Entrepreneurship PDF

ENTREPRENEURSHIP 4. Opportunity seeker - an entrepreneur must have the ability to be the first to see business chances. Relevance of Entrepreneurship to an Organization 5. Proac...

ENTREPRENEURSHIP 4. Opportunity seeker - an entrepreneur must have the ability to be the first to see business chances. Relevance of Entrepreneurship to an Organization 5. Proactive - controlling a situation by making things to happen or by preparing for possible future problems. 1. Development of Managerial capabilities - this means 6. Risk Taker - they have the courage to pursue their that one of the benefits an entrepreneur gets is to develop business ideas. his managerial skills. 7. Innovative - the entrepreneurs have big business ideas 2. Creation of Organizations - which means that because and they do not stop improving and thinking of new of entrepreneurships many organizations will exist. worthwhile ideas for their business. 3. Improving standard of living - this means that entrepreneurship can lift up the economic status of an Core Competencies in Entrepreneurship individual. 4. Means of economic development - this means that not 1. Economic and dynamic activity - Entrepreneurship is only the life of the entrepreneur is improved but also the an economic activity because it involves the creation and society where the business is located. operation of an enterprise with a view to creating value or wealth by ensuring optimum utilization of limited resources. Concept of Entrepreneurship 2. Innovative - Entrepreneurs constantly look for new ideas, thus he needs to be creative. The word "entrepreneur" was derived from the French verb 3. Profit Potential - The entrepreneur can be enterprendre, which means "to undertake." This is compensated by his profit coming from the operation. pinpointing to those who "undertake" the risk of enterprise. 4. Risk bearing - The entrepreneur needs to gamble but The enterprise is createdby an entrepreneur and the wise enough to offset the risk. process is called "Entrepreneurship." Types of Entrepreneurs Entrepreneurs are innovators, willing to take risks and generate new ideas to make it unique and profitable 1. Innovative entrepreneur - They are those who always solutions to the present-day problem make new things by thinking of new ideas. They have the ability to think newer, better and more economical ideas. Factors Affecting Entrepreneurship 2. Imitating entrepreneurs - They are those who don't create new things but only follow the ideas of other 1. Personality Factors which includes: entrepreneurs. a. Initiative - which means doing things even before being 3. Fabian entrepreneurs - They are skeptical about told. changes to be made in the organization. They don't initiate b. Proactive -which means he can classify opportunities but follow only after they are satisfied. and seize it. 4. Drone entrepreneur - They are those who lives on the c. Problem Solver which means he can retain good labor of others. They are die-hard conservatives even relations with other people. ready to suffer the loss of business. d. Perseverance - meaning he will pursue things to get 5. Social entrepreneurs - They are those who initiate done regardless of challenges. changes and drive social innovation and transformation in e. Persuasion - means that he can entice people to buy the various fields such as education, health, human rights, even if they don't. environment and enterprise development. f. A Planner - meaning he makes plan before doing things and do not fail to monitor it. Career Opportunities of Entrepreneurship. g. Risk-taker - which means that he is willing to gamble but he will calculate it first. 1. Business Consultant - with the expertise of in the field 2. Environmental Factors which include political, climate, of entrepreneurship, he can be a very good source of legal system, economic and social conditions and market advice to other entrepreneurs and would be business man. situations. 2. Teacher - a graduate of an entrepreneurship can use his knowledge in teaching. Common Competencies in Entrepreneurship 3. Researcher - the entrepreneur can be employed as researcher by an enterprise. 1. Decisive - an entrepreneur must be firm in making 4. Sales - the entrepreneurship graduate can apply as decisions. salesman. 2. Communicator - an entrepreneur must have a 5. Business Reporter - the entrepreneur being expert in convincing power. the field, he can be employed as business reporter. 3. Leader - an entrepreneur must have the charisma to be obeyed by his employees. ENTREPRENEURIAL IDEAS The Entrepreneurial Process of Creating New b. Economic forces- such as income level and employment Venture rate. c. Sociocultural forces- customs, lifestyles and values that characterize a society. d. Technological environment- New inventions and technology innovations. 1.3 The industry environment of the business includes: a. Competitors The creation of an entrepreneurial ideas leads to the b. Customers identification of entrepreneurial opportunities, which in turn c. Creditors results in the opening of an entrepreneurial venture. d. Employees Essentials in Entrepreneur's Opportunity Seeking e. Government f. Suppliers These are the basic foundation that the entrepreneur must have in seeking opportunities: 2. Technological discovery and advancement Entrepreneurial mind frame. This allows the A person with entrepreneurial interest sees possibility of entrepreneur to see things in a very positive and optimistic business opportunities in any new discovery or because of way in the midst of difficult situation. Being a risk-taker, an the use of latest technology. For example, an individual entrepreneur can find solution when problems arise. with knowledge in repair and installation of a machine Entrepreneurial heart flame. Entrepreneur's driven engine discovers that additional engine parts that passion, they are attracted to discover satisfaction in the considerably reduce fuel consumption. act and process of discovery. Passion is the great desire of 3. Government's thrust, programs, and policies an entrepreneur to achieve his/her goals. Entrepreneurial gut game. This refers to the ability of The priorities, projects, programs, and policies of the the entrepreneur of being intuitive. This also known as government are also good sources of ideas. For example, intuition. The gut game also means confidence in one's self the use of firecrackers to celebrate New Year's Eve is and the firm believes that everything you aspire can be strictly prohibited. People without entrepreneurial interest reached. will view the ordinance as a plain restriction. However, for an entrepreneur, it is a business opportunity to come up Sources of Opportunities with a new product that will serve as a substitute for firecrackers. Some are the following sources of opportunities: 4. People's interest 1. Changes in the environment The interest, hobbies, and preferences of people are rich Entrepreneurial ideas arise when changes happen in the source of entrepreneurial ideas. Like the increasing number external environment. A person with an entrepreneurial of Internet Café at present could be lead to the strong drive view these changes positively. External environment attachment of young people to computers. refers to the physical environment, societal environment, and industry environment where the business operates. 5. Past experiences 1.1 The physical environment includes: The expertise and skills developed by a person who has a. Climate- the weather conditions. worked in a particular field may lead to the opening of b. Natural resources- such as minerals, forests, water, and related business enterprise. For example an accountant fertile land that occur in nature and can be used for who has learned the appropriate accounting and economic gain. management skills and techniques in a prominent c. Wildlife- includes all mammals, birds, reptiles, fish, etc., accounting firm can start his/her business venture by that live in the wild. opening his/her own accounting firm. 1.2 The Societal environment includes the various Forces of Competition Model forces like: a. Political forces- includes all the laws, rules, and It is also known as the "five forces of competition," An regulations that govern business practices as well as the industry environment is a competitive environment. permits, approvals, and licenses necessary to operate the Regardless of what product or services you have, business. competition is always present.  b. Number of competing firms. c. Characteristics of the products or services. d. Increased Competition - it is the act or process of trying to get or win capacity. something. For example, the prices are lower when there is e. Amount of fixed costs. a competition among the stores. f. Rate of industry growth. These are the five forces competing within the 4. Substitute Products industry: Substitute means anything that takes the place or function a. Buyers of another. b. Potential new entrants For example, the consumers decide to use margarine as a c. Rivalry among existing firms substitute for butter. In case the price of butter increases, d. Substitute products preferably the consumer will gradually switch to margarine. e. Supplier A substitute product can give a big threat in the industry 1. Buyers environment if the following factors are notice: The buyers are the one that pays cash in exchange to your a. Switching cost is low. goods and services. b. Preferences and tastes of the customers easily change. For example, the influenced of the price or in the c. Product differentiation is highly noticeable bargaining strategy. The buyer has a strong and magnified d. The quality of substitute products dramatically improves. bargaining power. e. The price of substitute product is substantially lower. The threat of its bargaining power will be less if the 5. Suppliers following factors notice: The Suppliers are the one that provide something that is a. There are several suppliers available in the market. needed or wanted. b. The buyer has the potential for backward integration. For example, if the supply and services being offered is c. The cost of switching the supplier cost is minimal. unstable or keep. The intensity of the threat is strong in this d. The product represents a high percentage of the buyer's kind of the competitive force in the industry. cost. e. The buyer purchases large portions of the seller's This can be notice if there is the presence of the following product or services. factors: a. The supplier has the ability for forward integration. 2. Potential New Entrants b. Suppliers in the industry are few, but the sales volume is A new entrant is defined as the one who enters something. high. For example, the level of capital requirements, if the c. Substitute products are not readily available in the business requires huge capital, new entrants should market decline to join the business. d. The switching cost is very high. This can be notice if there is the presence of the following e. The product or service is unique. factors: Definition of Terms a. Substantial capital requirement. b. Strict government policy. Opportunity seeking - Process of considering, c. Difficulty in accessing distribution channels. evaluating, and pursuing market based activities d. Economies of scale. that are accepted to be beneficial for the e. High cost of product differentiation. business. f. High switching cost. Entrepreneurial process - can be defined as the steps taken in order to begin a new enterprise. It 3. Rivalry among Existing Firms is a step- by-step method, one has to follow to Rivalry is a state or situation in which people or groups are set up a business. competing with each other. For example, it depends on the Marketing strategy of your Entrepreneurial ideas - an innovative concept competitor, like giving freebies and special offers. that can be used for financial gain that is usually centered on a product or service that can be The intensity of rivalry among existing firms is offered for money. characterized to the following factors: Essentials of entrepreneur's opportunity a. Diversity of rivals. seeking - These are the basic foundation that the  entrepreneur must have in seeking opportunities, such as entrepreneurial mind frame, heart flame and gut game. Sources of opportunity - can be attain by assessing and looking at changes in the environment; technological discovery and advancement; government's thrust, programs, and policies; people's interest, and past experiences. External environment - refers to the physical environment, societal environment, and industry where the business operates. Government - refers to the local government (municipality, city, or provincial) or the national government and its branches. Competition - it is the act or process of trying to get or win something. Substitute - anything that takes the place or function of another. New entrants - the one who enters something. Suppliers - are the one that provide something that is needed or wanted. Buyers - are the one that pays cash in exchange to your goods and services. Rivalry - is a state or situation in which people or groups are competing with each other. Recognizing & Understanding the Market to create an effective unique selling proposition to the target customers are: The Value Selling Proposition & Unique Selling Identify and rank the uniqueness of the product or Proposition services character This part allows the entrepreneur to prepare himself on Be very Specific how to advertise and sell his product even if it is similar to Keep it Short and Simple (KISS) others. As an entrepreneur, present the best feature of your Value Proposition (VP) is a business or marketing product or service that is different from other competitors. statement that summarizes why a consumer should buy a Identifying the unique selling proposition requires marketing company's product or use its service. This statement is research that you will learn from the other modules. In often used to convince a customer to purchase a particular promoting your products or services, make sure that it is product or service to add a form of value to their lives. In very specific and put details that emphasize the creating Value Proposition, entrepreneurs will consider the differentiator against the competitors. Keep it short and basic elements: simple and think of a tagline that is easy to remember. Right now, the proposed unique selling proposition is: Target Customer "Charing sari-sari store, open 24/7" Needs/opportunity Name of the product Readers get confused between value proposition and Name of the enterprise/company unique selling proposition. The two propositions are used to differentiate the products from competitors. For example, There are many competitors in the market who establish Jollibee is known to have a Filipino taste burger. This brand superiority over other entrepreneurs. Entrepreneurs should has a unique selling point because of its tagline "Langhap think of other alternatives to make their products better. An Sarap" important aspect in Value Proposition is that it must be truthful and that it should establish credibility to the Unique Selling Proposition and Value Proposition are consumers. two of the most famous tools used to explain why prospect customers buy each product and service. Base on each Example: Potential value proposition is most common in definition, we learn that USP and VP are frameworks of small businesses of your locality. each business industry. The two propositions are valuable for the entrepreneurs. Make sure that you're focusing on a Aling Charing Sari-Sari Store opens only from 6:00 am to solution that is a need, and make sure that you are 6:00 pm, but Aling Charing noticed that there are targeting a customer segment that's large enough and customers who go to a nearby town to look for a cares enough about your solution so that you can build a convenience store at around 10:00 pm to 6:00 am. She viable business. We'll talk more about determining the size believes that this is a great opportunity for her store to of your target market in our next lesson. operate 24/7. In this example, the proposed value proposition is: "Charing sari-sari Store, open 24/7". After you understand the value proposition and the unique selling proposition, now it's time to understand the target The business describes a sari-sari store - a basic retail market, customers requirement and market size. As you store. The assurance from this value proposition is might expect, the market is right at the center of our word because of the phrase "open 24/7", Aling Charing's sari- cloud for this lesson. Understanding your market is critical sari store opens 24/7, which makes it different from other in building your business model. There are three factors competitors. that will determine your customers. Unique Selling Proposition (USP) - refers to how you sell your product or services to your customer. You will address Marketing Frameworks the wants and desires of your customers. A. Target Market As an entrepreneur, you should think of marketing Market Targeting is a sage in market identification process concepts that persuade your target customers. You may that aims to determine the buyers with common needs and ask the following questions in doing this: What do the characteristics. Prospect customers are a market segment customers want? What brand does well? What does your that an entrepreneurial venture intends to serve. competitor sell well? Some tips for the entrepreneur on how In targeting a specific market, it will exclude people if it will There can be two types of customer requirements: not fit your criteria. Rather, target marketing allows you to focus your marketing money and brand message on a 1. Service Requirement: specific market that is more likely to buy from you than An intangible thing or product that cannot be touched but other markets. Choose a product that is more affordable, the customer can feel the fulfillment. There are elements in efficient, and effective to reach potential clients and service requirement like on-time delivery, service with a generate business. smile, easy-payment etc. It includes all aspects of how a Commonly used methods for segmenting the markets are customer expects to be treated while purchasing a product follows.: and how easy the buying process goes. 1. Geographic segmentation - the total market is divided 2. Output Requirements: according to geographical location. Variables to consider: Tangible thing or things that can be seen. Characteristic a. Climate specifications that a consumer expects to be fulfilled in the b. Dominant ethnic group product. Costumers will avail services as a product, then c. Culture various service requirements can take the form of output d. Density (either rural or urban) requirements. For example, if the consumer hires a multi 2. Demographic Segmentation - divided based on cab, then on-time arrival becomes an output requirement. consumers. Variables to consider: Customer buys gadgets (phone speaker) the specification a. Gender like the loudness and clarity are the output requirements. b. Age C. Market Size c. Income The entrepreneur's most critical task is to calculate the d. Occupation market size, and the potential value that market has for e. Education their start-up business. Market research will determine the f. Religion entrepreneurs' possible customers in one locality. g. Ethnic group h. Family size What is Market Size? Market size is like a size of the arena where the 3. Psychological Segmentation - divided in terms of how entrepreneurs will play their business. It is the approximate customers think and believe. Variables to consider: number of sellers and buyers in a particular market. a. Needs and wants Companies are interested in knowing the market size b. Attitudes before launching a new product or service in the area. In c. Social class determining the market size, the entrepreneur will conduct d. Personality traits a strategic marketing research from reliable sources e. Knowledge and awareness using the following method: f. Brand concept g. Lifestyle The first step is to estimate the potential market - approximate number of customers that will buy 4. Behavioral Segmentation - divided according to the product or avail your services. customers' behavior pattern as they interact with a The second step is to estimate the customers company. Variables to consider: who probably dislike to buy your product or avail a. Perceptions the services. b. Knowledge The third step is for the entrepreneur to estimate c. Reaction the market share, that means plotting and d. Benefits calculating of the competitor's market share to e. Loyalty determine the portion of the new venture. f. Responses Market size becomes the most important factor if you ever B. Customer Requirements need to raise funding for your business. Customer requirements are the specific characteristics that the customers need from a product or a service. Market Research Make sure response scales used are consistent with categories that are mutually exclusive Firms and other businesses need to understand their service offerings and their customers to ensure that their services will be adopted as solutions to consumer needs. In Interview order for the firms to recognize the needs of the market or is one of the most reliable and credible ways of getting the customers, they need to conduct market research. relevant information from target customers. It is typically Market Research or Marketing Research Process can done in person between the researcher/entrepreneur and a be defined as the process of gathering, analyzing and respondent where the researcher asks pertinent questions interpreting the information about the products or the that will give significant pieces of information about the services to be offered for sale to the potential consumers in problem that he will solve. the market The interview is also helpful even when the business There are different ways to collect the data. The most has already started because the customers’ feedback important methods you can consider are surveys, focus provides the entrepreneur a glimpse of what the group discussion (FGD), and interviews. customers think about the business. Interviews normally last from 15 to 40 minutes, but Data Collection they can last longer, depending on the participants’ is the most valuable tool in any type of research study. interest in the topic. Inaccurate data collection may cause mistakes and In a structured interview, the researcher asks a ultimately lead to invalid results. standard set of questions and nothing more. Tips In Collecting Data Types of Interview Organize collected data as soon as it is available 1. Personal Interviews - are the traditional method of Know what message you want to get across and then conducting an interview. It allows the researcher to collect data that is relevant to the message establish relationship with potential participants and Collect more data therefore gain their cooperation. It generates highest Create more data response rates in survey research. They also allow the Regularly run experiments or collect data researcher to clarify indefinite answers and when Challenge your assumptions necessary, seek follow-up information. Set reasonable expectations 2. Telephone Interviews - are less expensive and less Take note of interesting or significant data time-consuming, but the disadvantages are that the response rate is not as high as the face-to-face interview, Surveys but considerably higher than the mailed questionnaire. are the most common way to gather primary research with the use of questionnaires or interview schedule. These can be done via direct mail, over the phone, internet (e.g. Focus Group Discussion (FGD) Google) or email, face-to-face or on the Web(e.g. Skype or is an excellent method for generating and screening ideas Viber). and concepts. It can be moderated group interviews and brainstorming sessions that provide information on user’s When designing or constructing your own research needs and behaviors. questionnaire, remember the following guidelines. The following are considerations in the use of focus Keep it as simple as possible group discussions in market research: Make sure it is clearly appealing and easy to read Cluster or block related questions The length of the session is between 90 and 120 Move from complex questions to more specific minutes. questions Conduct focus groups discussion with 8 to 10 Make sure questions are concise and easily participants per group. understood Avoid questions that are difficult to answer  Assign an expert moderator/facilitator who can manage group dynamics. Use a semi-structured or open-format discussion. Strive for consistency in the group’s composition (for example, it may not be advisable to have business customers and retail customers in the same focus group, their needs are very different). Note: Aside from the main basic groups of research methods (quantitative, qualitative and mixed), there are different tools that can be used to collect data. Interviews can be done either in personal or over the phone. Surveys/questionnaires can be paper or web based. Focus Group Discussions can be moderated group interviews and brainstorming sessions that provide information on user's needs and behaviors.