability to think of new ideas that will bring something useful to the community. 2\. **Requires devotion of time and effort.** If something is important to you, time and effort will make it easy to give in. 3\. **Involves the rewards of being an entrepreneur.** Give something to yourself as an entrepreneur when you achieve something, and it could help you be more inspired in your next project. It also serves as the price for your hard work. 4\. **Requires assumption of necessary risk**. Business is not always at the top, which is why risk is always present. **10 QUALITIES OF A SUCCESSFUL ENTREPRENEUR** 1\. Disciplined -- are focused on making their business work and eliminating hindrances or distractions from their goal. 2\. Confidence -- are confident in the knowledge that they will make their business succeed. 3\. Open-minded -- they can look at everything around them and focus it on their goals. 4\. Self-starter -- knows that if something needs to be done, they should start it themselves. 5\. Competitive -- they need to win at the sports they play and at the businesses they create. 6\. Creativity - often come up with solutions that are the synthesis of other items. 7\. Determination -- they look at defeat as an opportunity for success. 8\. Strong people skills -- has strong communication skills to sell the product and motivate employees. 9\. Strong work ethic -- will often be the first person to arrive at the office and the last person to leave. 10\. Passion -- they genuinely love their work and are willing to put in extra hours to make the business succeed. **Importance of Entrepreneurship** **by Najm Mohamed** 1**. Entrepreneurship Accelerates Economic Growth**. Entrepreneurs are important to market economies because they can act as the wheels of the country\'s economic growth. 2\. **Entrepreneurship Promotes Innovation.** Through the right practices of research and development, entrepreneurs bring innovation that opens the door to new ventures, markets, products, and technologies. 3\. **Entrepreneurship Can Promote Social Changes.** Entrepreneurs change or break traditions or cultures of society and reduce the dependency on obsolete methods, systems, and technologies. 4\. **Entrepreneurship Promotes Research and Industrial Development.** Along with producing new business ideas and thinking outside the box, entrepreneurs also promote research and development. 5\. **Entrepreneurship Develops and Improves Existing Enterprises.** We often think of entrepreneurs as inventing totally new products and ideas, but they also impact existing businesses. **LESSON 2: FACTORS TO CONSIDER IN STARTING A BUSINESS & TYPES OF BUSINESS OPERATION** **Start-up enterprise** -- a recently formed company where the founder establishes a completely new business from scratch. **Buying an existing business** -- acquiring either the shares of an existing company or all the assets of an existing enterprise. **Franchising** -- when the owner of a company that already has a successful product or service, licenses its trademark, trade name, and methods of doing business to others in exchange for initial franchise fee and royalty payments. **OTHER IMPORTANT FACTORS TO CONSIDER BEFORE AN ENTREPRENEUR CAN BEGIN AN ENTERPRISE**. 1\. Focus and Direction Should have a clear and documented vision-mission and strategies to begin with. Starting right by "beginning with the end in mind." 2\. Sources of Capital Different sources of capital are available; the only catch is determining the needed amount of funds where it will be sourced from. It can be from personal funds, family and friends, a retirement account, banks or financial institutions, a government loan, or the stock market. 3\. Good Network Building good relationships and working well with other people. Formal networks like associations and professional groups, informal networks like childhood friends, family members, former classmates. These can be drivers to build self-confidence and direction, providers of information that are not readily accessible to others, suppliers of raw materials, serves as mentors/coaches. 4\. Legal Requirements should know the laws and regulations that govern the type of business that will be opened to avoid major problems that can arise if legal requirements are overlooked. 5\. Degree of Risk Business is said to be risky when the probability or chances of failure is high meaning the odds are great in many aspects against starting the business-like limited market, stiff competition, high cost of financing the business, few supply of needed labor. 6\. Research and Development Innovation is a factor that keeps the business and its products busy in the market resulting in an increase or decrease in its customers. Success through innovation is well connected with a very strong research and development of an organization. 7\. Personal Competencies Competencies like creativity, opportunity seeking, self-confidence, persistence, commitment and risk-taking as well as technical background and related experiences needed to run the business are necessary to start running a business. 8\. Availability of Resources Resources like raw materials, human resources, and machinery/equipment should be at an adequate level from the get-go of your business. As an entrepreneur, knowing the sustainability of these resources is a must. **TYPES OF BUSINESS ACTIVITIES /OPERATIONS** A. **SERVICE** A type of business operation engaged in the rendering of services. It is also classified into three: These are the following types of Service Business: 1\. **Delivery services**- Companies can use delivery services to receive supplies without physically shopping for them. 2\. **Cleaning Services.** Cleaning services are in high demand. Starting a cleaning service is a great way to become your own boss and make a good income. 3\. **Professional services.** To operate a successful service business in the professional services industry, one must have specialized knowledge to assist clients. B. **TRADING OR MERCHANDISING** A type of business engaged in the buying and selling of goods. It includes the process of managing and marketing the product. The two types of Merchandising are: **I. RETAILING** -Refers to selling goods and services directly to the final consumer. **II. WHOLESALE** \- An important component distribution channel and it can be defined as a business activity of the buying and selling of goods in large quantities at cheaper prices, mostly to small businesses and shops when they are sold to end-users or customers. \- Wholesaling is the process of buying products from the manufacturers at a lower price, adding some margin price on the products, and then selling them to other businesses like retailers or small shops. **C. MANUFACTURING** Business that is engaged in the production of items to be sold. It involves the purchasing and converting of raw materials to finished goods. These are the following types of manufacturing business activities. 1\. **Continuous Manufacturing or Flow shop** -production is done continuously. 2\. **Intermittent or Job Order** - production takes place only when demand calls for it. 3\. **Batch Manufacturing** - combination of the flow shop and the job order type of manufacturing. 4\. **Project Manufacturing** - characterized by putting different inputs to make or produce product which can be applied in making projects that differ from each other. **D. HYBRID BUSINESS** A hybrid business could be classified in more than one type of business. A good example are restaurants and fast-food where ingredients are combined in making dishes for a fine meal (manufacturing, sells cold drinks (merchandising), and take and serve customer orders (service). LESSON 3: POTENTIAL MARKET AND TYPES OF BUSINESS AVAILABLE TO ENTREPRENEURS **Sole Proprietorship** -- is a business owned and managed by one person. **Partnership** -- is a business organization owned and managed by two or more people. **Corporation** -- is a form of business organization managed by an elected board of directors. **Cooperative** -- is an association of small producers and consumers. **ENTREPRENEURIAL IDEAS** The creation of entrepreneurial ideas leads to the identification of entrepreneurial opportunities, which in turn results in the opening of an entrepreneurial venture. **ESSENTIALS IN ENTREPRENEUR\'S OPPORTUNITY SEEKING** **Entrepreneurial Mind Frame** This allows the entrepreneur to see things in a very positive and optimistic way in the midst of difficult situations. Being a risk - taker, an entrepreneur can find solutions when problems arise **Entrepreneurial Heart Flame** Entrepreneur\'s driven passion, they are attracted to discover satisfaction in the act and process of discovery. **Entrepreneurial Gut Game** This refers to the ability of the entrepreneur to be intuitive. This is also known as intuition. The gut game also means confidence in one\'s self and the firm believes that everything you aspire can be reached. **SOURCES OF OPPORTUNITIES** 1\. **Changes in the environment** External Environment refers to the physical environment, societal environment, and industry environment where the business operates. The **physical** environment: \*Climate- the weather conditions. \*Natural resources- such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain. \*Wildlife- includes all mammals, birds, reptiles, fish, etc., that live in the wild. The **Societal** environment includes the various forces like: \*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. \*Economic forces- such as income level and employment rate. \*Sociocultural forces- customs, lifestyles and values that characterize a society. \*Technological environment- New inventions and technology innovations. The **industry** environment of the business includes: \*Competitors \*Customers \*Creditors \*Employees \*Government \*Suppliers 2\. **Technological discovery and advancement** A person with entrepreneurial interest sees the possibility of business opportunities in any new discovery or because of the use of the latest technology. 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** The interests, hobbies, and preferences of people are a rich source of entrepreneurial ideas. Like the increasing number of Internet Café at present could lead to the strong attachment of young people to computers. 5\. **Past experiences** The expertise and skills developed by a person who has worked in a particular field may lead to the opening of related business enterprises. **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** 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. **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. **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. **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. **Supplier** 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. **TYPES OF BUSINESS AVAILABLE TO ENTREPRENEURS** **ACCORDING TO SIZE** **ACCORDING TO OWNERSHIP** **ACCORDING TO INDUSTRY** There are many types of businesses based on the Philippines Standard Industrial Classification (PSIC). They either produce goods or services for the use of individuals, groups, or organization in society. These Industries are the following: Agriculture, Forestry and Fishing Mining and Quarrying Manufacturing Electricity, Gas, Steam, and Air-Conditioning Supply Water Supply; Sewerage, Waste Management and Remediation Activities Construction Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles Transportation and Storage Accommodation and Food Service Activity Information and Communication Real Estate Activities Professional, Scientific and Technical Activities Administrative and Support Service Activities Arts, Entertainment and Recreational Public Administration and Defense; Compulsory Social Security Education Human Health and Social Work Activities. **LESSON 4: THE BUSINESS PLAN** - Mission - A mission statement defines the organization\'s business, its objectives, and how it will reach these objectives. - Vision - A vision statement detailing where the organization aspires to go. - Organizational Chart - A diagram that visually conveys a company\'s internal structure by detailing the roles, responsibilities, and relationships between individuals within an entity. - Business Plan - A document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. The Business plan is a "formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. The Business plan is the blueprint for a business. It is where a business is based and where all the steps from starting up a business, its processes, financial plan, and many other aspects are stipulated. The success of the business plan is vital to the success of any enterprise **These are the major parts of a business plan:** **The Organizational Plan** **Compensation Plan** **Production Plan** **Market Plan** **Financial Plan** **LESSON 5: THE ORGANIZATIONAL PLAN AND COMPENSATION PLAN** **ORGANIZATIONAL PLAN** The organizational plan includes details and information about the demographics, basic characteristics, or details of the business. These details give information about the organizational hierarchy, goals, and objectives. The parts of this section are as follows: - Company Name, Logo and Address, and name of owner -- States the name of the business, together with its address, name of the owners, and logo. This section also gives the reason for its name and logo. The company name and logo should be unique and firsthand because if patented words and logos are used, it may be a problem for the company moving forward. - Nature of the business- This gives a short background on what kind of operations the business will engage in, its products, and the reason for the choice of business. The reason for the organization is also stated in this section. - Vision and Mission Statements -- These are statements about the long-term goals of the business, on which its core values are always based. - Workforce and Support personnel -- States the workforce requirements or what specifications of human personnel the business will need. - Organizational Chart - it is the structure of the business that will tell us the duties and responsibilities and to whom the employees work and report; it is called the line authority. **COMPENSATION PLAN** Human resources are the most important asset an organization has. Many businessmen have taken for granted the satisfaction of their personnel by not knowing this most important concept. Many have given more importance to the profit that a business gets, which is also important for the business. **Gross Compensation Income/Salary** This is the most basic compensation a company gives to an employee. It is the income derived from being hired by the company. The employees' rate can be weekly, daily, or monthly based, while some are only paid on a project or per piece basis. Every region has a minimum wage rate prescribed by the government based on the cost of living in each place, which is required to be followed by an employer. But the gross compensation. **Mandatory Benefits** These are the following benefits employers are required to give their probationary, contractual, or regular employees. 1. **Social Security System (SSS)** - this is to ensure that workers and employees are protected upon disability, retirement, maternity, sickness, or death. The agency also gives educational, salary, and calamity loans to members. Once you are employed with the company, the company will then register their employees with SSS, PhilHealth, and Pag-Ibig to become members. The agency has a monthly contribution table based on the monthly income of the employees, the premium is shared by the employer and the employee. You can find the table of contributions if you search the web. 2. **Philippine Health Insurance Company (PHIC) -** a benefit given to workers/employees for medical bills, doctor's fees, and hospitalization bills of the members and their beneficiaries. The premium is also shared by the employer and the employee. 3. **Home Development Mutual Fund or Pag-Ibig Fund** - it is a mutual fund or a savings fund earning a dividend. The savings are based on the monthly salary of the employee and are also shared by the employer and the employee. 4. **13^th^ month pay-** A mandatory benefit for all rank-and-file employees who worked at least a month in the private sector regardless of their position or employment status, which is computed as the total accumulated basic monthly salary of an employee divided by 12. **Other Benefits** Most companies imply benefits that are outside the mandatory requirements of the state for the further satisfaction of employees, helping the stability of tenure and lessen employee turnover. Some of them are: - Healthcare benefits/Health card - Medical and Dental Allowances - Clothing Allowance - 14^th^ month pay - Housing and Car loans **LESSON 6: 7PS OF MARKETING AND MARKET RESEARCH** - **Marketing- the process of getting people interested in your company\'s product or service.** - **Market Research- the process of collecting vital information about a company\'s target audience, market, and competition** **MARKETING DEFINED** An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. It is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. **7PS OF MARKETING OR MARKETING MIX** 1. 2. **Product** **A Product is anything that can be offered for satisfaction. It may be an idea, a physical entity (a good), a service, or any combination of the three. A product is the bundle of satisfaction which the buyer receives as the result of a lease or purchase. It includes the physical good or service itself, the function of the product in use, the packaging, the label, the warranty, the manufacturers and retailer's services.** 3. **Price** **Refers to how much the company will sell the product for. When establishing a price, companies must consider the unit cost price, marketing costs, and distribution expenses.** 4. **Place** **Is making the products available in the right quantities and locations where customers want them. Distribution Strategy refers to the process of moving goods and services from the company to the customer. The distribution channel that will be adapted must provide a strategic advantage to the company.** 5. **Promotion** **Refers to "the marketing communication used to make the offer known to potential customers and persuade them to investigate it further". Promotion elements include "advertising, public relations, direct selling and sales promotions.** 6. **People** **Essential in the marketing of any product or service. In the professional, financial or hospitality service industry, people are not producers, but rather the products themselves. When people are the product, they impact public perception of an organization as much as any tangible consumer goods. From a marketing management perspective, it is important to ensure that employees represent the company in alignment with broader messaging strategies. This is easier to ensure when people feel as though they have been treated fairly and earn wages sufficient to support their daily lives.** 7. **Packaging** **Refers to the preparation of a product for appropriate transportation and storage. Depending on the type of commodity, the packaging process may entail wrapping, bottling, strapping, sealing, marking, cushioning, bracing, weatherproofing, or blocking. Fundamentally, packaging protects products from damage during storage or transportation.** 8. **Physical Evidence** **The lasting proof that the service has happened, in terms of buying a physical product, the physical evidence is the product itself. According to Booms and Bitner's framework, "physical evidence is the service delivered and any tangible goods that facilitate the performance and communication of the service. Physical evidence is important to customers because the tangible goods are evidence that the seller has (or has not) provided what the customer was expecting.** **SELECTING THE TARGET MARKET** ***Target market*** represents a group of individuals who have similar needs, perceptions, and interests. They show an inclination toward similar brands and respond equally to market fluctuations. Individuals who think along the same lines and have similar preferences form the target audience. The target market includes individuals who have similar expectations from organizations or marketers. **Identifying specific target markets** -- and then delivering products and promotions that ultimately maximize the profit potential of those targeted markets -- is the primary function of marketing management for many smaller companies. **MARKET STRATEGY** *Current product/current market***: Market penetration** is a strategy for increasing your share of existing markets. You might achieve this by raising customers' awareness of your products and services or by finding new customers. For further information on planning effective marketing communications, see the Related Items section below for a link to the Factsheet: Planning Marketing Communications. Current product/new market: **Market development** is the strategy of finding and entering new markets with your current product or service range. The new market could be a new region, a new country, or a new segment of the market. For further information on selecting and entering new markets, see the Related Items section below for a link to the Factsheet: Entering new markets. *New product/current market*: **Product development** is a strategy for enhancing the benefits you deliver to customers by improving your existing products and services or developing new ones. *New product/new market***: Diversification** is a strategy that usually carries high costs and high risks. It often requires firms to adopt new ways of doing business, which has consequences far beyond simply offering new products/services in a new market. Therefore, it is usually a strategy to be adopted when other options are not feasible. **MARKET RESEARCH** Is the process of gathering information that will make the company more aware of how the people, it sells to will react to the company's current or potential products or services. It is simply an information-gathering exercise to determine the viability or acceptability of a product or service, and an entrepreneur can have the information needed to make informed business decisions about start-up, innovation, growth, and the 7 Ps. 1\. Identify potential customers 2\. Understand existing customers 3\. Set realistic targets 4\. Develop effective strategies 5\. Examine and solve business problems 6\. Prepare for business expansion 7\. Identify business opportunities **LESSON 7: BRANDING** - **Product** -- is something that can be offered to the market to satisfy a need or want. - **Branding** -- giving meaning to what you offer in the consumer's mind - **Brand** -- a name or mark that is intended to identify the seller's product - **Brand name** -- consists of letters, words or numbers that can be read or verbalized. - **Branded** -- a product with brand label - **Generic brand** -- product that lacks with noticeable name or logo because it not mostly advertised - **Logo -** A visual design element called logo is used to symbolize a brand - **Trademark** -- a brand that has been adopted by the seller and given legal protections. **CRITERIA FOR CHOOSING A BRAND NAME** 1. **Distinctive** -- is the brand closely associated with another product - McDonald's is known for fast food, but would a McDonald's Hotel (in Europe) be, okay? 2. **Word Association** -- does it have a pleasant meaning? - Dumex, the milk product never took off because customers associated it with another product, called Domex, a household cleanser. 3. **Legal Requirements** -- can it be registered? - Sharp already owns the brand name so "Sharp" calculators cannot be registered for being confusingly similar - "Beer". "Inasal" or "The Spa" are generic names so these names cannot be registered 4. **Memorability** -- can your name be remembered easily? - Johnson & Johnson is an institution locally, but would a competing brand Zwitsal be as easily remembered? 5. **Pronounceability** -- can it be pronounced easily? - Mortimer mouse (the original intended name conceived by Walt Disney) is not as easily pronounced as Mickey Mouse (the name suggested by Disney's wife Lilian). - Unilab is much easier to say than Boehringer (Pharmaceutical Companies) 6. **Limitations** -- is the brand name too limiting to be used for expansion? - Would the name Aqua Vida be as flexible as an Imarflex? - Aqua means water resulting to limiting to be used for expansion REASONS FOR THE EXISTENCE OF BRANDS ----------------------------------- 1. Identification -- Brands enable consumers to easily distinguish one product from another. - Magnolia branded a generic product-dressed chicken, which became the leading brand within two years from launch. 2. Protection -- It enables the owner of the brand name to enjoy the goodwill associated with the name so as not to be taken advantage of by others. - Levi's jeans have been resorting to the legal remedy of running after unscrupulous/unethical individuals and companies faking their brand. 3. Positioning -- It enables the owner to communicate the benefits of his product compared to competition. - Bruno\'s barber shop chain adopted such a name as it immediately conveys masculinity.