M1 Entrepreneur- refers to a person who strongly advocates and correctly practices the concepts and principles of entrepreneurship. Entrepreneurship- the art of observing correct practices in managing and operating a self-owned, wealth-creating business enterprise. Salient Features of Entrepreneurship • Art of correct practice • Wealth creating venture • Provides valuable goods and services • Entails opening and managing the self-owned enterprise • Risk-taking venture Theory- is a generalization that explains a set of facts or phenomena. -not an absolute truth. -can be supported by another observation or proven to be otherwise. Theories on Entrepreneurship • Innovation theory • Keynesian theory • Alfred Marshall theory • Risk and uncertainty-bearing theory • Weber’s sociological theory • Kaldor’s technological theory • Leibenstein’s gap-filling theory • Kirzner’s learning-alertness theory Entrepreneurship and Ordinary Small Business Activity • Motive in opening a business • Perception of risk in the business • Reaction to changes in the environment • View on competition • Vision for development and growth • Horizon of business operation • Source of business funds Misconceptions on Entrepreneurship • Applies only to manufacturing business • Applies only to small business • Applies mostly to persons with good educational background in business course • Applies only to a good economy • Simply opening a small business Sources of Entrepreneurial Ideas • Changes in the environment • Technological discovery and advancement • Government’s thrust, programs and policies • People’s interest • Past experience M2 Character traits – mark or attribute that distinguishes an entrepreneur from the owner of an ordinary small business. Character Traits Common to Successful Entrepreneurs Achievement Cluster • An opportunity-seeker • Committed • Persistent • A risk-taker • Efficient and quality oriented Planning Cluster • Goal Setter • Information seeker • Systematic in planning and monitoring Power Cluster • A persuasive and positive networker • Self-confident Skills- are considered as the personal abilities to do things well. -come from the totality of the knowledge, practice, or experience, and aptitude of a person. Entrepreneurial Skills • Cognitive skills • Technical skills • Interpersonal skills M3 Entrepreneurial venture- is created out of the business opportunities which the entrepreneur should seek to exploit. Societal environment- is generally composed of social, political, cultural, economic, legal and technological forces. Environmental scanning- critical evaluation and thorough study of the environment where the business operates. Importance 1. It clearly portrays the trends, activities, and developments happening in every environmental layer including the interrelated relationships between the various forces in the environment. 2. It identifies the expected threats and opportunities existing in the environment. 3. It points out the possible factors that will determine the success of the entrepreneurial venture. 4. It helps define the future path of the business. 5. It assists in the formulation of the most appropriate entrepreneurial strategies. Social forces are elements in society resulting from human interactions that can influence the thoughts, behavior, attitude, actions, and even the beliefs and customs of the people. • Values • Tradition • Literacy level • Consumer psychology • Time orientation • Lifestyle patterns • Professional career roles Political forces are the various elements usually comprising of the political parties, political systems, and other related political groups that substantially influence the political stability of a country. • Trade regulation • Taxation • Government stability • Unemployment • Worker’s benefit • Election practices. Cultural forces basically refer to the integrated characteristics of a group of people or ethnic group in a particular society. • Religion • Language • Beliefs • Customs • Education Economic forces are factors which are primarily caused by changes or movements in the Philippine economy that have direct or indirect effects on the entrepreneurial venture. • Interest rates • Inflation rates • Fiscal policies • Monetary policies • Income • Exchange rates • Employment • Consumer behavior Legal forces are the elements and bodies that are directly involved in the legislation and interpretation of laws and ordinances directly affecting the business. Legal forces include legislation on the following: • product control, pricing and labeling, • health and safety of the workers, • administration of election process, • advertising and promotion • exercise of profession, and • education administration and fees. Technological forces basically refer to the trends and development in computer and information technology that have impact on business. • Internet • Social media • E-commerce • Technological advancement • Technological infrastructure PESTEL analysis (Political, Economic, Social, Technological, Environmental, Legal)- is a tabular framework of the trends and developments in the different forces in the external environment. Environmental Forces Matrix – broadly classifies the various environmental forces into their frequency of occurrence and level of effect to the existing or proposed business. Industry environment- is the external environmental layer where the trends and changes are easily and immediately felt by the business. Industry Forces • Government- refers to the system or institution that handles the affairs of a particular country. • Suppliers- refer to individual persons or companies that provide the required materials, parts, or services to the business. • Customers- are the buyers of goods and services produced or rendered by the business. • Competitors- produce, sell, or render products or services which are similar to those of the business. • Employees- are the workers of the business who are highly responsible for the production of goods o delivery of services to the customers. • Creditors- refer to banks, financial institutions, and financial intermediaries engaged in lending of money to the borrower usually for a fee or charge in the form of interest. Industry Analysis Scanning Tools 1. SWOT model 2. Forces of Competition model (five forces of competition) was popularized by Michael Porter. a. Potential new entrants b. Buyers c. Substitute products d. Supplier e. Rivalry among existing firms 3. Competitive forces matrix Internal environment- refers to the environment within the business. Business resources- assets or properties owned or controlled by the business. - Tangible resources- are assets of the business that have physical appearance and form. - Intangible resources- are assets of the business that do not have physical appearance or form. Business Culture- known as the organizational or corporate culture, is another major force in the internal environment. - Cultural acceptance- refers to the degree by which the employees accept the culture of the unit or business. - Cultural integration- refers to the degree by which all units across the business accepts and shares a common culture. Business Structure- refers to the formal organizational arrangement of the business in terms of hierarchy of position, flow of communication, relationship of functional areas, and production and marketing processes. SWOT Analysis • Strength- refers to the strong attributes or capabilities of the business that provide great advantage in exploiting the business opportunity. • Weakness- are poor attributes or deficiencies that give disadvantages to the business. • Opportunities- are business situations in the form of products or services that must be exploited because of their potential in terms of profit and growth. • Threats- are possible external events in the environment that may provide harm to the business. BCG Analysis Matrix- most appropriate tool when there are several products or services that are produced or rendered by the business. The products or services are then classified as: • Stars- represent products or service that have high market shares but low market growth. • Cash- cows are products or services that have high market share and high market growth. • Question- marks are products or services that are usually facing problems. • Dogs- are products or services that have low market share and provide poor cash to the business. M4 Sole Proprietorship – owned by one person only. Partnership - owned by two or more persons. Corporation – owned by at least five but not more than fifteen persons. Funds - Partners may contribute money, property or industry. Incorporators- Persons originally forming the corporation. Stock – authorized to issue shares of stock to stockholders or shareholders. Non-stock – not authorized to issue share of stocks to members. Domestic – organized under the law of the Philippines. Foreign – organized under the law of foreign country but has the authority to operate in the Philippines. Corporation- Can be either be stock or non-stock, profit or non-profit, domestic or foreign. Nature of Entrepreneurial Venture • Merchandising • Service • Manufacturing • Agriculture • Hybrid Business • Special Corporation Elements in Production System • Input • Transformation or production process • Output Four M’s of Production • Manpower – human workforce involves in the manufacture of products. • Method – process of converting RM to FG • Machine – manufacturing equipment used in the production of goods or delivery of services. • Materials – RM needed in production of a product. M5 Market Identification – a strategic marketing approach and process that is intended to define the specific customer of the product. Three Strategic Marketing Approaches • Market Segmentation • Market Targeting • Market Positioning Entrepreneurial marketing strategy- designed primarily to divide the market into small segments with distinct needs, characteristics, or behavior (Kotler & Armsrtong, 2014) Methods for Segmenting the Market • Geographic • Demographic • Psychological • Behavioral Geographic Segmentation • total market is divided according to geographical locations in the Philippines like provincial regions, cities, provinces, municipalities, and even barangay units. • Variables to be considered: • Climate • Dominant Ethnic Group • Culture • Density (rural or urban) • Classification of geographical unit Demographic Segmentation • Market is divided based on the demographic variables of the consumers. • Gender • Age • Income • Occupation • Education • Religion • Ethnic group • Family size Psychological Segmentation • Market is divided in terms of what customers think and believe • Needs and wants • Attitude • Social class • Personality traits • Knowledge and awareness • Brand concept • Lifestyle Behavioral Segmentation • Market is divided based on the following variables • Perceptions • Knowledge • Reactions • Benefits • Loyalty • Responses Market Targeting- A stage in market identification process that aims to determine the set of buyers with common needs and characteristics. -In market targeting phase, the entrepreneur has already divided the total market and is now in the process of evaluating each market segment and selecting the target market segment or segments to serve. Segmentation Matrix • The size of the segment is usually expressed in terms of estimated product demand. • The expected growth may be expressed in terms of potential profitability of the segment. Market Segment Selection • Individual or One-on-One Selection • Segmentation marketing • Differential • Concentrated • Mass or undifferential marketing Positioning- simply refers to the act of occupying a certain place. -In entrepreneurship, it refers to the act of placing the business in a specific place in the industry or placing the product in a certain place in the market. Business positioning- simply refers to the process of determining the place of the business in the industry. Market positioning- refers to the process of arranging a product to occupy a clear, distinct, and desirable place in relation to other competing products in the mindset of target consumers (Kotler & Armstrong, 2014) positioning or perceptual map shows the position of similar products competing in the market as perceived by the customers. Benefits of market position • Identifiable • Beneficial • Distinctive advantage • Efficient rewarding Pricing is an essential factor that impacts the decisions of most customers. Quality can help rebuff most pricing wars. M6 Behavior refers to the reaction of the consumers to changes happening in the environment that influence their buying decision. Consumer buying behavior is simply the reaction of the consumers to various events or forces that are happening in the business community which contribute to the decision process. Environmental Factors • Cultural • Social • Personal • Psychological Buying Decision Process • Recognition of their needs and wants • Search for relevant information about the product • Evaluation of alternatives • Purchase decision • Post-purchase analysis Research- is defined as a scientific investigation. It involves the collection, presentation, analysis, and interpretation of gathered data. Research may be conducted to: • Determine the tastes and preferences of the consumer • Know the competitors, the suppliers of the RM, and the processing methods that best apply to the business • Determine the relationship of the different marketing variables relative to the buying behavior of the consumer Marketing Research Process • Identifying the problem • Deciding the type of data to be gathered • Evaluating how the data will be collected • Gathering the data • Analyzing the data gathered • Making a conclusion and recommendation • Reporting the result of the research work Types of Entrepreneurial Research • Exploratory Research - preliminary research work designed to gather baseline information to be used in solving a problem or forming a hypothesis. • Descriptive Research – conducted to describe the present condition, problem, or phenomenon. • Casual Research – intended to establish the relationship or the cause-and-effect situation among the variables covered in the study. • Research Data- Refers to the kind of necessary information to be gathered in answering the objective of the research work Quantitative Qualitative Research Instrument- used by the entrepreneur in gathering or collecting data. Survey questionnaire Personal interview Focus group discussion Complex – consumers buy expensive products and perform all the procedural steps in making the buying decision. Simple – consumer buy goods that are low priced and are not particular with the brand Brand-sensitive – consumers buy products because of their brand and seek to be attached to the brand Price-sensitive – consumers buy expensive goods regardless of their brands and equate high price with good quality. Marketing Mix- Refers to a mode, means, or tool used by entrepreneur to position the product in the target market segment. 7 Ps in Marketing • Product • Price • Place • Promotion • People • Packaging • Positioning Needs refers to the thing that a person must have in order to survive Wants refers to the thing that a person must have in order to be happy, comfortable, and satisfied. Branding- Refers to the name, design, color, symbol, quality, features, or a combination of these elements that make the product separate and distinct from similar products of the competitors. Brand Strategy • Umbrella brand approach • House brand approach • Line extension approach • Product extension approach
