Entrepreneurship: Fundamentals and Opportunities PDF

PREPARED BY ENTREPRENEURSHIP UNIT 1 Ms. She ine D. Ampa o, LPT Lea ning...

PREPARED BY ENTREPRENEURSHIP UNIT 1 Ms. She ine D. Ampa o, LPT Lea ning Module/Reviewe Fundamental Introduction to Entrepreneurship "The pursuit of opportunity beyond resources controlled." Definition of Entrepreneurship "Entrepreneurship is the pursuit of opportunity beyond resources controlled." - Professor Howard Stevenson, the godfather of entrepreneurship studies at Harvard Business School Four Main Types of Risk Demand isk elates to p ospective custome s’ willingness to adopt the solution envisioned by the ent ep eneu. Technology isk is high when enginee ing o scientific b eakth oughs a e e ui ed to b ing a solution to f uition. Execution isk elates to the ent ep eneu ’s ability to att act employees and pa tne s who can implement the ventu e’s plans. Financing isk elates to whethe exte nal capital will be available on easonable te ms. Four Tactics in coping with Catch-22 Lean expe imentation allows them to esolve isks uickly and with limited esou ce expenditu e, by elying on a “minimum viable p oduct,” that is, the smallest possible set of activities e ui ed to igo ously test a business model hypothesis. Staged investing allows ent ep eneu s to add ess isks se uentially, expending only the esou ces e ui ed to meet a given milestone–befo e committing the esou ces needed to achieve the next milestone. Pa tne ing allows ent ep eneu s to leve age anothe o ganization’s esou ces and the eby shifts isks to pa ties bette able/mo e willing to bea them. In a va iation of this tactic, ent ep eneu s ent esou ces to keep costs va iable and to avoid the big fixed outlays associated with esou ce owne ship.  “Storytelling” by entrepreneurs–conjuring a vision of a better world that could be brought about by their venture–can encourage resource owners to downplay risks and in the process commit more resources than they would if they had not been inspired. Source: Eisenmann, Thomas R. (2013, January 10). Entrepreneurship: A Working Definition. Retrieved from https://hbr.org/topic/entrepreneurship "Catch-22" is a term that originated from Joseph Heller's classic novel titled "Catch-22," published in 1961. The phrase has since become a part of the English language, referring to a no-win situation or a paradoxical dilemma in which an individual cannot avoid a problem because of contradictory constraints or rules. Sample Scenario: A combination of the need for outside capital to market a new product and the challenge of persuading resource owners to commit to a venture amidst high risk. Why Schools Should Teach Entrepreneurship? While society innovates, our K-12 schools have remained stagnant. As a result, they are not graduating the doers, makers and cutting-edge thinkers the world needs. Certainly, some public and private schools are modernizing -- having students work in groups to solve problems, learn online and integrate science with the arts. But most institutions do not teach what should be the centerpiece of a contemporary education: entrepreneurship, the capacity to not only start companies but also to think creatively and ambitiously. Source: Rodov, Florina and Truong, Sabrina (14 April 2015). Why Schools Should Teach Entrepreneurship. Retrieved from https://www.entrepreneur.com/article/245038 Can Entrepreneurship Be Taught in a Classroom? Entrepreneurs might have gotten stuck trying to figure out how to estimate the duration of the pandemic or how soon global manufacturing might recover...focus more on lengthy risk and return calculations. But as we face an increasingly uncertain, complex future, schools must adopt new teaching philosophies designed to forge agile, entrepreneurial leaders. Agile Leadership In the unknowable future, all leaders will need to be entrepreneurs: visionaries that can imagine, adapt, and act nimbly to address whatever challenges come their way. “Effectual” Entrepreneurship leveraging what we know, who we know, and who we are to take action an approach that invites students to recognize their existing entrepreneurial resources and accept a certain amount of risk  simply act based on the resources at your disposal What do you think is the reason why do you need to take up entrepreneurship regardless of your strand? RA 10644 (Go Negosyo Act) SEC. 10. Additional Functions of the MSMED Council. – Aside from its existing functions as mentioned under Section 7-B of Republic Act No. 9501, otherwise known as the “Magna Carta for Micro, Small and Medium Enterprises (MSMEs)”, the MSMED Council shall have the following additional functions: (e) Development of Entrepreneurial Education and Training. – The MSMED Council shall develop, in coordination with the Department of Education, TESDA and CHED, a course curriculum or training program in entrepreneurship that will promote entrepreneurial culture and competence. Entrepreneurship shall be integrated in the curriculum of educational and training institutions in all levels. RA 10679 (Youth Entrepreneurship Act) SEC. 4. Youth Entrepreneurship and Financial Literacy Program. – The promotion of youth entrepreneurship and financial literacy program shall be inculcated in all levels of education nationwide. Consistent with Section 5 of Republic Act No. 10533, or the “Enhanced Basic Education Act of 2013”, the Department of Education (DepED) shall ensure that the K to 12 curriculum shall be supported by programs on entrepreneurship and financial literacy: Provided, That at the elementary level, the programs referred to shall principally focus on the ideal values necessary to become successful entrepreneurs. The Commission on Higher Education (CHED) and the Technical Education and Skills Development Authority (TESDA) shall ensure the promotion of programs on entrepreneurship and financial literacy. Agility in Entrepreneurship So what is agility in business? Business agility is the ability to pivot and eact uickly, without bogging down in bu eauc acy. Agile o ganizations emb ace a mindset of continuous imp ovement: Business agility no malizes constant change fo the bette. Types of Agility in business Strategic Agility - It is the ability of a company to maintain its competitive ability by identifying potential th eats, mitigating isks, and taking advantage of oppo tunities. Business entities that detect and effectively espond to movements within thei inte nal and exte nal envi onments a e mo e likely to su vive and th ive. i.e. creating new markets with new products that reach new customers, i.e. market-creating innovation  Operational Agility - efe s to the o ganizations' ability to espond and adapt to changing and new p io ities, custome demands o business e ui ements, and inte nal dis uptions while maintaining ope ational e ciency and delive ing supe io esults. i.e. making the existing products better, faster, cheaper and so on for existing customers. Skills Outlook The Seven Survival Skills for Careers, College, and Citizenship by Tony Wagner 4. Initiative and Entrepreneurialism Mark Chandler, the Senior Vice President and General Counsel at Cisco was one of the strongest proponents of these traits. “Leadership is the capacity to take initiative and trust yourself to be creative,” he told me. “I say to my employees if you try five things and get all five of them right, you may be failing. If you try ten things, and get eight of them right, you’re a hero. If you set stretch goals, you’ll never be blamed for failing to reach a stretch goal, but you will be blamed for not trying. One of the problems of a large company is risk aversion. Our challenge is how to create an entrepreneurial culture in a larger organization.” 2022 Skills Outlook by World Economic Forum “Human” skills such as creativity, originality and initiative (Growing Skill #3), critical thinking, persuasion and negotiation will likewise retain or increase their value, as will attention to detail, resilience, flexibility and complex problem-solving. Opportunities 7 Awesome Opportunities for Entrepreneurs 1. Invest in Multiple Businesses Most self-made billionai es a e people who invested in many diffe ent business oppo tunities at once instead of focusing on just one idea. While the e a e also plenty of business owne s who have focused on one idea and succeeded, it is ha de to do this and if you fail, many mo e of you esou ces a e lost. Fo the fi st-time ent ep eneu , instead of taking an idea f om the g ound up, it may be mo e appealing to un othe businesses and be a pa t of thei inception, limiting you isk without limiting you oppo tunity fo p ofit. 2. Angel Investors These investo s a e becoming mo e popula than ventu e capitalists in some indust ies, and the money that comes f om them gene ally has fa fewe st ings attached o expectations than bank loans and money f om ventu e capitalists. These investo s can be g eat esou ces fo the ent ep eneu looking to st ess less about funding and focus on p oduct and custome loyalty and se vice, and angel investo s a e backing the ma ket in a way that has not been seen befo e. 3. Crowdfunding Anothe funding method that is changing the landscape of all indust ies' ma kets is c owdfunding. Sites like Kicksta te have made it possible fo ent ep eneu s to ci cumvent the need fo t aditional loans and investo s and instead go st aight to thei custome s to in ui e about inte est level and ga ne the funds necessa y to p oduce thei wa es and dist ibute them to inte ested pa ties. This has encou aged mo e innovation and dive sity in the ma ketplace, and has done uite a bit to level out the playing field between competito s--and help to negate the edge that comes with being well connected ve sus sta ting a business f om next to nothing. 4. Startup Incubators The founde s of sta tup incubato s function simila ly to angel investo s in that they p ovide many esou ces fo a sta tup to begin its jou ney with ve y few st ings attached and kickback expected in etu n. Though not all sta tup incubato s ope ate in te ms of funding, they can p ovide othe much- needed se vices like o ce space, p ofessional semina s, access to indust y p ofessionals, o access to the means of p oduction to give sta tups of all kinds an oppo tunity to accomplish thei mission. These p og ams a e highly competitive, howeve , and you sta tup will need to apply to take advantage of them. 5.Quality Content P oducing uality content will always set you business ahead of the cu ve. Good content can be found eve ywhe e nowadays, and p oviding g eat content has become easie with the p olife ation of ghostw iting netwo king websites that also allow fo uality designe s and filmmake s to sell thei wo k to businesses looking to c eatively each out and connect with thei custome s. Making good content is going to be you biggest in to making new sales, which means that p oducing good content is an oppo tunity that eve y sta tup owne should be jumping on to give his o he business an edge. 6. The Social Power of the Internet St ategically placing you business and b and in the cente of conve sations and c eating a cultu e a ound you b and will effectively sepa ate you business f om you competition's by t uly connecting to custome s on issues they ca e about.7 7. Foreign Markets Fo eign ma kets, especially the Chinese one, have seen exponential g owth in the past few yea s. Any sta tup owne s that know how to ecognize this oppo tunity fo what it t uly is--access to the la gest ma ket on ea th--will be thanking themselves all the way to the bank. Source: Newlands, M. (2020, February 6). 7 Awesome Opportunities for entrepreneurs. Inc.com. https://www.inc.com/murray-newlands/7-awesome-opportunities-for-entrepreneurs.html Entrepreneurial Ecosystem Understanding the Entrepreneurial Ecosystem The Ent ep eneu ial Ecosystem efe s to the inte connected netwo k of individuals, o ganizations, and esou ces that facilitate the c eation and g owth of sta tups and businesses. Key Components: Gove nment Suppo t - Policies, egulations, and incentives fo ent ep eneu s Examples: Unive sities offe ing ent ep eneu ship p og ams  Tech incubators providing resources for tech startups Education and Research - Universities, incubators, and research institutions Examples: Universities offering entrepreneurship programs Tech incubators providing resources for tech startups Funding - Investors, venture capitalists, and crowdfunding platforms Examples: Venture capitalists investing in innovative startups Kickstarter campaigns for crowdfunding projects Networking - Events, conferences, and communities connecting entrepreneurs Examples: Startup conferences like TechCrunch Disrupt. Co-working spaces fostering collaboration among entrepreneurs. BUSINESS ENVIRONMENT Business environments are micro, or minor, or macro, or major, external forces that affect the functions of a business. A changing business environment can affect how the business functions, whether it meets customer demands and whether the company earns a profit. By understanding all the factors that can affect a business environment, business owners can hope to improve daily operations and gain a more complete understanding of everything that affects their business positively or negatively. MICRO VS. MACRO ENVIRONMENT Micro environment (Internal) is the environment that originates inside the organization and affects the business operations directly and the businessman has absolute control over these forces. It includes the task environment which includes the employees of the organization and the operating environment which includes the operations of the business. Micro Environment is also known as Task Environment Macro environment refers to the overall, broader economy and the forces affecting it versus a microenvironment, which focuses on a specific sector or region's economy. There are macroeconomic conditions or factors that affect how all businesses operate, which, in turn, affect the economy as a whole. Environmental Scanning: A Strategist Competency Environmental scanning is a process that involves strategic foresight. It includes strategic thought as the channel through which foresight is applied. “Strategic thought and the ability to systematically forecast is a shared responsibility in an increasingly interconnected and interactive society where professional silos no longer exist.” What tool is best used in studying and analyzing the Macro Environment of a business? A PESTEL analysis or PESTLE analysis (formerly known as PEST analysis) is a framework or tool used to analyze and monitor the macro-environmental factors that may have a profound impact on an organization’s performance. This tool is especially useful when starting a new business or entering a foreign market. Political Factors These determine the extent to which government and government policy may impact on an organisation or a specific industry. This would include political policy and stability as well as trade, fiscal and taxation policies too. Economic Factors An economic factor has a direct impact on the economy and its performance, which in turn directly impacts on the organisation and its profitability. Factors include interest rates, employment or unemployment rates, raw material costs and foreign exchange rates. Social Factors The focus here is on the social environment and identifying emerging trends. This helps a marketer to further understand consumer needs and wants in a social setting. Factors include changing family demographics, education levels, cultural trends, attitude changes and changes in lifestyles. Technological Factors Technological factors consider the rate of technological innovation and development that could affect a market or industry. Factors could include advances in technology, developments in AI, automation, research and development. There is often a tendency to focus on developments only in digital technology, but consideration must also be given to new methods of distribution, manufacturing and logistics. Environmental Factors Environmental factors are those that are influenced by the surrounding environment and the impact of ecological aspects. With the rise in importance of CSR (Corporate Social Responsibility) and sustainability, this element is becoming more central to how organizations need to conduct their business. Factors include climate change, government environmental policies and initiatives, carbon footprint, waste disposal and sustainability practices. Legal Factors An organization must understand what is legal and allowed within the territories they operate in. They also must be aware of any change in legislation and the impact this may have on business operations. Factors include employment legislation, consumer law, healthy and safety, and international as well as trade regulations and restrictions. Political factors do cross over with legal factors; however, the key difference is that political factors are led by government policy, whereas legal factors must be complied with. Triple Helix Model of Innovation The triple helix model of innovation refers to a set of interactions between academia (the university), industry, and government, to foster economic and social development, as described in concepts such as the knowledge economy and knowledge society. This model suggests that innovation is most successful when these three entities work together in a coordinated and interactive way. University (Academia): They contribute to innovation by producing knowledge and skilled individuals. Industry (Business): They are responsible for bringing innovations to the market and making them commercially viable. Government (Public Sector): They fund research, create favorable regulations, and invest in infrastructure to facilitate the innovation ecosystem. Value Proposition What Is a Value Proposition? A value proposition in marketing is a concise statement of the benefits that a company is delivering to customers who buy its products or services. It serves as a declaration of intent, both inside the company and in the marketplace. The term value proposition is believed to have first appeared in a McKinsey & Co. industry research paper in 1988, which defined it as "a clear, simple statement of the benefits, both tangible and intangible, that the company will provide, along with the approximate price it will charge each customer segment for those benefits." Source: Twin, A. (2024, February 19). Value Proposition: How to write it with examples. Investopedia. https://www.investopedia.com/terms/v/valueproposition.asp Unveiling the Concept of the Value Proposition Conceived by Dr Alexander Osterwalder, the Value Proposition of a company focuses on aligning products or services with customer needs. It encompasses two elements: the customer profile and the company’s value map. The customer profile identifies the customer’s gains, pains, and tasks (jobs), while the value map lists the gain creators, pain relievers, and offerings that generate value. Each aspect should be prioritized according to its importance to the customer. 5-point Criteria These criteria collectively contribute to shaping a strong value proposition by emphasizing uniqueness, innovation, feasibility, societal impact, and the ability to execute the business idea effectively. Gaining a competitive advantage Successful businesses have strong competitive advantages. Competitive advantages include the attributes of your product or service which competitors find difficult to copy. For example, the quality of your staff: their skills, attitudes and relationships with customers; and the innovative features that constitute the intellectual property of the business. There are 4 basic approaches to gaining a competitive advantage which can be applied to most types of innovations. These are: become the low-cost supplier develop differentiated, innovative products and services target a niche: geography, industry, product/service employ differentiated business methods and approaches. Societal & Economic Benefits of Entrepreneurship Entrepreneurship produces more jobs which equates to an increase in national income. Through the creation of new businesses and ventures, leads to the generation of additional employment opportunities. As more jobs are created, the overall income of the nation rises, contributing to economic growth. Entrepreneurship amplifies economic activities of different sectors of society. entrepreneurship has a significant impact on various sectors of society by boosting and intensifying economic activities. Entrepreneurs create and operate businesses, leading to increased productivity, job creation, and overall economic growth across different domains within a society. Entrepreneurship improves people’s living standards. How can you look good if not for the services of your nearby salon or barber shop? How can your day be complete without the food that a nearby eatery cooks? How can you live without the sari- sari store near your house where you buy your basic needs? Entrepreneurship enhances living standards by fostering economic growth, creating job opportunities, and driving innovation. Entrepreneurs introduce new products and services, stimulate competition, and contribute to overall prosperity, ultimately leading to improved financial well-being and quality of life for individuals and communities. Entrepreneurship disperses the economic power and creates equity. It balances the economy by distributing national income to more businesses rather than to only few monopolies Entrepreneurship controls local wealth and balances regional development. entrepreneurship plays a crucial role in managing and distributing wealth within a community. By fostering entrepreneurial activities, local economies can grow, creating a balance in regional development as resources are utilized and distributed efficiently. Entrepreneurial endeavors contribute to the overall prosperity and sustainability of a region. Entrepreneurship reduces social conflicts and political unrest. Entrepreneurship, by fostering economic opportunity, wealth distribution, and community engagement, has the potential to reduce social conflicts and contribute to political stability. Imagine if there are no or only few sari-sari or supermarket stores in your area. All of you will then fight for the food supplies because the store cannot supply all your needs. Entrepreneurship elicits economic independence and capital formation. Entrepreneurship empowers individuals to achieve economic independence by creating businesses, while simultaneously fostering capital formation through the accumulation of resources and investments in the economy. A country with more entrepreneurs is highly likely to become financially independent and will less likely to need the help of other countries. This is also applies to families, barangays, and cities. Entrepreneurship creates wealth instead of borrowing wealth.