Lesson IV BUSINESS ORGANIZATION ACCORDING TO THE

Key Concepts in Entrepreneurship NATURE OF THE BUSINESS

BUSINESS ORGANIZATION
1. Service Concern - This deals with the rendering of services
Objectives to customers (tailoring shops, beauty shops, firms of CPAs
1. Compare and contrast types of business according to its nature and lawyers, doctors)
and according to ownership. 2. Trading or Merchandising - deals with the buying of goods
2. Describe and give examples of different types of business. and selling the same goods in the same form for profit. Ex.
3. Identify business and their contribution to our everyday life. Sari-sari store, department store, groceries stores.
3. Manufacturing concern - involves purchase of raw
BUSINESS ORGANIZATION materials and converting these raw materials into finished
1. According to OWNERSHIP products. Ex. Textile manufacturing firm. Candy
2. According to the NATURE OF THE BUSINESS manufacturing firms etc.
Trading or Merchandising
BUSINESS ORGANIZATION ACCORDING TO
Is the buying of goods and selling the same without change in
OWNERSHIP
form. When goods are sold in small quantities, it is called
retailing. When goods are sold in big quantities or in volume,
1. Single or Sole Proprietorship - owned only by one person, who it is called wholesaling.
also acts as the manager.
2. Partnership - with two or more owners, owners are called 1. Self-service retailer supermarket
partners, agree on the capital contributions, management of the 2. Limited service retailer dress shop
firm, distribution of profits and losses. 3. Full service retailer cellphone store
3. Corporation - This is a business organization of not less than 4. Specialty store Wise Old Owl Bookstore Inc.
five persons. It is organized by operation of law, owners are 5. Department store Robinsons
called stockholders. 6. Supermarket Waltermart
7. Convenience Store 7-eleven
Types of Entrepreneurial Business 8. Superstore SM
9. Combination Store Mercury Drug
Trading 10. Hypermart SM Hypermart
Manufacturing 11. Discount Store 99 store
Service 12. Factory Outlet Surplus Shop
13. Price clubs Makro
14. Door-to-door seller or direct marketer Avon
15. Vending machine Coca cola
16. Seller by mail or telephone or TV
Manufacturing
Is the process of converting raw materials into finished Large Corporation
products. The manufacturer buys the raw materials. He makes Banking and Finance
the raw materials to finished products by applying direct labor Hotel and Restaurant Services
and factory overhead. Schools
Entertainment
Hospitals
Raw materials are what you see in the completed product.
Call Centers
Direct Labor is the work on the raw materials as it is converted
Transportation Services
into finished product.
Factory Overhead is the resources needed or costs that need to
be paid for in making products other than raw materials and Professional Services
direct labor. Medical/dental services by doctors
Legal services by lawyers
Accounting services
Examples: Engineering services
Manufacturers of shoes/footwear Tutoring services by teachers
Manufacturers of soap and toiletries Services by Architects
Manufacturer of food products
Manufacturer of garments or RTW
Manufacturer of school and office supplies Sources of Product Idea
Manufacturer of glass wares, silverwares, chinaware, - Chance happening - Suggestions
Canned goods manufacturers - Personal interest - Education
- Friends and relation - Prior work experience
Service - Family business - Research
Is doing work for others. Examples of business are beauty - Other means
parlors, spas, barber shops, laundry shops, and repair shops,
medical, dental, accounting, legal, and other services of Sizes of the Business
professional Micro Business below 1.5M
Beauty Parlor Collection Center
Small Business 1.5+ - 6M
Barber Shops Flower Shops
Daycare Centers Pensionne Houses Medium Business 6M+ - 15M
Restaurant or Snack Bake Shops Large Business 15M and above
Bar Dress Shops
Water Station Car repair Shops
 Lesson V
SEARCH FOR BUSINESS OPPORTUNITY, IDEATION,
INNOVATION AND CREATIVITY
Objectives
A. Define innovation ideation, creativity-whats the relationship
between them.
B. Analyze concepts about ideation.
C. Differentiate innovation from creativity and ideation.
Innovation
Is a multi-stage process whereby organizations transform
ideas into new/improved products, service or processes, in
order to advance, compete and differentiate themselves
successfully in their marketplace.
Ideation
Is the creative process of generating, developing, and
communicating new ideas.
INNOVATION (DEFINITION)
Innovation is people putting ideas into valuable action
- Innovation is not just creativity
- Innovation is not just idea generation
- Innovation requires putting ideas into action-developing new
products and services.
- Those new products and services need to drive values for the
business.
How does business innovate?
Traditionally, its an internal process e.g.
Designers design, engineers engineer
Innovation is doing something different. It could be
introducing either something new or different.
Innovation is a characteristic of an individual, team or
organization.
This is also the capacity to create ideas and develop them to
usable product and services
The Concept of Innovation
Doing something different.
The process of taking new ideas to satisfy customers.
Innovation is not only for a change, but also for the search in
excellence, not only in producing a product, but also in the
form of innovative systems and services.
Innovation impact
Briefing a new policy. All business starts
Finding new opportunities with an idea!
Designing a new structure
Devising a fresh method
What is ideation?
Ideation represents the creative process of generating,
developing and communicating new ideas, where an idea is
understood as basic element of thought that can be either
visual, concrete, or abstract.
It is an essential part of design process.
Business begins with IDEATION.
IDEATION should be the first investment of anybody
who seeks to be an entrepreneur.
The single most important activity or any entrepreneur
or small business manager is to generate business ideas.
Requires insights, creativity and imagination.
Developing an Idea
Recognizing a need Ways in Protecting your Ideas
Improving an existing product
Recognizing trend 1. Confidentiality Agreement- provides that the signer will not
Be aware of everything share the idea to anyone.
Questioning assumptions 2. Patents - gives the inventor exclusive legal rights to exclude
Identifying or naming it first, then develop it. anyone else from manufacturing, selling, importing or using
an invention during the life of the patent
When is an idea an opportunity? 3. Trademarks - a word, name, symbol, or device use by
Create or add value to customer. manufacturers on merchants to identify their goods.
Solve significant problem, removing pain point or meeting a 4. Copyrights - protects the creative works of composers,
demand. authors/writers, artist and others.
Have a robust market, profit margin and money marketing.

Business ideas are not Business opportunities

Unless they solve CREATIVITY (DEFINED)
Business Problems
It is defined as idea generation.
Being creative is to be able to generate or to come up with
new ideas.
The beginning of business endeavor is ideation. Idea has to be
new, or if not, should be innovative. The best source of ideas are Entrepreneurial Creativity
the consumers or the market since they are the ones in need of - It is about coming up with innovative ideas and converting
product or services. them into value-creating profitable business activities.
For a creative person, ideas are in him in his mind, but for those
deprived with creative thinking, they can get idea through reading ENVIRONMENT STIMULANTS TO CREATIVITY
books and talking to someone with creative associations,
conventions, exhibits trade shows, country or government affairs, a. Freedom
and others. b. Good Project Management
c. Sufficient resources
Once you generate idea, it has to be protected.
d. Encouragement
e. Various Organizational Characteristics
f. Recognition
g. Sufficient time
h. Challenge
i. Pressure
 ENVIRONMENT OBSTACLES TO CREATIVITY Lesson VI
SEARCH FOR BUSINESS OPPORTUNITY, IDEATION,
Various organizational characteristics
INNOVATION AND CREATIVITY
Constraints
Organizational disinterest
Poor project management Objectives
Evaluation Discuss entrepreneurial activities in search of business
Insufficient resources opportunities.
Competition Describe market research and its importance in starting a
business.
Determine SWOT Analysis and describe its function.
Totally Stupid Online Business Ideas that made someone rich
Positives Dating.com The Search for Business Opportunity
How would you like to go on a date with an HIV postive
In discovering business opportunities, the following factors
person?
on resources have to be evaluated:
Paul Graves and Brandon Koechlin thought that someone
1. Markets 5. Suppliers of Inputs
would, so they created a dating site for HIV positive folks. Projected 2. Individual Interest 6. Manpower
2006 sales are $110,000 and the two hope to have 50,000 members in 3. Capital 7. Technology
the next few years. 4. Skills

Among the productive resources, people are the most

SantaMail important because they are the once who organize and manage the
other productive resources such as money, materials machine and
Hows that for a brilliant idea? Get a postal address at North manpower.
Pole, Alaska, pretend you are Santa Clause and charge parents 10
bucks for every letter you send to their kids?
Other opportunity seeking process that can guide a prospective
Well, Byron Reese sent over 200,000 letters since the start of entrepreneur as to what kind of business to establish are as follows:
the business in 2001, which makes him a couple million dollars
1. Look at other successful business/entrepreneurs.
richer.
2. Respond to a problem area.
3. Home-Based Business Option
4. Linkage of Resources.
The best way to evaluate business opportunity is through Market SWOT ANALYSIS
- To be able to translate business opportunities into profits, the
Steps in Market Research are: SWOT-Strength, Weakness, Opportunity and Threat is
Defining the problem. applied. SWOT can be a tool for evaluating SWOT associated
Making a preliminary Investigation with a particular product or services. In knowing this, the
Planning the research entrepreneur must be able to have an idea or a precautionary
Gathering the data measure even before the start of any business.
Analyzing the data
Reaching a conclusion
Implementation and evaluating decision. THE LIFE CYCLE OF A PRODUCT

MARKET RESEARCH 1. Introduction - consumer awareness and acceptance of

The study of all problems in marketing product product.
2. Growth - growing demand, product distribution expanded
What does Market Research do? 3. Maturity - sales are still rising, but rate of increase has
Through Market Research, the entrepreneur can be guided in declined.
identifying the profitable markets, saleable products, the 4. Decline - sharp fall in sales volume, while profit curve
strengths and weaknesses of competitors, available resources, becomes almost flat or horizontal. Product are eliminated
business risks, trends in consumer tastes and preferences, because it is not profitable
better marketing strategies, proper business location, new
market opportunities and realistic objectives. TYPES OF BUSINESS BY CATEGORY OR SECTOR
1. Service-based business
Why location of the business important? 2. Trading or product based
Location of the business is a key factor in business success. 3. Manufacturing business
In selecting a location, the population, income, competitor, 4. Licensed business opportunities
government policies, peace and order and others are being 5. Distributorship
considered. This requires a market survey. 6. Rack Jobber
7. Wholesalers
8. Subcontracting
9. Vending machines routes.
 LESSON VII Entrepreneurs must be:
MARKET AND ENVIRONMENT A. Skillful enough to address the needs and demands of the
Recognize the potential market market
B. Pay attention to the market needs and demands
C. A need-demand based business will always have a share
Objectives of the market.
A. Recognize a potential market.
B. Demonstrates understanding of environment and market in DIFFERENT INDUSTRIES IN THE COUNTRY
ones town or municipality.
C. The learner independently creates a concept map reflective of A. ENGINEERING
a potential market within the locality or town. - Aviation - Plastic Polymer,
- Shipping Industry rubber mold
- Architecture - Ceramic
MARKET - Engineering and - Textile
- Refers to a group of people with economically important Technology - Packaging
needs which opens entrepreneurial or business opportunities - Mining - Leather
to everyone. - Petroleum - Railway
- Tool and die - Technicians

B. SHIPPING INDUSTRY
- A market is a socially, politically, economically organized C. ARCHITECTURE AND CONSTRUCTION INDUSTRY
people whose needs and demands are based on tradition, D. CAREERS IN SCIENCES
culture and technology. - Chemistry - Dairy & Poultry
- Enumerable business opportunities are open in a market. - Home Science & Eco - Meteorology
- The market needs and demands are enormous depending on - Physics - Environmental
the class of people being referred to. These class of people - Nutritionist & Science
are known as the market segment. These may be high-end, Dieticians - Oceanography
middle-end and low-end market segment. Each one will have - Geology - Forestry
varying needs of various products and services. - Food Technology - Microbiology
- Geography & GIS - Food Technology
- Forensic Science - Genetic Scientist
- Mathematics & - Farming & Fishery
Staistics
 Many of the elements of the target market can changed by month
E. CAREERS IN ARTS to month or year to year, thus, updated data and information of the
- Designers - Interior/Exterior following must be gathered which shall be the basis of setting up the
- Print journalism Designer planned business:
- Fashion Technology - Film making
A. Demographic data such as population size and growth rate.
- Mass communication - Fine arts
- Textile Designers - Advertising B. List of competitors which are available on the Department of
- Electronic Journalism - Cartoonist Trade and Industry(DTI).
- Accessory/Jewelry - Public relations
Designers Photography C. List of supplies which can also be sources at DTI.
D. Results of Reliable mini survey using considerable samples
F. HOTEL INDUSTRY of target market.
- Travel & Tourism FACTORS IN SELECTING THE BEST BUSINESS
- Hotel Industry LOCATION

G. BUSINESS INDUSTRY 1. Nearness to target market.

- Chartered Accountant - Stock broker & 2. Availability and quality of raw materials and supplies.
- Law related options Investment Analysts 3. Accessibility to consumers and transportation.
- Cost management - Health & Hospital 4. Considering zoning and local ordinances.
Accts - Banking 5. Availability of power and fuel resources.
- Human Resources Management 6. Taxation such as municipal taxes policies, and other local
- Finance Managers & - Finance planners fees and rates.
Analysts - Technology
- Personnel management
Know the 4mS OF PRODUCTION
Management
Raw materials (local/outsourced) are processed into goods to
be sold to an identified target market or segments of the market. The
Checking the needs, wants and demands of the market through
economic activity is referred to as production.
environmental scanning
Success in production is strictly determined with Four (4) Factors
The needs and demands of the community can be determined
popularly known as the 4 Ms of production.
through environmental scanning. It is the thorough investigation of
the market before any particular business is set.
 Refers to all people in the
business who are also popularly THE IMPORTANCE OF ACQUIRING A START-UP CAPITAL
called the labor force. That
MANPOWER Business capital, usually in the form of money is an indispensible
means the word manpower
include the Entrepreneur factor to start up a business. It is considered to be the working capital
himself. because it will keep the operations going. Entrepreneurs must secure
It is known to be the life juice of enough capital to start and sustain business operations.
the business and has to do with
the economic status of the Raising capital may not be a problem for wealthy families, however if
business. These can be in paper you do not have cash on hand yet, you may consider favorable
bills or coins, generally used in resources. The following are sources of the start-up capital of any
MONEY paying up of goods and services, businesses:
repayment of debts and
restoring and saving the SOURCES ADVANTAGES DISADVANTAGES
purchasing power of the No interest to be
business. paid. In case of
It takes some time to
bankruptcy, no one
save enough money
This can be raw materials or Personal Savings will run after the
to start up a business.
finished products which shall go Entrepreneur for
certain process or combined legal actions.
MATERIALS procedures which shall end as
the expected output of In rare cases if
production. Low or no interest problem exist
at all, will be between two parties,
MACHINES A semi- or fully automated Family Savings charged to would be capital may be taken
devices that are used in Entrepreneurs. in partial or at once
converting materials into by parents.
marketable products or outputs.
There are well Monthly
reputable lending amortizations must
External Sources
institutions not loan be paid amidst
such as Banks and
sharks, in the financial difficulties
Cooperatives
community. of an enterprise.
 HIRING TRAINING PERSONNEL Entrepreneurial Mind Frame, Heart Flame, and Gut Game
Before the actual operations begin, hiring the right person for
Mind frame - see things in a
the right task must be considered. The Business Plan will tell you how
very positive and optimistic
many workers you need to start and how many will be hired again as
light. Heart Flame - driven by
the operations progresses.
passion, great desire to attain
Excess personnel will be an extra cost for the business and this a vision/mission, EQ
must be avoided. Gut game - intuition
Lakas ng loob
REGISTRATION OF THE BUSINESS
New business must be registered in the name of legalities. These are
the ff. processes that must be undertaken: THE MANY SOURCES OF OPPORTUNITIES

1. Register your official business name in the Department of
Trade and industry.
2. Apply for Mayors Permit to operate the business and the
Municipal Business License of the business.
Macro Environment - refers to big macro forces. They affect how
consumers will behave, how supply and demand will move and how
different competitors would will position themselves.
FIVE CATEGORIES OF MACRO ENVIRONMENT

3. Register your business at the Security and Exchange

Commission (SEC)-for corporation and partnership Socio-
Economic
Cultural Technological
4. Register your business in the Bureau of .Internal Revenue Environment
Environme Environement
(BIR) whereupon your business will be assigned a Tax nt
Identification Number (TIN). Political Ecological
Environme Environme
5. Register your employees with PHILHEALTH, PAG-IBIG, nt nt
and SSS (Social Security System). Registration in other
agencies which provide welfare and other insurance benefits
must also be consulted and legally followed.
 INDUSTRY SOURCES OF OPPORTUNITIES
Industry and market are the next biggest source of
opportunities after macro environment.
The proper classification of what industry the enterprise is
competing in is important if the entrepreneurs intention is to define
who are the relevant customers, who are the direct/indirect
competitors and what are the critical characteristics of the market.
PARTICIPANTS IN AN INDUSTRY
The most common way of defining an industry is according to the
product types according to the function of the product of service.
Ex. Computer industry
Microsoft vs. Apple
Market Sources of Opportunities
Market sources of opportunities can be discovered from
increased or decreased demand as well as higher or lower supply.
Example: Battle of the value combo meals also known as
more for less smaller in portion but the volume served is more
MICROMARKET
Micromarket - refers to the specific target market segment of a
particular enterprise. It is likewise pertains to a clearly defined
location, or specific customers group that an enterprise wishes to
serve.
The need for segmentation would be crucial in micromarket analysis
because the definition of value for money differs from group to group.
Consumer Preferences, Piques and Perceptions
Consumer Preference- refer to tastes of particular groups of people.
Ex. Clothes, food, music
Because of the many choices that customers have to struggle with
every day, a product or service must be able to win the battle for
customers mind.