Starting An Enterprise PDF

BM2217 STARTING AN ENTERPRISE Innovation and Ideas What is Innovation? Although “business innovation” is often used to describe the technology, the real meaning o...

BM2217 STARTING AN ENTERPRISE Innovation and Ideas What is Innovation? Although “business innovation” is often used to describe the technology, the real meaning of business innovation is increasing income. Most businesses are aware of the need to innovate to keep up with the market’s rate of change. All industries are being disrupted by technology, so companies must innovate to stay current and avoid falling behind. An emphasis on design thinking, brainstorming, or the creation of an innovation lab may fuel business innovations. The main benefit of innovation is that it increases business income and enhances the bottom line. It could entail introducing updated goods or services (which might boost sales), streamlining present procedures, or resolving a pressing company issue (both of which cut down on costs and save time). The following are the different types of innovation: Process Innovation is a change in how a product or service is manufactured, created, or distributed to achieve greater efficiency. Example: Zara does not spend money on advertisements. Instead, they only put their labels on their bags and communicate with customers verbally to spread their brand. It complements their innovative manufacturing method: Only 15 to 25 percent and 50 to 60 percent of clothing are produced before the season. Any remaining garments are made during the season as indicated by the clients’ desires. They can respond quickly and send clothes to their shops using this procedure. Product/Service Innovation is creating new ideas that do not alter established business models. Example: The waterproof Cicret Bracelet has a projector and looks like a fitness band that can be worn. It projects all of a smartphone’s visuals onto the arm using the app. From there, the user can touch and manipulate the image just like they would on a smartphone. It includes making calls, surfing the Internet, looking up the weather, setting the alarm, looking up directions, and other similar activities. Disruptive Innovation introduces a new value proposition. It either creates new markets or reshapes existing markets. There are two (2) types of disruptive innovations: low-end and new markets. It is any situation in which an industry is shaken up, and previously successful ones stumble. a. Low-end disruptive innovations can occur when existing products and services are “too good,” making them overpriced compared to the value existing customers can use. Example: The customers of Blockbuster, an American-based home video and video game rental services provider, did not find its original service appealing because they desired rapid satisfaction while selecting movies and video games. This allowed Netflix to introduce their highly and technologically integrated services, allowing anyone to watch video content in a more user-friendly interface. As Netflix’s quality and market share soared, this low-end disruptive innovation forced Blockbuster into bankruptcy in 2010. b. New-market disruptive innovations can occur when characteristics of existing products limit the number of potential consumers or force consumption to take place in inconvenient, centralized settings. 02 Handout 1 *Property of STI  [email protected] Page 1 of 8  BM2217 Example: Customers can call and message from the same interface using Viber, a low-cost telecommunications service that costs a fraction of what traditional telecommunications services cost. Any successful enterprise begins with the adaption of a sound business idea. One good example is parcel delivery. People had to contend with the postal offices’ slow and often inefficient services. Complaints such as missing parcels and long delivery periods are constant hassles people encounter. Then private firms like LBC, DHL, and FedEx came forward, which offered people safe and timely deliveries. Years after, with just one click on your mobile phone, you can have a courier agent come to you and deliver your parcel, documents, groceries, or even food. Grab, Uber, honestbee, and Lalamove are some innovations made by technopreneurs due to their sound business ideas. A good business idea can come as an original or an improvement of an old idea. An original idea can be successful when properly introduced in its market entry. An old idea that was improved can achieve competitive success among other enterprises that offer the same product or service. According to Nieminen (2018), a good business idea must be aligned with the objectives and resources of the technopreneurial enterprise. Below are the steps a technopreneur should follow to generate a feasible business idea. Figure 1. Steps in determining a good business idea Source: https://smallbizclub.com /creating-a-plan 1. Find the sweet spot. Capitalize on the market’s needs or at least think of ideas to alleviate the common hassles people encounter. 02 Handout 1 *Property of STI  [email protected] Page 2 of 8  BM2217 Figure 2. The Sweet Spot Source: https://smallbizclub.com /creating-a-plan 2. Generate business ideas. Start with a good and feasible idea. The idea must be specific, measurable, attainable, realistic, and time-bound. 3. Prioritize and choose the most potential idea. Rate the ideas based on a few different criteria and then compare them to one another. The idea with the most potential usually provides a more sustainable source of competitive advantage. It can sometimes be easier to market and sell, provided it has a clear value promise. 4. Create hypotheses for obstacles and key assumptions. At this point, take a closer look at your idea’s most significant potential challenges and clarify your assumptions on the key hypotheses that can either make or break the idea. 5. Validate the core assumptions of your theory. a. Conducting the research. When conducting the research, you should ideally do it with a prototype or mock of your value proposition instead of just asking people directly or via surveys. It minimizes response bias and helps create a backlog of solid prospects to sell once the service is ready. b. Analyzing the result. Depending on the challenge, you could try refining the product, the technologies, the business model, or the customer acquisition channels and then re- conducting the same tests as before to see if these changes make a difference. The New Industry Trends The 1920s saw a boom in the establishment of numerous industries. Transportation became simple with the rise of vehicles. Along these lines, the tremendous increase in automobiles and the rise of petroleum were crucial partners. Every home in the United States, Europe, and Asia now has a radio. 02 Handout 1 *Property of STI  [email protected] Page 3 of 8  BM2217 The development of the modern entertainment business was made possible by the film industry’s explosive growth. Factory assembly lines allowed for the continuous mass production of commodities and products. Several new sectors have since evolved and benefited from technology. The way we conduct business today is changing due to these new trends. Here are a few industries that have embraced new technological feats. 1. Aerospace 10. Information Technology 2. Audio Technology 11. Medical devices 3. Automotive 12. Nanotechnology 4. Artificial Intelligence 13. Nuclear Physics 5. Automation 14. Photonics 6. Biotechnology 15. Robotics 7. Bioinformatics 16. Semiconductors 8. Computer Engineering 17. Telecommunications 9. Electrical and Electronic Engineering 18. Electromagnetic Engineering Business Ethics in the Age of Technology Data privacy has been a primary issue since the introduction of new technologies and the Internet. Technopreneurial businesses frequently ask their customers for personal information like name, email address, and phone number. It could be a significant opening for dishonest people to obtain client information and utilize it to their advantage. Technopreneurs now must uphold current rules governing data secrecy and offer protections to protect their clients (Fredrick, 2016). One ethical dilemma technopreneurs face is the disclosure of their clients’ data. Technopreneurs must protect their client’s information. According to Forbes Technology Council (2018), the following guidelines are the ethical approach to data privacy protection: 1. Be clear to the clients where their data will be stored from the beginning and assure their safety. 2. Have a multi-factor authentication when they login to their accounts when they purchase. 3. Make sure that if the client says no, you will comply. 4. Be transparent, especially when there are updates that need to be done. 5. Use jargon (special words or expressions) that are understandable by everyone. 6. Ensure that the technopreneurial enterprise’s website, apps, and other software are often audited for security glitches. Business Ethics According to the definition provided by Alexandra Twin (2022), business ethics is the study of proper company conduct regarding potentially contentious issues, including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, fiduciary duties, and much more. The law frequently directs business ethics. However, there are occasions when business ethics offer a fundamental standard that enterprises can abide by to win the public’s acceptance. 02 Handout 1 *Property of STI  [email protected] Page 4 of 8  BM2217 The following determinants stimulate the behaviors of technopreneurs (Medina, 2014): The public. Technopreneurs must adhere to the norms of society. Interest groups such as consumer rights advocates. Technopreneurs must be aware of the groups keen on protecting consumers’ rights. Business organizations. It is best to study other enterprises’ ethical standards. Morals and conviction. Morals and convictions of technopreneurs play an important part in coming up with technopreneurial ideas. Ethical behaviors of a business entity are influenced by any or a combination of the following factors: Responsibilities. It refers to businesses taking complete accountability for their conduct. It includes any unethical business practices or poor decisions made during business operations. Respect and consideration. Customers, employees, and business owners all owe each other respect. Businesses must promote a respectful relationship between all stakeholders and ensure that employees have a safe workplace. Sincerity. It is greatly desired for employees and business owners to communicate openly. Thanks to this quality, employees and the company can develop trust and a connection. Customers’ interactions with a business can also benefit from transparency. Healthy competition. Conflicts of interest among employees should be kept to a minimum, and healthy competition among employees should be encouraged. Loyalty and respecting commitments. All disagreements between employers and employees should be resolved internally, away from public view. Employees must continue to promote the company’s brands and uphold the company’s vision. Additionally, businesses must adhere to agreements with employees. In business practice, it is unethical for companies not to honor commitments or unreasonably interpret contracts. Information. A company’s customers, employees, or partners should have complete access to crucial data. This includes both positive and negative information, terms and conditions, and other important information. Withholding or concealing relevant facts is against business ethics. Respect to the rule of law. Any violation of corporate laws, rules, and regulations governing business practices is unethical, so they must be respected and adhered to. How ethical behaviors are instilled Below are ways to encourage and instill business ethics among technopreneur partners, owners, and employees (Medina, 2014): Adoption of a code of ethics: A code of ethics instructs stakeholders on how to behave and conduct business inside and outside the company. Establishment of a system that rewards and punishes ethical behavior: This system is used to control the actions of stakeholders. Recognition or promotion could result from meeting the code of ethics or ethical standards. However, if the ethical standards are not adhered to, reprimands, suspensions, demotions, or dismissals are all possible outcomes. 02 Handout 1 *Property of STI  [email protected] Page 5 of 8  BM2217 Conflict resolution programs: It is a given that disagreements will arise in any business due to differences over ideas, beliefs, or principles. It is essential to have a program or committee that settles disputes to prevent parties who disagree from deviating from the goals. Establishment of an ethics review committee: This group ensures that the businesses’ ethical standards are upheld. Employees and other stakeholders associated with the company make up this group. Additionally, this committee offers business advice on sensitive ethical issues. Training on business ethics: The company is responsible for training stakeholders and employees accountable for upholding the company’s ethical standards. Thanks to this training, they should be sufficiently prepared to handle the business’s ethical issues and cases and those of the other employees. Support from upper management, including owners and executives: If upper management provides support, the company’s ethical programs will run smoothly. The ethical standards will be equitable to employees at all levels. Ethics differ from one culture to another so, as do businesses. Sound business ethical behaviors should be of prime importance in any technopreneurial enterprise. Laws Covering the Practice of Entrepreneurship and Technology More and more technopreneurial enterprises have sprouted nowadays. It is right that the government regulates these businesses to protect the clients. Suppose businesses are put up in the Philippines, and the Internet Protocol (IP) addresses of the clients and the technopreneurial enterprise are registered in the Philippines. In that case, they are covered by the law. Here are four (4) laws that govern technopreneurial and online businesses. 1. Republic Act No. 8792, also known as the E-Commerce Act, imposes penalties on offenses involving computers and the Internet, such as infecting a customer’s computer with viruses when they place an online order, hacking, and stealing original works that are trademarked or copied. Violators could face a fine of P100,000 and prison terms of up to three (3) years and six (6) months, respectively. The country’s e-commerce and business-to-consumer (B2C) transactions are encouraged by this law. Even though this law encourages Internet use to speed up transactions, it also discourages dishonest technopreneurs from operating illegal businesses. Features of this law: Gives legal recognition of electronic data messages (Section 6) Gives legal recognition of electronic documents such as contracts, memos, receipts, and others sent online (Section 7) Gives legal recognition of electronic signatures (Section 8) Allows the formation of contracts in electronic form (Section 16) Gives power to the Department of Trade and Industry (DTI) to supervise the development of e-commerce in the country (Section 29) 2. Republic Act No. 9501, also known as the Magna Carta for SMEs, defines a small, medium, or micro enterprise (SME) as any business with 10 to 199 employees and total assets of up to three (3) to 100 million pesos. It gives guidelines for how a new business can succeed in the market and 02 Handout 1 *Property of STI  [email protected] Page 6 of 8  BM2217 acknowledges the significance of SMEs to the growth of the nation’s economy. This law shields SMEs from potential dangers, providing them with the necessary government assistance. Features of this law: Recognizes the importance of SMEs Acknowledges that these SMEs are the backbone of the country Addresses the challenges of putting up a business in the country, such as: High cost of doing business; Lack of market and finance information; Limited resources of the technopreneur; and Weak technical capabilities of the technopreneur Protects the SMEs entrepreneurs’ and technopreneurs’ rights against unscrupulous individuals 3. DTI Department Administrative Order No. 8, “Prescribing Guidelines for the Protection of Personal Data in Information and Communications System in the Private Sector” - This Department of Trade and Industry (DTI) administrative order safeguards consumer data. This law encourages private SMEs and even large corporations to develop privacy policies to protect data in private sector information and communications systems. It requires the company to safeguard its data whenever employees use it. Features of this law: Aims to protect the consumers’ data and secure its safety Mandates companies to create privacy policies for the protection of the information given by their clients 4. DTI-DOH-DA Joint Department Administrative Order (JDAO) No. 1, “Rules and Regulations for Consumer Protection in a Transaction Covered by the Consumer Act of the Philippines” - This joint administrative order from the DTI, the Department of Health (DOH), and the Department of Agriculture (DA), focuses on protecting consumers who engage in online transactions, particularly those involving the purchase of goods that are included in the Consumer Act of the Philippines. It applies to all e-commerce-related local or international retailers or sellers. For customers to make an educated decision, the joint order requires e-commerce businesses to disclose information about their products or services openly. Companies must also have a system for customer complaints where customers can voice concerns. Features of this law: Focuses on the protection of consumers who are engaged in online transactions, especially the purchase of products listed on the Consumer Act of the Philippines Covers retailers and sellers located domestically or abroad Requires the enterprises engaged in e-commerce to disclose information about their products so the consumers can have an informed choice on whether to purchase or not 02 Handout 1 *Property of STI  [email protected] Page 7 of 8  BM2217 References: Buljubasic, T. (n.d.). Process innovation – Zara. http://innovationexcellence.com/blog/2013/11/18/process-innovation-zara/ Department of Trade and Industry (2006). DTI Department Administrative Order (DAO) No. 8, Prescribing Guidelines for the Protection of Personal Data in Information and Communications System in the Private Sector. https://www.dti.gov.ph/information/related-laws-and-policies. Department of Trade and Industry, Department of Health, & Department of Agriculture (2008). Rules and Regulations for Consumer Protection in a transaction covered by the Consumer Act of the Philippines (R.A. 7394) through Electronic Means under the E-Commerce Act (R.A. 8792). https://www.dti.gov.ph/information/related-laws-and-policies. Forbes Technology Council. (2021). Assure your customers their data is secure with these six best practices. https://www.forbes.com/sites/forbestechcouncil/2021/06/08/12-ways-to-assure-your-customers-that-their-data-is- protected/?sh=158408195925 Fast Company (2022). The most innovative products and services of 2022. https://www.fastcompany.com/90731853/the- most-innovative-products-of-2022 Fredrick, H. (2020). How does technology affect business ethics? https://yourbusiness.azcentral.com/technology-affect- business-ethics-16709.html Wingo, L. (2021) What Business Should I Start? 6 Factors to Help You Decide. https://www.uschamber.com/co/start/startup/deciding-what-business-to-start Republic of the Philippines. (2000) Republic Act No. 8792. https://www.officialgazette.gov.ph/2000/06/14/republic-act-no-8792- s-2000/ Republic of the Philippines. (2000). Republic Act No. 8792. https://www.officialgazette.gov.ph/2000/06/14/republic-act-no- 8792-s-2000/ Study Smarter (n.d.) Business Ethics. https://www.studysmarter.us/explanations/business-studies/influences-on-business Twin, A. (2022) Business Ethics: Definition, Principles, Why They’re Important. https://www.investopedia.com/ terms/b/business- ethics.asp 02 Handout 1 *Property of STI  [email protected] Page 8 of 8