Comp 2033 Technopreneurship

Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

INSTITUTE OF TECHNOLOGY
Management Technology Department
INSTRUCTIONAL MATERIAL
FOR
COMP 2033
TECHNOPRENEURSHIP
COMPILED BY:
NIMFA M. DEL ROSARIO, MBE

INTRODUCTION
Technology is an absolute need we cannot escape from, it has a very big role in most
aspects of our lives. In other words, it answers most of mankind’s problems. Across centuries,
technology evolves.
Technology is opening up a universe of opportunities, unimaginable before. And there is
a growing number of talented young business-oriented people to deploy technology to level the
playing field for everyone. Fuelled by the power of imagination and the changeable nature of
a sector that has become a byword for innovation, technopreneurship has transitioned not
only from the fantasies but to the mainstream as well.
Technopreneurs are riding on the wings of technology all around the globe to reshape,
remodel and reinvent the way we live, work, play, learn, communicate, manufacture , name it ...
the possibilities are endless. Entrepreneurship in general is a key driver of any economy.
Wealth and a high majority of jobs are created by small businesses started by entrepreneurially
minded individuals, many of whom go on to create big businesses.
Entrepreneurship is the process of starting a business or another organization. The
entrepreneur develops a business model, acquires the human and other required resources,
and is fully responsible for its success or failure. The future workforce needs to be skilled,
diverse and creative, putting great emphasis on meeting the demands of the marketplace (local,
as well as global). Entrepreneurship education is a lifelong learning process starting early and
progressing through all levels of education, including adult education. Entrepreneurship
Education focuses on developing understanding and capacity for pursuit of entrepreneurial
behaviors, skills and attributes in widely different contexts
As a result, many experienced business people, political leaders, economists, and
educators believe that fostering a robust entrepreneurial culture will maximize individual and
collective economic and social success on a local, national, and global scale. It is with this
mindset that Entrepreneurship Education that includes Technopreneurship be developed: to
prepare youth and adults to succeed in an entrepreneurial economy.
1 | COMP 20233 TECHNOPRENEURSHIP

Table of Contents
MODULE 1 ................................................................................................................................ 7
INTRODUCTION TO TECHNOPRENURSHIP........................................................................... 7
TECHNOPRENEURSHIP DEFINE ......................................................................................... 7
IMPORTANCE OF TECHNOPRENEURSHIP ........................................................................ 7
TECHNOPRENEUR DEFINE ................................................................................................. 7
DIFFERENCE TECHOPRENEUR AND ENTREPRENEUR ................................................... 7
CHARACTERISTICS OF TECHNOPRENEUR ....................................................................... 8
KEY CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURS ...................................... 8
TEN D’S OF AN ENTREPRENEUR ....................................................................................... 8
DIFFERENCE BETWEEN CYBERPRENEURSHIP, ENTERPRENEURSHIP, AND
TECHNOPRENEURSHIP....................................................................................................... 9
ELEMENTS OF TECHNOPRENUERSHIP ............................................................................. 9
ADVANTAGES OF ENTREPRENEURSHIP........................................................................... 9
IMPORTANT ENTREPRENEURIAL TRAITS ........................................................................10
ROLES OF AN ENTREPENEUR...........................................................................................10
CATEGORIES OF AN ENTREPRENEUR .............................................................................10
PROS AND CONS OF AN ENTREPRENEUR ......................................................................11
SOCIO-ECONOMIC BENEFITS FROM ENTREPRENEURSHIP ..........................................12
MODULE 2 ...............................................................................................................................15
CREATIVITY AND INNOVATION .............................................................................................15
CREATIVITY DEFINE ...........................................................................................................15
IMPORTANCE OF CREATIVITY IN BUSINESS ...................................................................15
SPECIFIC BENEFITS OF CREATIVITY IN THE WORKPLACE INCLUDE: ..........................15
COMPONENTS OF CREATIVITY .........................................................................................16
QUALITIES OF CREATIVE PEOPLE ....................................................................................16
CREATIVE DOMAIN DISCRETE PROCESSING MODES ....................................................16
4 TYPES OF CREATIVITY ....................................................................................................16
6 STAGES OF CREATIVE PROCESS ..................................................................................17
RECOGNIZING CREATIVE TECHNIQUES ..........................................................................17
CHARACTERISTICS OF CREATIVITY .................................................................................18
INNOVATION DEFINE ..........................................................................................................18
TYPES OF INNOVATION......................................................................................................18
BENEFITS OF INNOVATION IN BUSINESS.........................................................................19
IMPORTANT ROLE OF INNOVATION ..................................................................................19

IMPORTANCE OF INNOVATION IN ENTREPRENEURSHIP EDUCATION, IDEAS
EXECUTION, KNOWLEDGE AND MORE ............................................................................20
IMPORTANCE OF CREATIVE AND INNOVATION IN ENTREPRENEURSHIP ....................21
PRINCIPLES OF INNOVATION ............................................................................................21
IMPORTANCE OF CREATIVITY AND INNOVATION TO:.....................................................21
FACTORS SUPPORT CREATIVITY AND INNOVATION ......................................................22
MODULE 3 ...............................................................................................................................25
PLANNING AN ORGANIZING A BUSINESS ORGANIZATION ...............................................25
BUSINESS ORGANIZATION DEFINE ..................................................................................25
3 TYPES OF BUSINESS .......................................................................................................25
FORMS OF BUSINESS ORGANIZATION .............................................................................26
BUSINESS ORGANIZATION ADVANTAGES & DISADVANTAGES .....................................27
5 IMPORTANT CHARACTERISTICS OF ORGANIZATION ..................................................29
IMPORTANCE IN ORGANIZING A BUSINESS ....................................................................29
MAIN PURPOSE OF THE BUSINESS ORGANIZATION ......................................................30
HOW TO REGISTER YOUR BUSINESS ..............................................................................30
MODULE 4 ...............................................................................................................................32
MARKETING ............................................................................................................................32
MARKETING DEFINE ...........................................................................................................33
MARKET DEFINE .................................................................................................................33
MARKETING CONCEPT .......................................................................................................33
UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS .................................33
DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY .........................................34
STRATEGIC MARKETING PARTNERS................................................................................35
MARKETING STRATEGY .....................................................................................................36
FOUR MARKETING MANAGEMENT FUNCTIONS ..............................................................37
MARKETING ENVIRONMENT ..............................................................................................37
CUSTOMER INSIGHTS ........................................................................................................38
MARKETING RESEARCH ....................................................................................................38
CONSUMER BUYER BEHAVIOUR ......................................................................................39
BUSINESS MARKETS ..........................................................................................................41
THE BUSINESS BUYING PROCESS ...................................................................................42
TYPES OF TARGET MARKETS BASED ON SEGMENTATION ...........................................43
P’S OF MARKETING MIX .....................................................................................................43
THE 7 FUNCTIONS OF MARKETING: A FIELD GUIDE .......................................................44

MARKETING GOALS ............................................................................................................44
MARKETING FEATURES .....................................................................................................44
MODULE 5 ...............................................................................................................................47
PROMOTION ............................................................................................................................47
PROMOTION DEFINE ..........................................................................................................47
GOAL OF PROMOTION........................................................................................................47
THE PROMOTIONAL MIX.....................................................................................................48
BENEFITS OF PROMOTION ................................................................................................49
REASONS WHY PROMOTIONAL ACTIVITIES ARE NECESSARY FOR BUSINESS
PROMOTION ........................................................................................................................49
IMPORTANCE OF PROMOTION ..........................................................................................50
TYPES OF ADVERTISING....................................................................................................50
SALES PROMOTION DEFINE ..............................................................................................52
TYPES OF SALES PROMOTION .........................................................................................52
SIX COMMON TYPES OF PRESS RELEASES: ...................................................................52
MODULE 6 ...............................................................................................................................55
MANANAGING HUMAN RESOURCES ...................................................................................55
HUMAN RESOURCE MANAGEMENT DEFINE: ...................................................................55
FUNCTIONS OF HUMAN RESOURCE MANAGEMENT ......................................................55
PRINCIPLES OF HUMAN RESOURCE MANAGEMENT ......................................................55
MAIN FUNCTIONS OF HUMAN RESOURCE MANAGEMENT.............................................56
IMPORTANCE OF HUMAN RESOURCE MANAGEMENT ...................................................57
ROLE OF HR MANAGERS ...................................................................................................57
IMPORTANCE OF HR MANAGERS IN ORGANISATIONS ..................................................58
SOURCES OF RECRUITMENT ............................................................................................58
SELECTION PROCESS ........................................................................................................59
INTERVIEW DEFINE ............................................................................................................62
COMPENSATION DEFINE ...................................................................................................63
DIFFERENT KINDS OF COMPENSATION ...........................................................................63
TYPES OF COMPENSATION ...............................................................................................63
PERFORMANCE APPRAISAL DEFINE ................................................................................64
MODULE 7 ...............................................................................................................................67
MANAGING BUSINESS FINANCE ..........................................................................................67
FINANCIAL PLANNING DEFINE...........................................................................................67
IMPORTANCE OF FINANCIAL PLANNING ..........................................................................67

BENEFITS OF FINANCIAL PLANNING ................................................................................68
BUDGET DEFINE .................................................................................................................69
10 REASONS WHY BUDGETING IS IMPORTANT...............................................................69
SIX BUDGETING PROCESS ................................................................................................70
TYPES OF BUDGETING.......................................................................................................71
LEVELS OF INVOLVEMENT IN BUDGETING PROCESS ....................................................71
FINANCIAL ANALYSIS .........................................................................................................71
MODULE 8 ...............................................................................................................................78
THE BUSINESS PLAN .............................................................................................................78
BUSINESS PLAN DEFINE ....................................................................................................78
OVERALL PURPOSE OF BUSINESS PLAN.........................................................................78
THE PARTS OF THE PLAN ..................................................................................................79

COURSE OUTCOMES:
• Explain clearly the concepts of Technopreneurship, business ownership, creativity and
innovative mind in IT Business.
• Manage a business successfully and commit ethical responsibilities in running a
business to ensure sustainable for future expansion.
• Develop and implement business plan into successful action based on current
technologies and creative a new venture to support business
• Understand the difference between entrepreneurship and technopreneurship
• Apply the principles and theories of entrepreneurship and management in IT business
• Understand the interplay between various factors affecting the IT business

MODULE 1
INTRODUCTION TO TECHNOPRENURSHIP
OVERVIEW:
Technopreneurship is, by a large part, still entrepreneurship. The difference is that
technopreneurship is more involved in delivering innovative hi-tech, value added products and
the creation scalable business ventures. It is the practice of consistently converting good ideas
into profitable commercial business ventures.
Through its courses, it inculcates amongst students the philosophy of technopreneurship
and develops values responsible for a mind-set shift from the traditional expectation of
employment by government, industry and commerce.
Under the Technopreneurship ethos, graduates are capacitated to start innovative and
high tech enterprises that address key macro-economic objectives and make an impact on the
national economy.
LEARNING OUTCOMES:
After successful completion of this modules, you should be able to:
A. Describe the technopreneurship and entrepreneurship, cyberpreneurship

B. Explain the importance of technoprenuership
C. Discuss the characteristics of the technopreneur and entrepreneur
D. Identify difference between technopreneur and entrepreneur
COURSE MATERIALS:
TECHNOPRENEURSHIP DEFINE
Integration of technology, innovation and entrepreneurship. Act of turning something into

a resource of high value by converting good ideas into business ventures that relies heavily on
the application of human knowledge for practical purposes.
IMPORTANCE OF TECHNOPRENEURSHIP
Technopreneurship helps the unemployed person to be employed, by creating or

inventing a new product. Through technology, they can invent or create devices and they can
easily sell it online. As we all know internet and technologies are available and highly
recommend in today's generation.
TECHNOPRENEUR DEFINE
Technopreneur is the person who destroys the existing economic order by introducing,
new products and services, by creating new forms of organizations and by exploiting new raw
materials. It is someone who perceives an opportunity and creates an organization to pursue it
DIFFERENCE TECHOPRENEUR AND ENTREPRENEUR
As nouns the difference between entrepreneur and technopreneur is that entrepreneur is a

person who organizes and operates a business venture and assumes much of the associated

risk while technopreneur is (informal) an entrepreneur in the field of technology.
CHARACTERISTICS OF TECHNOPRENEUR
1. Leadership –This means that as a person, you serve as the spark to a bright idea
and transform the dream into a reality.
2. Flexibility - Technopreneurs know that not everything produces great results and
adapt to such circumstances easily.
3. Discipline - You need to structure your work so that you and everyone know their
roles and responsibilities. Great discipline within the business will help you find out and
tackle problems that arise with the venture.
4. Strategist - you need to be able to come up with unique products every time and
have the magic to push your products to the market and let consumers see the real
value it can bring into their lives.
5. Focus - you must know how to prioritize your tasks and responsibilities. You should
learn to drop down distractions and focus on success oriented things.
KEY CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURS
1. Entrepreneurs excel at identifying business opportunities and staying focused on

opportunities, not problems.
2. They learn from their mistakes.
3. They are action-oriented. They like to get things done and love to turn their ideas into
reality.
4. They understand what it takes to succeed and often have a high physical stamina to
carry them through their lives and work.
5. Successful entrepreneurs seek outside help to supplement their expertise and their
enthusiasm attracts people to their ideas, especially employees, creditors, investors and
partners.
TEN D’S OF AN ENTREPRENEUR
1. Dream: Entrepreneurs have a vision of what the future could be like for them and their
businesses. And, more importantly, they have the ability to implement their dreams.
2. Decisiveness: They don’t procrastinate. They make decisions swiftly. Their swiftness
provides a key factor in their success.
3. Doers: Once they decide on a course of action, they implement it as quickly as
possible.
4. Determination: They implement their ventures with total commitment. They seldom
give up, even when confronted by obstacles that seem insurmountable.
5. Dedication: They are totally dedicated to their business, sometimes at considerable
cost to their relationships with their friends and families. They work tirelessly. Twelve-

hour days and seven-day work weeks are not uncommon when an entrepreneur is
striving to get a business off the ground.
6. Devotion: Entrepreneurs love what they do. It is that love that sustains them when the
going gets tough. And it is love of their product or service that makes them so effective
at selling it.
7. Details: It is said that the devil resides in the details. That is never truer than in
starting and growing a business. The entrepreneur must stay on top of the critical
details.
8. Destiny: They want to be in charge of their own destiny rather than depend on an
employer.
9. Dollars: Getting rich is not the prime motivator of entrepreneurs. Money is more a
measure of their success. They assume that if they succeed they will be rewarded.
10. Distribute: Entrepreneurs distribute the ownership of their businesses with key
employees who are critical to the success of the business.
DIFFERENCE BETWEEN CYBERPRENEURSHIP, ENTERPRENEURSHIP, AND
TECHNOPRENEURSHIP
Cyberpreneurship is a business activity and business by using improved computer technology,

especially the Internet, in this business and businesses that are promoted using electronic
brochures, known as the homepage on the Internet.
Entrepreneurship is the person who dared to take a step to enter a particular activity or to
welcome a new challenge, in entrepreneurship, there are three things most important are:
creativity, innovation, opportunity-creation, and Calculated risk-taking.
Technopreneurship is a process in the formation of new businesses that view technology as a
base, with the hope that the creation of appropriate strategies and innovations that could
someday put the technology as one factor for the development of national economy.
ELEMENTS OF TECHNOPRENUERSHIP
1. Human Capital - the skill, capabilities, and knowledge of the firm's people.
2. Organizational Capital - the patents, technologies, processes, databases and
networks.
3. Social Capital - The quality of the relationships with customers, suppliers and
partners
ADVANTAGES OF ENTREPRENEURSHIP
1. Learning to See Possibilities Everywhere. An entrepreneur has to develop the skill

and train his or her mind to stay open and receptive to potential ideas and possibilities.
2. Defining Your Income. You create the relationship between your efforts and your
income.
3. Flexibility in Your Schedule - an entrepreneur you can ditch the rigid schedule.

4. Enjoying Your Work - you can create your own schedule, it doesn’t necessarily
mean there won’t be long hours.
5. Learning to be in the Moment - you plan and schedule your day, set regular goals
and work to achieve them.
IMPORTANT ENTREPRENEURIAL TRAITS
• Self-Awareness Courage
• Self-Motivation Confidence
• Patience Risk-taking
• Decisiveness Hard work
• Experience Vision
• Knowledge Optimism
• Perseverance Creativity
• Drive resourcefulness
• Total commitment innovation
• Maturity Emotional Balance
• Integrity
ROLES OF AN ENTREPENEUR
➢ Perceive opportunities in the environment

➢ Takes Risks
➢ Introduces innovations
➢ Organizes labor and production
➢ Makes decision
➢ Plans ahead
➢ Sells his products at a profit.
CATEGORIES OF AN ENTREPRENEUR
INTRAPRENEUR – he is an entrepreneur within an existing organization, referred as the

corporate entrepreneur.
SOLO SELF- EMPLOYED INDIVIDUAL – includes all agents, repairman, brokers,
accountants and physician who operate alone or with only few employees ad perform
work personally.
DEALERS TO DEALERS – include highly knowledgeable businessmen engaged to
various forms of trades frequently, directly or indirectly related to their line of work.
TEAM BUILDERS – individuals who go on building larger companies using hiring and
delegation.
INDEPENDENT INNOVATORS –include persons who hit upon ideas for better products
or services and then create companies to develop, produce, and sell these products.
PARTNER MULTIPLIERS- entrepreneurs who spot an effective business patterns quite
possibly originated by someone else, and multiply it to realize profits.
ECONOMY OF SCALE EXPLOITERS- Entrepreneurs who locate their business in
lower rent and tax areas.

CAPITAL AGGREGATORS – Smart entrepreneur who use their experience and
expertise in pooling a group of financiers to engage in a business.
ACQUIRERS- Entrepreneurs who acquire businesses.
INDEPENDENT INVENTORS –They include pure inventors who really develop their
own product or invention and take care of marketing them.
BUY AND SELL ARTISTS – they include wise guys referred to as corporate raiders and
brokers who turn around, sell and liquidate.
OTHERS CATEGORIESD OF ENTREPRENEUR – Immigrant Entrepreneurs, corporate
Castoffs, Copreneurs, Cyber Entrepreneurs, Part Time entrepreneurs, Home-based
Business Owners.
PROS AND CONS OF AN ENTREPRENEUR
PROS OF AN ENTREPRENEUR
1. Control Your Own Destiny - You certainly may not have control over all the cards
you are dealt, but you decide what you do with them. The worse the hand, the more
amazing the win.
2. You Get to Do What You Love - You might not love every task and hour of the
journey, but overall you get to choose to work on something you love and care about.
3. Maximize Your Contribution - Freeing yourself from working for someone else
means you really get to maximize the impact you can have. When you make a huge
contribution on a broad scale, in turn, the rewards will show up in increasing your own
income and wealth.
4. Leading Others - you can create a great legacy and leave your mark on the world as
an entrepreneur. More notably, you get to lead and inspire others by your example.
5. There’s Nothing You’ll Want to Do More - Whether you win or fail on your first or
next venture, the journey will be your own reward. You’ll be compelled to go at it again
and again.
CONS OF AN ENTREPRENUER
1. You’re Responsible for Your Own Destiny - You’ll be responsible for your
employees and their retirement. You’ll be responsible for your impact on your customers.
2. Lack of a Road Map - You’re figuring out much of it as you go along on a daily basis.
Your flashlight lets you see just far enough ahead to take the next few steps.
3. it’s not going To Be Easy - Your start-up might be bought for hundreds of millions of
dollars in the next couple of years, but you need to buckle in and expect it to take the
next 7 to 10 years to make an overnight success story.
4. You have to create your own 401k Plan - You’re responsible for figuring out your
own retirement plan. Making the money, setting enough aside, and reinvesting it in other
things for balance.
5. One Day You’ll Have to Say Goodbye - If things go well, one day you’ll have to sell
your company or free it to the public market. It’s going to be harder than you think.

SOCIO-ECONOMIC BENEFITS FROM ENTREPRENEURSHIP
• Promotes self-help and employment

• Mobilizes capital
• Provides taxes to economy
• Empowers individual
• Enhances competitive consciousness
• Improves equality of life
• Enhances equitable distribution of income and wealth
SUMMARY OF VARIOUS ECONOMIES VIEW OF ENTREPRENEURSHIP

ECONOMIST CONTRIBUTION
JEAN BAPTIST SAY (1800) Entrepreneurship refers to the shifting of economic
Resources out of an area of lower and into high
Productivity and greater yield.
CARL MENGER (1871) Entrepreneurship involves obtaining information
calculation, an act of will and supervision.
JOSEPH SCHUMPETER (1910) Entrepreneurship is, in the essence, the finding and
promoting new combinations of productive factors.
HARVEY LIEBENSTEIN (1970) Entrepreneurship is the reduction of organizational
Inefficiency.
ISRAEL KIRZNER (1975) Entrepreneurship is the identification of market
arbitrage opportunities.
ALBERT SHAPIRO (1957) Entrepreneurship involves a kind of behaviour that
includes initiative taking, organizing and
recognizing social mechanism to turn resources
and situations to practical account, and the
acceptance of risks and failure.
KARL VESPER (1980) Entrepreneurship is the dynamic process of
creating incremental wealth.

HOWARD STEVENSON (1992) Entrepreneurship is the pursuit of opportunity
beyond the resources currently under one’s control.
JEFFREY TIMMONS (1994) Entrepreneurship is the ability to create and build a
vision from practically nothing.
PETER DRUCKER (1998) Entrepreneurship is the process of starting one’s
own, new and small business. It is also the process
of innovation and new venture creation through four
major dimensions- individual, organizational,
environmental, process – aided by collaborative
networks in government, education and institutions.
ROBERT HISRISCH (2001) Entrepreneurship involves the creation process,
requires the devotion of the necessary time and
effort, assumes the accompanying financial,
psychic and social risks, and receive the resulting
rewards of monetary and personal satisfaction and
independence.
READ:
Azarcon, Areola, Arguelles, Pablo-Barlis et al. Entrepreneurship Principles and Practices. First
Edition. 2005, Valencia Educational Supply.
Carson, David. Marketing and Entrepreneurship in SME’s: An innovative Approach First
Edition. 2002. Pearson Education.
Lambing, Peggy A.: Entrepreneurship. Third Edition, 2002. Prentice Hall.
Medina, Roberto G. Entrepreneurship in Small Business Management. First Edition. 1996. Rex
Printing Company. Inc.
Vaughn, Donald E. Financial Planning for the Entrepreneur. First Edition. 1997. Prentice Hill.
Activities/Assessment:
A. Discuss in your own words.
1. Which personal characteristic of successful entrepreneurs reflects that successful
entrepreneurs work until the job is done?
2. What is the main reason that entrepreneurships fail?
3. What factors will make the company succeed?
B. MULTIPLE CHOICES: Encircle the correct answer

1. What is the key to business success?
A. business knowledge b. market awareness c. hands-on management
D. sufficient capital e. hard work
2. Which is the largest potential trouble spot:
A. too much growth b. too little growth c. too fast growth
D. occasional growth e. too slow growth

3. I am happy when my employees are:
A. late b. unhappy c. abrupt with customers d. resigning
4. I trust (select as many as apply):
A. nobody b. myself c. my partner. D. a few key
employees e. My customers.
5. My customers are (select as many as apply):
A. always right b. too fussy c. demanding d. worth listening to.
e. dumb

MODULE 2
CREATIVITY AND INNOVATION
OVERVIEW:
The words creativity and innovation can be heard used in the media and in
everyday conversation to refer to both a product of human creativity and to the processes
involved in the development of a product. The two quotations cited in this book’s preface are
examples of this duality. We will mainly concentrate on the latter of these meanings, whereas
other studies focus on the evaluation of products once they have been produced.
According to Drucker (1985), most innovative ideas result from a conscious and
purposeful search for opportunities to solve problems or please customers. The literature on
innovations defines two types of innovations: incremental and radical. Incremental innovations
exploit existing technologies to improve upon something that already exists. Radical innovations
are new to the world and a departure from existing technologies and methods. Christensen
(1997) distinguished between sustaining and disruptive or radical innovations.
Innovation refers to creating more effective processes, products, and ideas. For a
business, it could mean implementing new ideas, improving services or creating dynamic
products. It can act as a catalyst that can make your business grow and can help you adapt in
the marketplace.
The connection between innovation and success is clear and by understanding what
motivates your people you can structure your compensation programs to drive the innovation
needed in your organisation.
LEARNING OUTCOMES:
After successful completion of this modules, you should be able to:
A. Identify the importance of creativity and innovation
B. Describe the importance of creativity and innovation
C. Discuss the components, benefits and types of creativity and innovation.
D. Explain the characteristics of creativity and innovation
COURSE MATERIALS:
CREATIVITY DEFINE
Creativity is the act of turning new and imaginative ideas into reality. Creativity is
characterised by the ability to perceive the world in new ways, to find hidden patterns, to make
connections between seemingly unrelated phenomena, and to generate solutions.
IMPORTANCE OF CREATIVITY IN BUSINESS
Creativity in business is a way of thinking that inspires, challenges, and helps people to
find innovative solutions and create opportunities out of problems. It’s the reason some
companies wow us with new, amazing ideas, whilst others merely follow the beaten path. It’s
the source of innovation and inspiration.
SPECIFIC BENEFITS OF CREATIVITY IN THE WORKPLACE INCLUDE:
• Better teamwork and team bonding;

• Increased workplace engagement and interaction;

• Improved ability to attract and retain quality employees;
• Increased staff morale, fun and happiness; and.
• Increased workplace problem solving and productivity.
COMPONENTS OF CREATIVITY
1) Originality - The method or idea must be new and unique. It should not be the extension of
something, which already exists.
2) Functionality - A creative idea must work and produce results, otherwise, the whole effort
will be in vain.
Kinds of people called creative:
• People who are thought-provoking, curious and have a variety of uncommon
thoughts are known to be creative people.
• People who had important self- discoveries, who view the world with a fresh
perspective and have insightful ideas. These people make unique discoveries
which they don’t share with the outer world.
• People who make great achievements which are known to the world. Inventors
and artists fall under this category.
QUALITIES OF CREATIVE PEOPLE
1) They are Energetic - Creative people tend to have a great amount of physical as well as
mental energy. They utilize their energy to invent new ideas.
2) They are intelligent - It is believed that intelligence plays a key role in creativity. o become
creative, people should be smart and they should also have a child-like attitude to view things.
3) Discipline – They people have the practice of making people obey rules or standards of
behaviour, and punishing them when they do no.
CREATIVE DOMAIN DISCRETE PROCESSING MODES
• Emotional
• Cognitive
• Deliberate
• Spontaneous
4 TYPES OF CREATIVITY
1) Deliberate and Cognitive creativity- They have a great amount of knowledge about a
particular subject and combine their skills and capabilities to prepare a course of action to
achieve something.
2) Deliberate and Emotional Creativity - These types of creative people are very emotional
and sensitive in nature. These individuals prefer relatively quiet and personal time to reflect and
they usually have a habit of diary writing. However, they are equally logical and rational in
decision making.
3) Spontaneous and Cognitive creativity - By indulging in different and unrelated activities,
the unconscious mind gets a chance to connect information in new ways which provide

solutions to the problems. Therefore, to let this type of creativity happen one should take a
break from the problem and get away to let conscious mind overtake.
4) Spontaneous and Emotional Creativity - Spontaneous ideas and creativity happen when
conscious and Prefrontal brain is resting. This type of creativity is mostly found in a great artist
Spontaneous and emotional creativity is responsible for a scientific breakthrough, religious and
also philosophical discoveries. Such as musicians, painters, and writers etc. This type of
creativity is also related to “epiphanies”. Epiphany is a sudden realization of something.
6 STAGES OF CREATIVE PROCESS
• Preparation - the idea that you are immersing yourself in the domain. During this stage,
she may perform research, creates goals, organize thoughts and brainstorm as different
ideas formulate
• Incubation - While the individual begins to process her ideas, he begins to synthesize
them using his imagination and begins to construct a creation. Gabora states that during
this step, the individual does not actively try a find a solution, but continues to mull over
the idea in the back of his head.
• Illumination - As ideas begin to mature, the individual has an epiphany regarding how
to piece her thoughts together in a manner that makes sense. The moment of
illumination can happen unexpectedly. For example, an individual with the task of putting
together an office party may have an idea for a theme while driving home from work.
• Evaluation - After a solution reveals itself in an epiphany, the individual then evaluates
whether the insight is worth the pursuit. He may make changes to his solution so it is
clearer. He may consult with peers or supervisors regarding his insights during this step
before pursuing it further. If he works with clients, he may seek a client’s input and
approval before moving on to the next step.
• Implementation - The implementation of an idea or solution in the creative process
model is when an individual begins the process of transforming her thoughts into a final
product. According to Gabora, an individual may begin this step more than once in order
to reach the desired outcome.
RECOGNIZING CREATIVE TECHNIQUES
1. Brainstorming – probably one of the most popular creative techniques. The basis of
brainstorming is a generating ideas in a group situation based on the principle of suspending
judgment – a principle which scientific research has proved to be highly productive in individual
effort as well as group effort.
2. Negative brainstorming - It uses brainstorming to generate bad solutions to the problem

and then see how those could be transformed into good solutions. The method is a two-step
process that consists of generating the worst ideas first and then transforming them into good
solutions.
3. The Insights Game - Actually, it is a personal method, but you can do it with your friends or
team on different boards simultaneously supporting each other.
4. Mood boards - Mood board is a type of collage that may consist of images, text, videos and
samples of objects in a composition of the choice of the mood board creator.

5. Random Words (Random Input) - encourages your imagination to create different
perspectives and new angles on your idea or the problem you are facing. It is by far the simplest
of all creative techniques and is widely used by people who need to create new ideas.
6. Storyboarding example, for new products Go back to the very beginnings of cinema and
animation. Managing the thousands of drawings and the progress of a project was nearly
impossible.
7. Metaphorical thinking - A metaphor is a thinking method which connects two universes of

meaning. A road map is a model or metaphor of reality and useful for explaining things.
8. Mind mapping - Mind Maps has been developed by Tony Buzan are an effective technique
of structuring information and note-taking. Start in the center of the board with the main idea,
invite your team and work in all directions, producing a growing and organized structure using
key words/phrases and key images/videos.
9. Brain shifter- is one of creative techniques that is similar to mind mapping, but you should
act as if you were someone else. The purpose is to create new ideas that you never thought
about before. Get in to character by changing your mind set and try to think like another person.
CHARACTERISTICS OF CREATIVITY
1. Flexibility - it involves a mind-set that suggests that there may be more than a single answer
or solution to any particular issue or problem. Flexible thinkers are not hemmed in by being
overly-focused on one way of doing things and tend to be open to innovation.
2. A sense of intense curiosity - They ask lots of questions, and tend to develop a very
intense focus that takes them into almost a reverie as they try to discover how something works,
or the detail of a beautiful structure, or anything else they set their mind on.
3. Positive attitude - is essential for thinking creatively as it is this positivity that spurs the mind
on to seek detail, wonder, and, indeed, solutions. This is linked strongly to my previous point
about intense curiosity.
4. Strong motivation and determination - creativity requires the follow-through that can only
come from strong motivation and determination. Without this, creative ideas will only reside
within the mind of the individual without having the opportunity to influence society and/or the
community.
5. Fearlessness - highly creative people tend to believe in the VALUE of the ideas they come
up with. Remember, they are also flexible, so they are willing to change; however, they do not
seem to be worried about whether their idea is right or wrong because they believe that their
idea brings value to the field in which it resides, even if it may later be debunked.
INNOVATION DEFINE
The creation, development and implementation of a new product, process or service,

with the aim of improving efficiency, effectiveness or competitive advantage.
TYPES OF INNOVATION

1. Incremental Innovation - It utilizes your existing technology and increases value to the
customer (features, design changes, etc.) within your existing market.
2. Disruptive Innovation - involves applying new technology or processes to your company’s

current market. It is stealthy in nature since newer tech will often be inferior to existing market
technology. This newer technology is often more expensive, has fewer features, is harder to
use, and is not as aesthetically pleasing.
3. Architectural Innovation - is simply taking the lessons, skills and overall technology and
applying them within a different market. This innovation is amazing at increasing new
customers as long as the new market is receptive. Most of the time, the risk involved in
architectural innovation is low due to the reliance and reintroduction of proven technology.
Though most of the time it requires tweaking to match the requirements of the new market.
4. Radical innovation - It gives birth to new industries (or swallows existing ones) and involves
creating revolutionary technology. The airplane, for example, was not the first mode of
transportation, but it is revolutionary as it allowed commercialized air travel to develop and
prosper.
BENEFITS OF INNOVATION IN BUSINESS
1. Solve Problems Easily - You need to come up with creative answers to solve certain
problems in your business. Many times you’ll face problems that don’t seem to go away. You
need to think outside the box to find an answer you’ve never come up with.
2. Increase Your Productivity - In order to work smarter, think creatively. Focus on what things
you should streamline and what things you need to cut out. Also, focus on the programs and
workflows that you can use to increase productivity.
3. Market Your Business - In order to make people remember your business, you need
innovative ideas. You can create a new brand, develop a quirky business or can work with any
non- profit organization.
4. Beat Your Competitors - You just need to put in a little creativity and you can easily come
up with better ways to design products and connect with customers. Along with this, creativity
will help you figure out the right marketing techniques that will help your business grow.
IMPORTANT ROLE OF INNOVATION
1. Economic growth - Economic growth refers to the increase in the inflation-adjusted market
value of the goods and services produced by an economy over time. It is conventionally
measured as the percent rate of increase in real gross domestic product, or real GDP. The
purpose of innovation is to come up with new ideas and technologies that increase productivity
and generate greater output with the same input.
2. Innovation and the future of jobs - Technological advancement and increased productivity
means major changes for careers today as well. The world economy could more than double in
size by 2050 due to continued technology-driven product improvements.

3. Increased well-being - In general, innovation and economic growth increases well-being
because living standards rise. According to the Brookings Institution, average life satisfaction is
higher in countries with greater GDP per capita. Another research also shows that there’s a link
between innovation and subjective wellbeing.
4. Reduced sickness, poverty and hunger - As already mentioned, developing countries

depend on innovation as new digital technologies and innovative solutions create huge
opportunities to fight sickness, poverty and hunger in the poorest regions of the world.
5. Environmental sustainability - Sustainability and environmental issues, such as climate

change, are challenges that require a lot of work and innovative solutions now and in the future.
Although new greener technology solutions, such as eco vehicles aren’t necessarily more
competitive alternatives to petrol-powered vehicles just yet, they will definitely offer many
advantages for the future.
IMPORTANCE OF INNOVATION IN ENTREPRENEURSHIP EDUCATION, IDEAS

EXECUTION, KNOWLEDGE AND MORE
Innovation and education
Since we live in an age of innovation, a practical education must prepare a man for work that
does not yet exist and cannot yet be clearly defined. – Peter Drucker
Knowledge, information and innovation
Innovation is fostered by information gathered from new connections; from insights gained by
journeys into other disciplines or places; from active, collegial networks and fluid, open
boundaries. Innovation arises from ongoing circles of exchange, where information is not just
accumulated or stored, but created. Knowledge is generated anew from connections, that
weren’t there before. – Margaret J. Wheatley
Money and innovation
Innovation has nothing to do with how many R&D dollars you have. When Apple came up with
the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about
the people you have, how you’re led, and how much you get it. – Steve Jobs
Ideas and innovation
Just as energy is the basis of life itself, and ideas the source of innovation, so is innovation the
vital spark of all human change, improvement and progress. – Ted Levitt
Idea execution and innovation
Innovation is the process of turning ideas into manufacturable and marketable form. – Watts
Humprey
Patience, persistence and innovation
Innovation by definition will not be accepted at first. It takes repeated attempts, endless
demonstrations, and monotonous rehearsals before innovation can be accepted and
internalized by an organization. This requires “courageous patience. – Warren Bennis

IMPORTANCE OF CREATIVE AND INNOVATION IN ENTREPRENEURSHIP
Creativity improves the process of solving problems. It doesn't matter if we're talking
about developing a new strategy or an innovative way to stay ahead of the competition.
Creative problem solving gives that competitive edge that any business is striving to achieve.
PRINCIPLES OF INNOVATION
1. Be action oriented - a cross-disciplinary learning-by-doing approach to problem solving is

necessary. It helps your team identify challenges you face and come up with multiple ideas to
solve problems. Actions speak louder than words.
2. Start Small - By appealing to a small, limited market, a product or service requires little
money and few people to produce and sell it. As the market grows, the company has time to
fine-tune its processes and stay ahead of the emerging competition.
3. Aim High - Raise awareness and build a shared understanding of the possibilities and
challenges of legislation in creating markets for innovation and innovative business ecosystems.
4. The rules of try, test and revise - Innovation creates novel products, processes, or business
models that generate economic value. Trying anything new inevitably entails experimentation
and failure. Simple rules, however, add discipline to the process to boost efficiency and increase
the odds that the resulting innovations will create value.
5. Learn from failures - admitting to mistakes and taking the time to learn from them will
reward companies with deeper insights into their businesses and markets. Getting
employees to talk about previous errors can foster innovative thinking in a way that
successes cannot. Mistakes offer us new portals of discovery, and that is their unique
value. Without mistakes, we can’t really learn.
6. Follow a milestone schedule - provides an estimated timeline for the life of the project. The
schedule should include milestones for the planning, development, construction, evaluation and
reporting of the project's implementation.
7. Reward heroic activity - Provide financial / tangible incentives through bonus, cash, shares,
additional holiday, and the like. Importantly though remember that not all are of equal value in
the eyes of your employees. Some will appreciate the time off, for example, more than pay
whilst others may prefer pay and even like to work extra hours.
8. Work, work, work - Working is living, and exceptional living standards attract exceptional
people. Creating a workplace that is conducive to a happy lifestyle will attract top talent and
keep your employees motivated. More than this, though, a truly great and innovative workplace
can actively work to inspire employees, helping them to explore new ideas and blend old ones
together for innovative solutions.
IMPORTANCE OF CREATIVITY AND INNOVATION TO:
A. Technopreneur
• Its ability to develop new ideas and to discover new ways of looking the problems
and opportunities.

• It is defined as the tendency to generate or recognize new ideas, alternatives,
possibilities that may be useful in solving problems, communicating with others,
and entertaining ourselves and others.
• It is also any act, idea or product that changes an existing domain or that
transform an existing domains into a new one.
B. Business Organization
Innovation is the process of creating and implementing a new idea. It is the process of
taking useful ideas and converting them into useful products; services or processes or methods
of operation. These useful ideas are the result of creativity, which is the prerequisite for
innovation. Creativity in the ability to combine ideas in a unique way or to make useful
association among ideas. Creativity provides new ideas for quality improvement in organizations
and innovation puts these ideas into action.
FACTORS SUPPORT CREATIVITY AND INNOVATION
1. Management practices that support creating a culture of innovation.

Specific actions and practices on the part of management that impact a culture of
innovation include allowing freedom and autonomy in the practice of work; providing challenging
work; specifying clear strategic goals; and forming work teams comprised of individuals with
diverse skills and perspectives.
Factor as part of work environment
• Freedom: People need the autonomy to determine the optimal way to carry out their
tasks. This gives them a sense of control over their work and a feeling of responsibility
for the final product (or process).
• Challenging Work: Challenging assignments give employees an opportunity to work

hard and feel challenged — and to feel that their work is important and valuable.
Employees need to understand why their work contributes to the organization’s
competitive advantage and long-term sustainability.
• Managerial Encouragement: A boss should set and communicate clear innovation

goals that are ambitious, yet achievable. He or she should serve as a good work model,
support the work group, value individual contributions, and exude confidence in the
team. Support employees when they speak up, take risks, and try new things.
• Support for Teamwork: Because innovation is a team effort, people need to work on a
team where diverse skillsets are represented. Team members should communicate well
and remain open to new ideas, constructively challenge each other’s work, trust and
help each other, and feel committed to the work they’re doing.
2. Organizational motivation and encouragement of innovation.
Creating a culture of innovation requires collaboration and communication.
• Organizational Encouragement: This is a culture that encourages creativity through

the fair, constructive judgment of ideas; reward and recognition for creative work;

mechanisms for developing new ideas; and an active flow of ideas and a shared
vision.
• Lack of Organizational Impediments: A culture of innovation doesn’t impede creativity
through internal political problems, harsh criticism of new ideas, destructive internal
competition, avoidance of risk, or an overemphasis on the status quo.
•
3. Resources to support an innovative culture.
In order to innovate, people have to balance the tension between managing the day-to-
day while driving for improvement and reinvention.
• Sufficient Resources: Innovation doesn’t happen in a silo, so employees need access

to appropriate resources, including funds, materials, facilities, and information.
• Realistic Workload Pressures: Extreme time pressures, unrealistic expectations for

productivity, and distractions from creative work are counterproductive when creating a
culture of innovation.
READ:

Activities/Assessment:
A. Discuss in your own words:
1. How do you assess creativity and innovation?

2. What are the barriers to innovation and creativity?
3. What are the challenges of being innovative?
B. Multiple Choices.
1. I keep
A. careful financial records b. in touch with my customers

C. in touch with employee’s d. trying new techniques e. wanting to retire
2. My dream is:
A. to grow the business until someone else can run it.

B. to work until I drop
C. to give up these headaches and have more fun at work.
D. to try another business.
E. take a vacation.
3. What makes terrific entrepreneur?
A. creativity c. consumer orientation

B. discipline d. technical proficiency e. flexibility
4. Competition is
A. dumb b. smart c, cunning d. everywhere e. constant threat
5. The best competitive advantage is
A. experience
B. understanding what the market wants
C. Confidence
D. Conducting a business ethically
E. A detailed plan

MODULE 3
PLANNING AN ORGANIZING A BUSINESS ORGANIZATION
OVERVIEW:
All business entities are not the same. Some provide owners a lot of flexibility in
management and control and some do not. Some provide owners a significant degree of
protection from liability and some do not. And some are heavily regulated, and some are not. On
top of these differences is the fact that our tax code provides different tax treatments for different
business entities. All of these factors should be considered when an entrepreneur is selecting the
type of business entity she or he wishes to use for her or his business.
Okay, let's take a look at the primary choices an entrepreneur has by breaking them
down into two broad categories. First, we'll take a look at unlimited liability entities, or those
business organizations that don't provide the owner or owners any protection from personal
liability, such as sole proprietorships and general partnerships. Then, we'll examine limited
liability entities, which are business organizations that usually limit an owner's liability to his or
her investment in the business, such as corporations, limited liability companies, and limited
partnerships.
LEARNING OUTCOMES:
After successful completion of this module, you will be able to:
A. Describe the different business organization forms and nature.
B. Explain the registration of the business organization
C. Discuss the importance and purpose of business organization.
D. List the different kind of organization advantages and disadvantages
COURSE MATERIALS:
BUSINESS ORGANIZATION DEFINE
Business organization is an entity formed for the purpose of carrying on commercial

enterprise. Such an organization is predicated on systems of law governing contract and
exchange, property rights, and incorporation.
3 TYPES OF BUSINESS
There are three major types of businesses:

1. Service Business -A service type of business provides intangible products (products
with no physical form). Service type firms offer professional skills, expertise, advice, and
other similar products
Examples of service businesses are: salons, repair shops, schools, banks, accounting
firms, and law firms.
2. Merchandising Business- This type of business buys products at wholesale price

and sells the same at retail price. They are known as "buy and sell" businesses. They
make profit by selling the products at prices higher than their purchase costs. A

merchandising business sells a product without changing its form. Examples are:
grocery stores, convenience stores, distributors, and other resellers.
3. Manufacturing Business: Unlike a merchandising business, a manufacturing

business buys products with the intention of using them as materials in making a new
product. Thus, there is a transformation of the products purchased.
A manufacturing business combines raw materials, labor, and factory overhead in its
production process. The manufactured goods will then be sold to customers.
Hybrid Business
Hybrid businesses are companies that may be classified in more than one type of business. A
restaurant, for example, combines ingredients in making a fine meal (manufacturing), sells a cold
bottle of wine (merchandising), and fills customer orders (service).
FORMS OF BUSINESS ORGANIZATION
These are the basic forms of business ownership:

1. Sole Proprietorship is a business owned by only one person. It is easy to set-up and is the
least costly among all forms of ownership.
The owner faces unlimited liability; meaning, the creditors of the business may go after
the personal assets of the owner if the business cannot pay them. The sole proprietorship form
is usually adopted by small business entities.
2. Partnership is a business owned by two or more persons who contribute resources into the
entity. The partners divide the profits of the business among themselves.
In general partnerships, all partners have unlimited liability. In limited partnerships,

creditors cannot go after the personal assets of the limited partners.
3. Corporation is a business organization that has a separate legal personality from its owners.
Ownership in a stock corporation is represented by shares of stock.
The owners (stockholders) enjoy limited liability but have limited involvement in the
company's operations. The board of directors, an elected group from the stockholders, controls
the activities of the corporation.
In addition to those basic forms of business ownership, these are some other types of
organizations that are common today:
Limited Liability Company are hybrid forms of business that have characteristics of both a
corporation and a partnership. An LLC is not incorporated; hence, it is not considered a
corporation. Nonetheless, the owners enjoy limited liability like in a corporation. An LLC may
elect to be taxed as a sole proprietorship, a partnership, or a corporation.
Cooperative is a business organization owned by a group of individuals and is operated for their
mutual benefit. The persons making up the group are called members. Cooperatives may be
incorporated or unincorporated.

Some examples of cooperatives are: water and electricity (utility) cooperatives, cooperative
banking, credit unions, and housing cooperatives.
BUSINESS ORGANIZATION ADVANTAGES & DISADVANTAGES
A. Sole Proprietorship
A sole proprietorship is the common business structure. It makes sense if you're in a business
where personal liability is not a concern. From a legal standpoint, the owner and the
proprietorship are the same.
Advantages
• It's the easiest to set up because it doesn't require the filing of any papers.
• States do not require the registration of proprietorships.
• Profits are only taxed once on the owner's personal tax returns.
• The owner has complete control of the business and makes all the decisions.
• Tax forms are not complicated.
• Assets are easy to liquidate upon the death of owner.
Disadvantages
• The owner is exposed to unlimited legal liabilities. If you lose a lawsuit, you could lose
your home, car and other personal assets.
• Proprietorships cannot accept capital from outside investors.
• Borrowing money is more difficult. Banks are reluctant to make business loans to sole
proprietorships. You will have to rely on savings, home equity loans or loans from family
members.
• Business will be liquidated when owner passes away.
Partnerships
A partnership is a sole proprietorship that allows the business to have more than one owner.
Advantages
• They're easy to form.
• A partnership can bring together a group of individuals with different talents to share in
the responsibilities of running a business.
• If the partnership agreement permits, a partnership could continue to exist if one of the
partners dies.
Disadvantages
• Partners are exposed to unlimited liabilities.
• Owners will not always agree on decisions. This could lead to management conflicts.
• Partners share in the profits of the business, but will not always feel they are being
adequately compensated for their contributions and services.
Limited Liability Companies
Advantages

• The owners have limited liability. The owner's personal assets are protected from
judgments and defaults on company debts.
• Owners can choose how the business pay taxes. It could be a proprietorship, a
partnership or a corporation.
• Most states don't require LLCs to have annual meetings.
• An LLC is not required to have a board of directors.
• The number of shareholders is unlimited.
Disadvantages
• Legal and accounting costs are higher than proprietorships.
• LLCs must file articles of incorporation with the state of domicile.
• Owners must create an operating agreement that defines management authority and
limits to making decisions.
• In some cases, an LLC will cease to exist upon the death of a member, unless otherwise
specified in the operating agreement.
Corporations
A corporation is a legal entity that's completely separate from the shareholders who own stock in
the company. It has the authority to enter into contracts and buy and sell property. A corporation
can sue other parties but can also be sued.
Advantages
• Owners do not have personal liability for debts of the corporation. A shareholder only
risks the amount of the investment in the company.
• Has more access to financial resources. A corporation can sell stock to raise capital,
obtain bank loans or issue bonds for long-term financing.
• Corporations are better able to attract more talented and skilled employees than
proprietorships.
• The corporation continues to exist separately from the lives of its stockholders.
Disadvantages
• A C Corp is the most complex business structure and requires a lawyer to set up.
• Earnings could be subject to double taxation.
S Corporations
S Corporations combine the tax benefits of proprietorships and LLCs with the liability protection
of C Corps.
Advantages
• Avoids double taxation by passing income through to the owners.
• The structure of an S Corp protects the personal assets of the shareholders.
• Lenders are more willing to make loans to S Corps.
Disadvantages
• Articles of incorporation must be filed with the state.

• An S Corp is limited to 100 shareholders.
• It can only have one class of stock.
• Fringe benefits provided by the company to shareholder-employees are taxable as
compensation.
The choice of which business structure to use demands thought about your type of business and
what you want it to look like. If the business is just yourself, a sole proprietorship could be
enough. But, if you're worried about personal liability and risking personal assets and taxes,
consider an LLC, a C Corp or an S Corp.
5 IMPORTANT CHARACTERISTICS OF ORGANIZATION
1. Division of Work - the breakdown of labor into its components and their distribution
among different persons, groups, or machines to increase.
2. Coordination - the process of organizing people or groups so that they work together
properly and well.
3. Plurality of Persons - excess of votes received by the leading candidate, in an

election in which there are three or more candidates, over those received by the next
candidate (distinguished from majority)
4. Common Objectives - A specific result that a person or system aims to achieve

within a time frame and with available resources.
5. Organization is a Machine of Management - This picture of an organization implies

routine operations, well-defined structure and job roles and efficient working inside and
between the working parts of the machine i.e. the functional areas.
IMPORTANCE IN ORGANIZING A BUSINESS
(1) Benefits of Specialisation - For all the sub works, competent people are appointed who
become experts by doing a particular job time and again. In this way, maximum work is
accomplished in the minimum span of time and the organisation gets the benefit of
specialisation.
(2) Clarity in Working Relationship - Organising clarifies the working relations among
employees. It specifies who is to report to whom. Therefore, communication becomes effective.
It also helps in fixing accountability.
(3) Optimum Utilisation of Resources - there is optimum utilisation of all the available
resources (e.g., material, machine, financial, human resource, etc.) in the organisation.
(4) Adaptation to Change - Organising process makes the organisation capable of adapting to
any change connected with the post of the employees. This becomes possible only because of
the fact that there is a clear scalar chain of authority for the manager’s right from the top to the
lower level.
(5) Effective Administration - The process of organising makes a clear mention of each and
every activity of every manager and also of their extent of authority. It is also made clear as to

whom a manager order for a particular job shall. Everybody also knows to whom they are
accountable. In this way, the confusion on authority is put to an end. Consequently, effective
administration becomes possible.
(6) Development of Personnel - Under the process of organising, delegation of authority is

practiced. This is done not because of the limited capacity of any individual, but also to discover
new techniques of work. It provides opportunities of taking decisions to the subordinates. By
taking advantage of this situation, they try to find out the latest techniques and implement them.
Consequently, it helps them to grow and develop.
(7) Expansion and Growth – The process of organising allows the employees the freedom to
take decisions which helps them to grow. They are always ready to face new challenges. This
situation can help in the development of the enterprise. This helps in increasing the earning
capacity of the enterprise which in turn helps its development.
MAIN PURPOSE OF THE BUSINESS ORGANIZATION
The primary purpose of a business is to maximize profits for its owners or stakeholders
while maintaining corporate social responsibility. It is the motivating force moving, guiding, and
delivering the organisation to a perceived goal. It is the driving force, the fuel, the bond, the
intangible link that pulls the organisation together to achieve success.
HOW TO REGISTER YOUR BUSINESS
Sole proprietorship
• Register your business name with the Bureau of Domestic Trade, Department of Trade
and Industry (BDT-DTI).
• Obtain a business clearance from the barangay captain of your place of business.
• Obtain a permit to do business from the local government (your city or municipal
government’s business licensing office)
• Get a Tax Identification Number (TIN) from the Bureau of Internal Revenue (the branch
nearest to you).
• Register your business and employees with the Social Security System for social
benefits.
• Register with the Department of Labor and Employment (DOLE) office nearest to you, if
you have five or more employees.
Cooperative
• Register with the Cooperative Development Authority (CDA) office nearest you.
• Register the name of your cooperative with the Department of Trade and Industry (DTI)
office nearest you.
• Obtain a permit to operate the cooperative from the local government unit.
• Get a Tax Identification Number (TIN) from the Bureau of Internal Revenue.
• You may also register the employees of your cooperative with the Social Security
System and the Department of Labor and Employment
Registering with the DTI
For Sole Proprietorship For Partnerships and For Cooperatives

Corporations
• Applicant must be 18 years • Certified true of • Certifies true or photo
old or more. photocopies of articles of copies of articles of
• Two recent passport-sized incorporation or cooperation, by-laws and
photos of applicant. partnership, by-laws and CDA registration
• Proof of Filipino registration certificate certification.
citizenship, if applicant approved by the SEC. • Certification issued by
acquired this by • If foreigners own 40% or CDA, in case of increase of
naturalization, election or more of the capital, the capitalization.
other means provided by SEC certificate must
law. specify that this is in
• Proof of Filipino accordance with the
citizenship (e.g. birth Foreign Investments Act of
certificate, voter’s ID) if 1991.
applicant’s name is • In case there is an increase
suggestive of foreign in capital, a certificate
nationality. issued by the SEC.
Registering with the Mayor’s Office (the Local Government Unit)
For sole proprietorships For partnerships and corporations For cooperatives

• DTI registration certificate • Location map of business • Location map of business
of business name establishment establishment
• Location map of business • Barangay clearance • Barangay clearance
establishment • SEC registration certificate • CDA registration certificate
• Barangay clearance • Articles of partnership or
• Community Tax Certificate incorporation Plus, depending on type of business,
of proprietor • Current Class “C” any of the following:
certificate • Building occupancy permit
• Community Tax Certificate • Mechanical permit
of the partners • Electrical inspection
Plus, depending on type of business, • Pollution clearance
any of the following: Plus, depending on type of business, • Location clearance
• Building occupancy permit any of the following: • Sanitary/health certificate
• Mechanical permit • Building/occupancy permit • Police clearance
• Electrical inspection • Mechanical permit
• Pollution clearance • Electrical inspection
• Location clearance • Pollution clearance
• Sanitary/health certificate • Location clearance
• Police clearance • Sanitary/health certificate
• Police clearance
Registering with the BIR

• Photocopy of DTI • Photocopy of SEC • Photocopy of CDA
registration registration registration or business
• Photocopy of mayor’s • Mayor’s permit permit
permit
Registering with the SSS

• Photocopy of mayor’s • Photocopy of articles of Cooperatives, as a rule, do not have
permit partnership or incorporation to register with the SSS, but their
• Employer’s data record • Employer’s data record employees do.)
• Initial or subsequent list of • Initial or subsequent list of
employees employees (The last two
requirements should be
signed by the managing
partner of a partnership or
the highest ranking officer
of a corporation,)
READ:

Activities Assessment:

1. Why is organization important?
2. How does organization lead to success?
3. Why budget is important for an organization?
B. Enumeration:
List examples of businesses under service, merchandising, and manufacturing.
MODULE 4
MARKETING
OVERVIEW:

Marketing is also a functional area of management that when properly utilized brings
beneficial results. If the firm’s management knows in advance the needs of the market, then it
will proceed to satisfy those need with more resolution. Knowing the needs in advance,
however, will require a kind of management that fully understands marketing. Marketing is
managing profitable relationships, by attracting new customers by superior value and keeping
current customers by delivering satisfaction. Marketing must be understood in the sense of
satisfying customer needs.
LEARNING OUTCOMES:
A. Understand the strategy of marketing strategy and environment
B. Describe the process of marketing plan
C. Explain the marketing strategies and marketing plan
D. Discuss the features of marketing and marketing customer behaviors
COURSE MATERIALS:
MARKETING DEFINE
Marketing is the process of planning, and executing the conception, pricing, promotion,
and distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational objectives.
MARKET DEFINE
A market is any place where sellers of particular goods or services can meet with buyers
of those goods and services.
MARKETING CONCEPT
The marketing concept is the strategy that firms implement to satisfy customer’s needs,
increase sales, maximize profit and beat the competition.
UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS
There are five different core customer and marketplace concepts.

1. Customer needs, wants and demands. Human needs are states of felt deprivation
and can include physical, social and individual needs. Wants are the form human needs
take as they are shaped by culture and individual personality. Demands are human
wants that are backed by buying power.
2. Market offerings are a combinations of products, services and experiences offered

to a market to satisfy a need or want. These can be physical products, but also services
– activities that are essentially intangible. The phenomenon of marketing myopia is
paying more attention to company products, than to the underlying needs of consumers.
3. Value and satisfaction are key building blocks for customer relationships.

4. Exchanges are the acts of obtaining a desired object form someone by offering
something in return. Marketing consists of actions trying to build an exchange
relationship with an audience.
5. A market is the set of all actual and potential buyers of a product or service.
Marketing involves serving a market of final consumers in the face of competitors.
DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY
Marketing management is the art and science of choosing target markets and building
profitable relationships with them. The aim is to find, attract, keep and grow the targeted
customers by creating and delivering superior customer value. The target audience can be
selected by dividing the market into customer segments (market segmentation) and selecting
which segments to go after (target marketing). A company must also decide how to serve the
targeted audience, by offering a value proposition. A value proposition is the set of benefits or
values a company promises to deliver.
There are five alternative concepts that companies use to carry out their marketing
strategy.
1. The production concept: the idea that consumers will favour products that are
available and highly affordable and that the organisation should therefore focus on
improving production and distribution efficiency.
2. The product concept: the idea that consumers will favour products that offer the
most quality, performance, and features and that the organisation should therefore
devote its energy to making continuous product improvements.
3. The selling concept: the idea that consumers will not buy enough of the firm’s
product, unless it undertakes a large-scale selling and promotion effort.
4. The marketing concept: the idea that achieving organisational goals depends on
knowing the needs and wants of target markets and delivering the desired satisfactions
better than competitors do. It can be regarded as an “outside-in view”.
5. The societal marketing concept is the idea that a company’s marketing decisions
should consider consumer wants, the company’s requirements, consumers’ long-term
interests and society’s long-term interests. Companies should deliver value in a way that
maintains consumers and society’s well-being.
Constructing an integrated marketing plan

A marketing strategy outlines which customers it will serve and how it will create value. The
marketer develops an integrated marketing plan that will deliver value to customers. It contains
the marketing mix: the tools used to implement the strategy, which are the four Ps: product,
price, place and promotion.
Building customer relationships
• Customer relationship management (CRM) is the overall process of building and
maintaining profitable customer relationships by delivering superior customer value and
satisfaction.

• Customer-perceived-value, which is the customer’s evaluation of the difference
between all the benefits and all the costs of a marketing offer, in relation to those of
competing offers.
• Customer satisfaction, which is the extent to which a product’s perceived performance
matches a buyer’s expectations. Customer delight can be achieved by delivering more
than promised.
• Customer-managed relationships: marketing relationships in which customers,
empowered by today’s new digital technologies, interact with companies and with each
other to shape their relationships with brands.
• Consumer-generated marketing: brand exchanges created by consumers themselves,
by which consumers are playing an increasing role in shaping their own brand
experiences and those of other consumers.
• Partner relationship management means working closely with partners in other
company departments and outside the company to jointly bring greater value to
customers. These partners can be inside the company, but also outside the firm.
• Supply chain is a channel, from raw material to final product, and the companies
involved can be partners through supply chain management.
Capturing customer value
• Customer lifetime value is the value of the entire stream of purchases that the
customer would make over a lifetime of patronage.
• Share of customer, the portion of the customer’s purchasing that a company gets in its
product categories.
• Customer equity is the total combined customer lifetime values of all of the company’s
customers. It is the future value of the company’s customer base.
When building relationships, it is important to build the right relationships with the right
customers. Customers can be high- or low-profitable and short-term or long-term oriented. When
putting these on two axes, a matrix of four terms appears.
1. Butterflies are profitable, but not loyal and have a high profit potential.
2. True friends are both profitable and loyal and the firm should invest in a continuous
relationship.
3. Barnacles are loyal, but unprofitable. If they can’t be improved, the company should try
to get rid of them.
4. Strangers are not loyal and unprofitable, the company should not invest in them.
STRATEGIC MARKETING PARTNERS
Strategic planning is the process of developing and maintaining a strategic fit between the
organisation’s goals and capabilities and its changing marketing opportunities. It is the base for
the long term planning of the firm. At a corporate level, the firm starts defining the company’s
mission.
A mission statement is a statement of the organisation’s purpose. The mission leads to a
hierarchy of goals.
Management Business Plan

• Business Portfolio: the collection of the businesses and products that make the
company.
• Portfolio analysis is the process by which management evaluates the products and
businesses that make up the company. The first step is identifying the strategic business
units (SBU) that are vital to the company.
• Product/market expansion grid is a portfolio-planning tool for identifying company
growth opportunities through:
➢ Market penetration: company growth by increasing sales of current products to

current market segments without changing the product.
➢ Market development: company growth by identifying and developing new market
segments for current company products.
➢ Product development: company growth by offering modified or new products to
current market segments.
➢ Diversification: company growth through starting up or acquiring businesses outside
the company’s current products and markets.
Company needs strategies such as:

• Downsizing, which means reducing the business portfolio by eliminating products or
business units that are not profitable or that no longer fit the company’s overall strategy.
• Value chain: the series of internal departments that carry out value-creating activities to
design, produce, market, deliver and support a firm’s products.
• Value delivery network is the network composed of the company, its suppliers, its
distributors and ultimately its customers who partner with each other to improve the
performance of the entire system.
MARKETING STRATEGY
Marketing strategy is the marketing logic by which the company hopes to create customer
value and achieve profitable customer relationships. The company must choose which
customers to serve and how to serve them. It is a process or model to allow a company or
organization to focus limited resources on the best opportunities to increase.
This process involves four steps:
1. Market segmentation: dividing a market into distinct groups of buyers who have different,
needs, characteristics or behaviour and who might require separate products or marketing
programmes. A market segment is a group of consumers who respond in a similar way to a
given set of marketing efforts.
2. Market targeting is the process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter.
3. Positioning is arranging for a product to occupy a clear, distinctive and desirable place
relative to competing products in the minds of consumers.
4. Differentiation is actually differentiating the market offering to create superior -customer

value.
Marketing mix is the set of tactical marketing tools: product, price, place and promotion that the
firm blends to produce the response it wants in the target market.

• Product refers to the combination of goods and service the firm offers.
• Price is the amount the customer pays to obtain the product. Place refers to the
availability of the product.
• Promotion relates to the activities that communicate the benefits of the product.
FOUR MARKETING MANAGEMENT FUNCTIONS
• Marketing analysis, starting with a SWOT analysis. SWOT analysis is an overall

evaluation of the company’s strengths (S – internal capabilities), weaknesses (W –
internal limitations), opportunities (O – external factors that can be profitable) and threats
(T – external factors that might challenge the company).
• Marketing planning involves choosing the right marketing strategies.
• Marketing implementation: turning marketing strategies and plans into marketing
actions to accomplish strategic marketing objectives.
• Marketing control: measuring and evaluating the results of marketing strategies and
plans and taking corrective action to ensure that the objectives are achieved.
➢ Operating control refers to checking the performance against the annual plan
➢ Strategic control involves looking at the match between strategies and
opportunities.
MARKETING ENVIRONMENT
Marketing environment consists of the actors and forces outside marketing that affect
marketing management’s ability to build and maintain successful relationships with target
customers. It consists both of the micro and macro environment.
• Microenvironment consists of the actors close to the company that affect its ability to
serve its customers, such as: the company itself and its subdivisions and suppliers that
provide the resources the firm needs to produce its products.
• Marketing intermediaries, which are firms that help the company to promote, sell and
distribute its goods to final buyers.
➢ Resellers are distribution channel firms.

➢ Physical distribution firms help the company stock goods
➢ Marketing service agencies are marketing research firms.
➢ Financial intermediaries include banks and credit companies.
➢
Public is any group that has an actual or potential interest in or impact on an organisation’s
ability to achieve its objectives. These can be financial publics, media publics, government
publics, local publics, general public and internal publics.
Customers are the most important actors. Consumers markets consist of individuals that buy
goods for personal consumption. Business markets buy goods for usage in production
processes, while reseller markets buy to resell at a profit. Government markets consist of
buyers who use the product for public service, and international markets consist of all these
types of markets across the border.
• Economic environment consists of economic factors that affect consumer purchasing
power and spending patterns. Countries vary in characteristics, some can be considered

industrial economies, while others can be subsistence economies, consuming most of
their own output.
• Natural environment involves natural resources that are needed as inputs by marketers
or that are affected by marketing activities. Changes in this environment involve an
increase in shortage of raw materials, increased pollution and increased governmental
intervention.
• Environmental sustainability involves developing strategies and practices that create
a world economy that the planet can support indefinitely.
• Technological environment consists of forces that create new technologies, creating
new product and market opportunities. It can provide great opportunities, but also comes
with certain danger.
• Political environment consists of laws, government agencies and pressure groups that
influence and limit various organisation and individuals in a given society. Current trends
in our world today are increasing legislation affecting businesses globally and thus an
increase in governmental influence over businesses.
• Cultural environment involves instructions and other forces that affect society’s basic
values, perceptions, preference and behaviour. Cultural factors influence how people
think and consume. Core beliefs are fundamental and passed on by parents and
reinforced by the environment. Secondary beliefs are more open to change. People
can vary in their views of themselves, of others, of organisation, but also in their views of
society, nature and the universe.
CUSTOMER INSIGHTS
Customer insights are fresh understanding of customers and the marketplace derived from
marketing information that become the basis for creating customer value and relationships. To
gain this information, companies must design.
Marketing information systems (MIS), which are people and procedures for assessing
information needs, developing the needed information and helping decision makers to use the
information to generate and validate actionable customer and market insights. A MIS helps to
assess information needs, develop needed information and analyse the right information to form
customer insights.
Internal databases are electronic collections of consumer and market information obtained
from data sources within the company network. Internal data can be a strong base for a
competitive advantage, because of the potential of this information.
Competitive marketing intelligence is the systematic collection and analysis of publicly

available information about consumers, competitors and developments in the marketing
environment. Good marketing intelligence helps gain insights in how consumers think of and
connect with the brand.
MARKETING RESEARCH
Marketing research is the systematic design, collection, analysis and reporting of data relevant
to a specific marketing situation facing an organisation. The process of marketing research has
four steps:
The process of marketing research has four steps:

1. Defining the problem and research objectives. The objective of exploratory research is to
gather preliminary information that will help define problems and suggest hypotheses. The
objective of descriptive research is to better describe marketing problems, situations or
markets. Causal research aims to test hypotheses about cause-and-effect relationships.
2. Developing the research plan on how the information will be gathered.
Secondary data is information that already exists somewhere, having been collected for
another purpose. Secondary data can be accessed by using commercial online databases,
which are collections of information available from online commercial sources or accessible via
the Internet. Internet search engines can be used to locate secondary data, but the research
must verify that the found information is relevant, accurate, current and impartial.
Primary data is information collected for the specific purpose at hand. It can be collected via
observational research, which gathers primary data by observing relevant people, actions and
situations. Ethnographic research is a form of observational research that involves sending
trained observers to watch and interact with consumers in their “natural environments”.
Primary data can also be collected via survey research, which gathers information by asking
people questions about their knowledge, attitudes, preferences and buying behaviour.
Experimental research gathers primary data by selecting matched groups of subjects, giving
them different treatments, controlling related factors and checking for differences in group
response.
Online marketing research collects primary data online through Internet surveys, online focus
groups, web-based experiments or tracking consumer’s behaviour online. Online focus groups
gather a small group of people online with a trained moderator to chat about a product, service
or organisation and gain qualitative insights about consumer attitudes and behaviour.
Customer relationship management (CRM) is managing detailed information about individual

customers and carefully managing customer touch points to maximise loyalty. It means
capturing and using consumer data to manage customer interactions and build customer
relationships. Data mining techniques can be used to access customer data. By using CRM to
understand customers, relationships with them can be deeper.
CONSUMER BUYER BEHAVIOUR
Consumer buyer behaviour is the buying behaviour of final consumers: individuals and
households that buy goods and services for personal consumption. All these consumers add up
to the consumer market: all the households and individual that buy or acquire goods and
services for personal consumption. Consumers make buying decisions every day, but it can be
difficult to determine why they make certain decisions. Consumer purchases are influenced by
different characteristics.
Cultural factors
Cultural factors have an influence on consumer behaviour. Culture is the set of basic values,
perceptions, wants and behaviours learned by a member of society from family and other
important institutions. A subculture is a group of people with shared value systems based on
common life experiences and situations. They are distinct, but not necessarily mutually

exclusive. Social classes are relatively permanent and ordered divisions in a society whose
members share similar values, interests and behaviours.
Social factors
Another influence is social factors. Groups are two or more people who interact to accomplish
individual or mutual goals. Many small groups influence a person’s behaviour. Membership
groups are groups in which a person belongs, while reference groups serve as direct points of
comparison.
Word-of-mouth influence of friends and other consumers can have a strong influence on
buying behaviour. An opinion leader is a person within a reference group who, because of
skills, knowledge, personality or other characteristics, exerts social influence on others.
Marketers try to identify the opinion leader and aim their marketing efforts towards this person.
Buzz marketing involves creating opinion leaders to serve as brand ambassadors. Online
social networks are online communities, such as blogs, social networking sites or even virtual
worlds, where people socialize or exchange information and opinions.
Family can have a strong influence on buying behaviour as well. Buying role patterns in
families change with evolving consumer lifestyles. A person belongs to many groups beside the
family, also clubs, organisation and online communities. The position of a person in a group is
defined in terms of role and status. A role consists of the expected actions of a person. People
usually choose products appropriate to their role and status.
Personal factors
Personal characteristics also have an influence on consumer buyer behaviour. These

characteristics can be the person’s age and life-cycle stage, the person’s occupation and
economic situation, but also lifestyle and personality. Lifestyle is a person’s pattern of living as
expressed in his or her activities, interests and opinions. Personality is the unique psychological
characteristics that distinguish a person or group.
A brand personality is the mix of human traits that may be used to describe the brand. There
are five general brand personality traits: sincerity, excitement, competence, sophistication
and ruggedness.
Psychological factors
Buying behaviour is influenced by four major psychological factors: motivation, perception,

learning and beliefs and attitudes. Motive (drive) is a need that is sufficiently pressing to direct
the person to seek satisfaction of the need. Motivation research refers to qualitative research
designed to find consumer’s hidden motivations. Maslow’s hierarchy of needs categorizes
needs into a pyramid, consisting of psychological needs, safety needs, social needs, esteem
needs and self-actualisation needs.
Perception is the process by which people select, organise and interpret information to form a
meaningful picture of the world. People from different perceptions of the same stimulus because
of three perceptual processes: selective attention, selective distortion and selective retention.
Learning describes changes in an individual’s behaviour arising from experience. A drive is a
strong stimulus that calls for action. Cues are minor stimuli that determine how a person
responds.

A belief is a descriptive thought that a person holds about something. An attitude is a person’s
consistently favourable or unfavourable evaluations, feelings and tendencies toward an object
or idea. Attitudes can be difficult to change, because they are usually part of bigger pattern.
There are different types of buying decision behaviour.
• Complex buying behaviour is characterized by high consumer involvement in a

purchase and significant perceived differences among brands. The buyer will pass
through a learning process, developing beliefs and attitudes and then a purchase choice
will follow.
• Dissonance-reducing buying behaviour is consumer buying behaviour characterised by

high involvement, but few perceived differences among brands.
Habitual buying behaviour is consumer buying behaviour characterized by low consumer

involvement and few significantly perceived differences. Repetition of advertisements can
create brand familiarity (but not conviction), which can lead to habitual purchases. Variety-
seeking buying behaviour is consumer buying behaviour characterised by low consumer
involvement, but significant perceived brand differences.
The buyer decision process has five stages.
1. Need recognition is the first stage, in which the consumer recognises a problem or need.
2. Information search is the stage in which the consumer is aroused to search for more
information, the consumer may simply have heightened attention or may go into active
information search. Information can be obtained from personal sources, commercial sources,
public sources and experiential sources.
3. Evaluation of alternatives. Alternative evaluation is the process in which the consumer

uses information to evaluate alternative brands in the choice set.
4. Purchase decision is the buyer’s decision about which brand to purchase. Both the attitude
of others and unexpected situational factors can influence the ultimate decision.
5. Post-purchase behaviour is the stage of the buyer decision process in which consumers
take further action after purchase based on their satisfaction or dissatisfaction with a purchase.
Cognitive dissonance is buyer discomfort caused by post-purchase conflict.
The buyer decision process can be different for new products. A new product is a good,
service or idea that is perceived by some potential customers as new. The consumer must
decide to adopt them or not. The adoption process is the mental process through which an
individual passes from first hearing about an innovation to final adoption.
There are five stages in the adoption process: awareness, interest, evaluation, trial and
adoption.
BUSINESS MARKETS

Business buy behaviour of organisations that buy goods and services for use in the
production of other products and services that are sold, rented or supplied to others. The
business buying process is the decision process by which business buyers determine which
products and services their organisations need to purchase and then find, evaluate and choose
among alternative suppliers and brands. The business market is bigger than the consumer
markets, and differs in many ways.
Business demand is derived ultimately derives from the demand for consumer goods.
Business markets’ demand is more inelastic and is less affected by short-term price changes,
while demand also fluctuates more quickly.
Supplier development is the systematic development of networks of supplier-partners to

ensure an appropriate and dependable supply of products and materials for use in making
products or reselling them to others.
There are three types of business buying situations
• A straight rebuy is a business buying situation in which the buyer routinely reorders
something without any modifications.
• A modified rebuy is when the buyer wants to modify the product specifications, prices,
terms or suppliers.
• A new task is a business buying situation in which the buyer purchases a product or
service for the first time.
Systems selling (or solutions selling) is buying a packaged solution to a problem from a single
seller, thus avoiding all the separate decisions involved in a complex buying situation.
There are multiple participants in the business buying process. The buying centre are all
the individuals and units that play a role in the purchase decision-making process.
• Users are members of the buying organisation who will actually use the purchased
product or service.
• Influencers are people in an organisation’s buying centre who affect the buying
decision, they often help define specifications and also provide information for evaluating
alternatives.
• Buyers are the people in an organisation’s buying centre who make an actual purchase.
• Deciders are people who have formal or informal power to select or approve the final
suppliers.
• Gatekeepers are people in an organisation’s buyer centre who control the flow of
information to others.
THE BUSINESS BUYING PROCESS
The business buying process has eight stages.
1. Problem recognition: someone in the company recognises a problem or need that can be
met by acquiring a good or a service.
2. General need description is the stage in the business buying process in which a buyer
describes the general characteristics and quantity of a needed item.

3 Product specification is the stage in the business buying process in which the buying
organisation decides on and specifies the best technical product characteristics for a needed
item.
4. Supplier search is the stage in which the buyer tries to find the best vendors.
5. Proposal solicitation is the stage in which the buyer invites qualified suppliers to submit
proposals.
6. Supplier selection is the stage in which the buyer reviews proposals and select a supplier
or suppliers.
7. Order-routine specification is the stage in which the buyer writes the final order with the
chosen supplier(s), listing the technical specifications, quantity needed, and expected time of
delivery, return policies and warranties.
8. Performance review is the stage in which the buyer assesses the performance of the
supplier and decided to continue, modify or drop the arrangement.
E-procurement involves purchasing through electronic connections between buyers and

sellers, usually online. This can be via reverse auctions, trading exchanges, company buying
sites and extranet links. Benefits of e-procurement are lower transaction costs and efficient
purchasing.
Institutional market consists of schools, hospitals, nursing homes, prisons and other
institutions that provide goods and services to people in their care. These markets can be
extensive and are often characterized by low budgets. Government markets consist of
governmental units (federal, state and local) that purchase or rent goods and services for
carrying out the main functions of government.
TYPES OF TARGET MARKETS BASED ON SEGMENTATION
1. Age
2. Gender
3. Race
4. Income
5. Religion
6. Occupation
7. Family size
8. Geographic location
9. Zip code
COMMON TYPES OF TARGET MARKETING

1. Customers Need
2. Customer preferences
3. Values
4. Demographics
5. Location
6. Behavior
7. Lifestyles
8. Price Sensitivity
9. Competitive targeting
P’S OF MARKETING MIX

1. Product - The Product should fit the task consumers want it for, it should work and it should
be what the consumers are expecting to get
2. Place - The product should be available from where your target consumer finds it easiest to
shop.
3. Price - The Product should always be seen as representing good value for money. This does
not necessarily mean it should be the cheapest available; one of the main tenets of the
marketing concept is that customers are usually happy to pay a little more for something that
works really well for them.
4. Promotion - Advertising, PR, Sales Promotion, Personal Selling and, in more recent times,
Social Media are all key communication tools for an organization. These tools should be used to
put across the organization’s message to the correct audiences in the manner they would most
like to hear, whether it be informative or appealing to the emotion.
5. People – All companies are reliant on the people who run them from front line Sales staff to
the Managing Director. Having the right people is essential because they are as much a part of
your business offering as the products/services you are offering.
6. Processes –The delivery of your service is usually done with the customer present so how
the service is delivered is once again part of what the consumer is paying for.
7. Physical Evidence – Almost all services include some physical elements even if the bulk of
what the consumer is paying for is intangible. For example a hair salon would provide their client
with a completed hairdo and an insurance company would give their customers some form of
printed material.
THE 7 FUNCTIONS OF MARKETING: A FIELD GUIDE
• Promotion.
• Selling.
• Product management.
• Marketing information management.
• Pricing.
• Financing.
• Distribution.
MARKETING GOALS
• Building brand awareness.

• Generating a high volume of qualified leads.
• Establishing thought leadership.
• Attributing marketing activities to revenue generation.
• Increasing brand engagement.
MARKETING FEATURES
1. Customer focus
2. Customer satisfaction
3. Objective-oriented
4. Marketing is both art and science
5. Continuous and regular activity
6. Exchange process
7. Marketing environment
8. Marketing mix

9. Integrated approach:
10. Commercial and non-commercial organizations
11. Precedes and follows production
READ:

1. What is the role of marketing?

2. Explain the role and function of marketing?
3. Why do we study marketing?
B. MULTIPLE CHOICES:
1. These are bundles of attributes and benefits designed to be offered to buyers to
Satisfy their needs, wants and demands.
a. Products b. people c. promotions d. place
2. These forces refer to the general study of human populations.
A. demographics forces b. Natural forces c. economic forces
d. Technological forces
3. It is mostly known as the “neglected part of the market.”
A. Market penetration b. Market Segmentation
c. Market Niche d. Market Analysis
4. It is the prime consideration before a product is effectively sold.

A. Price b. Market skimming c. Product d. people

5. It is the P’s of Marketing designed to bring products forward to customers and
Consumers.
A. Placement B. product C. pricing d. people

MODULE 5
PROMOTION
OVERVIEW:
After finding out what products or services the customers need, these are produced
accordingly. The next concern will be how to inform the customers that such products or
services are available. The task of informing the customers, however is coupled with the task of
persuading them to buy from the company. This activity falls under the task of promotions.
Most successful company are engaged in promotions, one way or another. Some firms
use it extensively while others only superficially. In any case, the small business operator must
know what promotion is and how it can help him achieve his sales and profit objectives.
Promotion aims to stimulate demand for a company’s goods or services. Promotional

strategy is designed to inform, persuade, or remind target audiences about those products. The
goals of promotion are to create awareness, get people to try products, provide information,
keep loyal customers, increase use of a product, identify potential customers, and even teach
clients about potential services.
LEARNING OUTCOMES:
After successful completion of this module, you are able to:
A. Explain the different kinds of promotion
B. Describe the goal of promotion
C. Discuss the methods of promotion and strategy
D. List the elements of promotion
COURSE MATERIALS:
PROMOTION DEFINE
Promotions refer to the entire set of activities, which communicate the product, brand or
service to the user. The idea is to make people aware, attract and induce to buy the product, in
preference over others.
GOAL OF PROMOTION
1. Creating awareness: All too often, firms go out of business because people don’t know they
exist or what they do. Small restaurants often have this problem. Simply putting up a sign and
opening the door is rarely enough. Promotion through ads on social media platforms and
local radio or television, coupons in local papers, flyers, and so forth can create awareness of a
new business or product.
2. Getting consumers to try products: Promotion is almost always used to get people to try a
new product or to get nonusers to try an existing product. Sometimes free samples are given
away. Lever, for instance, mailed over two million free samples of its Lever 2000 soap to
targeted households. Coupons and trial-size containers of products are also common tactics
used to tempt people to try a product. Celebrities are also used to get people to try products.

3. Providing information: Informative promotion is more common in the early stages of the
product life cycle. An informative promotion may explain what ingredients (for example, fibre)
will do for a consumer’s health, describe why the product is better (for example, high-definition
television versus regular television), inform the customer of a new low price, or explain where
the item may be purchase.
4. Keeping loyal customers: Promotion is also used to keep people from switching brands.
Slogans such as Campbell’s soups are “M’m! M’m! Good!” and “Intel Inside” remind consumers
about the brand. Marketers also remind users that the brand is better than the competition.
Firms can also help keep customers loyal by telling them when a product or service is improved.
5. Increasing the amount and frequency of use: Promotion is often used to get people to use
more of a product and to use it more often. The most popular promotion to increase the use of a
product may be frequent-flyer or -user programs.
6. Teaching the customer: For service products, it is often imperative to actually teach the
potential client the reasons for certain parts of a service. In services, the service providers work
with customers to perform the service. This is called “co-creation.”
THE PROMOTIONAL MIX
The combination of traditional advertising, personal selling, sales promotion, public

relations, social media, and e-commerce used to promote a product is called the promotional
mix. Each firm creates a unique promotional mix for each product. But the goal is always to
deliver the firm’s message efficiently and effectively to the target audience.
These are the elements of the promotional mix:
• Traditional advertising: Any paid form of nonpersonal promotion by an identified

sponsor that is delivered through traditional media channels.
• Personal selling: A face-to-face presentation to a prospective buyer.
• Sales promotion: Marketing activities (other than personal selling, traditional

advertising, public relations, social media, and e-commerce) that stimulate consumer
buying, including coupons and samples, displays, shows and exhibitions,
demonstrations, and other types of selling efforts. This includes freebies, contests,
discounts, free services, passes, tickets and so on, as distinct from advertising, publicity
and public relations
• Public relations: The linking of organizational goals with key aspects of the public
interest and the development of programs designed to earn public understanding and
acceptance. Public relations can include lobbying, publicity, special events, internal
publications, and media such as a company’s internal television channel.
• Social media: The use of social media platforms such as Facebook, Twitter, Pinterest,
Instagram, and various blogs to generate “buzz” about a product or company. The skills
and knowledge needed to generate information as well as to defend the company
against problems (such as incriminating videos “going viral”) are separate skills from
those related to traditional advertising. Even promotional strategies such as paying
celebrities to wear a specific line of clothing and posting these images on Twitter or

Instagram (a form of advertising) requires different types of planning and expertise than
traditional advertising.
• E-commerce: The use of a company’s website to generate sales through online

ordering, information, interactive components such as games, and other elements of the
website. Website development is mandatory is today’s business world. Understanding
how to develop and utilize a website to generate sales is imperative for any marketer.
BENEFITS OF PROMOTION
• Increase brand awareness - With the help of various media like the television,
billboards, radio or local newspaper news, you can spread across information about
your brand and company, which helps people to find out more about you and look into
your products and make purchases.
• Segment Identification - If you’re promotional and marketing strategy is loosely

structured, it might not be successful in targeting the “right” audiences. Having a full-
proof and well-thought-out promotional strategy and marketing plan can help you
identify different segments of consumers in the market and offer suitable.
• Increasing customer traffic –Promotion also helps in increasing customer traffic. The
more you promote your brand, the more will the customers know about you and your
company and the more will they be interested in your products. Promotion can be
done even by giving out free samples which work wonders for customers! They try
your product and ultimately, come to you and make purchases.
REASONS WHY PROMOTIONAL ACTIVITIES ARE NECESSARY FOR BUSINESS

PROMOTION
1. To Provide Information to Customers about New Products/services

When a company comes in the market with its new products/services, it has to deal with
several challenges. People love to buy from trusted brands that have already captured the
market.
2. Creating a Positive Image of the Company
Therefore, it is very important for all companies to have a positive image in the eyes of
existing and potential buyers. A company with a good image is praised by customers on
different forums, helping it to get more business opportunities.
3. Easy Dissemination of information About the Advantages of Goods
So, as a hard core business entrepreneur, you should initiate promotional activities and
make people aware of the importance and advantage of using your products and services. Only
then, you will be able to generate the desired sales and leads.
4. Sales Promotion - Participate in product exhibitions, contests, lotteries, coupons, loyalty
programs, prizes, free samples, demonstrations, etc, to send business messages to customers
easily and quickly and grow the business volume.
5. Create an Easily Recognizable Logo for Your Business- As a matter of fact, a beautifully
created logo attracts the attention of people, let them know about the main business activities of
a particular company and identify it easily in the crowd of several companies.
6. Frequent Communication with Clients & Customers
We all know the huge importance of frequent communication with clients and customers.
Always keep in mind all customers are not fully aware of the importance of your
products/services. So, through promotional activities, you can communicate with your

clients/customers frequently, solve their problems instantly and sell more products and services
every day.
7. Further Expansion of Your Business
Different promotional activities lay the foundation for the further expansion of your
business. For example- you can give free times to customers to make them feel special and
they love to buy from your frequently. It also helps you to gain more customers and business
opportunities easily and effortlessly.
IMPORTANCE OF PROMOTION
Promoting your brand will help you in many different ways:

• Increase brand awareness - Promotions help in creating brand awareness. With the
help of various media like the television, billboards, radio or local newspaper news, you
can spread across information about your brand and company, which helps people to
find out more about you and look into your products and make purchases.
• Segment Identification - If you’re promotional and marketing strategy is loosely
structured, it might not be successful in targeting the “right” audiences. Having a full-
proof and well-thought-out promotional strategy and marketing plan can help you identify
different segments of consumers in the market and offer suitable solutions for your
clients.
• Increase Customer Traffic - Also, promotion helps in helps in increasing customer
traffic. The more you promote your brand, the more will the customers know about you
and your company and the more will they be interested in your products. Promotion can
be done even by giving out free samples which works wonders for customers! They try
your product and ultimately, come to you and make purchases.
• Build sales and profits - Promotional material gives customers more of an incentive to
purchase, if they can purchase your product or service from many different sources, why
should they chose you? You need to answer this within your promotions i.e. with our
product you will receive a free fitting or extra warranty etc… This will build your profits
and give you a worthy edge over your competitors.
• Quick decision making - Limited availability offers can create a sense of urgency in
your customers that get them to act. When combined with new content that helps
customers clearly see the benefits of what you are promoting, you can create compelling
reasons to buy now.
• Strengthens the focus on marketing - Developing a promotion calendar will

encourage you to plan for new marketing programs focused at specific times of year. If
you don’t have a dedicated marketing team doing this for you already, you should
consider creating a promotions plan this will ensure frequency in your overall marketing
schedule.
TYPES OF ADVERTISING
a. Newspaper advertising can promote your business to a wide range of customers. Display
advertisements are placed throughout the paper, while classified listings are under subject
headings in a specific section.
b. Magazine Advertising in a specialist magazine can reach your target market quickly and
easily. Readers (your potential customers) tend to read magazines at their leisure and keep
them for longer, giving your advertisement multiple chances to attract attention. Magazines

generally serve consumers (by interest group e.g. women) and trade (industry/business type
e.g. hospitality).Magazines do not usually serve a small area such as a specific town. If your
target market is only a small percentage of the circulation, then advertising may not be cost-
effective.
c. Radio Advertising on the radio is a great way to reach your target audience. If your target
market listens to a particular station, then regular advertising can attract new customers.
However, sound has its limitations. Listeners can find it difficult to remember what they have
heard and sometimes the impact of radio advertising is lost.
d. Television advertisements have the advantage of sight, sound, movement and colour to
persuade a customer to buy from you. They are particularly useful if you need to demonstrate
how your product or service works.
Producing a television advertisement and then buying an advertising slot is generally

expensive. Advertising is sold in units (e.g. 20, 30, 60 seconds) and costs vary according to:
• the time slot
• the television program
• whether it is metro or regional
• if you want to buy spots on multiple networks
e. Directories - list businesses by name or category (e.g. Yellow Pages phone directories).
Customers who refer to directories have often already made up their mind to buy - they just
need to decide who to buy from.
f. Outdoor and transit there are many ways to advertise outside and on-the-go. Outdoor
billboards can be signs by the road or hoardings at sport stadiums. Transit advertising can be
posters on buses, taxis and bicycles. Large billboards can get your message across with a big
impact. If the same customers pass your billboard every day as they travel to work, you are
likely to be the first business they think of when they want to buy a product. Even the largest of
billboards usually contain a limited amount of information; otherwise, they can be difficult to
read. Including your website address makes it easy for customers to follow up and find out more
about your business. Outdoor advertising can be very expensive especially for prime locations
and supersite billboards.
g. Direct mail, catalogues and leaflets - Direct mail means writing to customers directly. The
more precise your mailing list or distribution area, the more of your target market you will reach.
A direct mail approach is more personal, as you can select your audience and plan the timing to
suit your business. A cost effective form of direct mail is to send your newsletters or flyers
electronically to an email database. Find out more about direct mail.
Catalogues, brochures and leaflets can also be distributed to your target area. Including a
brochure with your direct mail is a great way to give an interested customer more information
about your products and services. Learn more about leaflet marketing using letterbox drops and
hangouts.
h. Online - Being on the internet can be a cost-effective way to attract new customers. You can
reach a global audience at a low cost. Many customers research businesses online before
deciding whom to buy from. Other ways to advertise your business online include promoting
your products or services on social media sites, blogs and search engines and other websites
that your target audience visits. Find out more about social media.

SALES PROMOTION DEFINE
Sales promotion is the practice of offering sale prices and other incentives to customers. It is
often coordinated with marketing activities such as advertising, promotion, sales targets,
channel management and visual merchandising. The following are common types of sales
promotion.
TYPES OF SALES PROMOTION
Sale prices such as a percentage discount.

• Volume Discount such as buy two get one free.
• Freebies Free items with a purchase such as a free baseball cap with a purchase of a
meal.
• Contests such as prize giveaways.
• Coupons are one way to implement price discrimination as price sensitive customers
will be more willing to look for coupons.
• Loss Leaders selling an item at an exceptionally low price to attract customers to a
location.
• Upgrades & Premiums Free upgrades such as more memory in a mobile device.
• Terms temporarily offering improved terms such a telecom company that offers unlimited
bandwidth on new contracts for a limited time.
• Free Trials Allowing customers to try a service risk free for a period of time.
• Free Samples such as a trial size of a new product that is given out to create brand
awareness.
• Loyalty Programs offering double or triple points on a loyalty program for a period of
time.
• Trade Allowances Discounts given to distribution partners such as retailers to
encourage them to stock up on your product. In many cases, this is done in conjunction
with advertising to support sales.
• Dealer Loader A dealer loader is a reward that is given to retailers to buy a minimum
amount or to install in-store displays.
• Push Money Extra commissions for salespeople and distribution partners to increase
sales volume
Publicity involves conveying information and generating awareness about products and
services to the general public or target audiences through various media.
SIX COMMON TYPES OF PRESS RELEASES:
1. General News -This is the most common type of press release. The idea behind a general
news release is to generate traditional coverage in online and offline media. While ideally the
topic in the release should be newsworthy, sometimes the definition of “newsworthy” can be
stretched a bit. For example, a press release can be sent out when your company wins an
award or contest.
2. Launch Release - A launch press release relates to the release of a new company, product,
website, initiative or something similar. The format of this press release is similar to a general
news release, but with more of an emphasis on timeliness. A launch release should help create
a sense of urgency about the upcoming news.

A launch press release doesn’t even have to be about something tangible. Instead, you can
launch an idea. Recently, the Democratic Party launched a new economic platform called a
"Better Deal." While this isn’t a physical object you can hold in your hand, many media outlets
still devoted a lot of (virtual) ink to discussing the concept.
3. Event Press Release - Most press releases are written with members of the media as the
initial audience. An event press release is a little different. This type of press release needs to
clearly explain the details of an event. The goal is to have the event specifics printed in the
media so the general public can learn about them.
4. Product Press Release -Releasing a new product? Let the world know with a product press
release. This has a similar format to a launch press release. The main difference is that a
product press release contains product specs.
5. Executive, Staff and Employee Press Release -Large companies typically announce new
hires, especially those in high levels of management, in a press release. A press release of this
genre often includes fairly extensive biographical information about the new hire. At least one
photo of the person should be included, too.
6. Expert Position Press Release -This is a type of press release used to establish an
individual’s or brand’s credibility in a particular field. The idea is to position the person or
company as a go-to source of information to be contacted by the media at some point in the
future. An expert position press release provides a general introduction as well as some type of
third-party verification of expertise.
Positive result of word-of-mouth

• Competent employee
• Proper treatment of people
• Not overcharging
• Not using false claims in advertising
• Keeping promises to customers
• Having a good product or services
• Keeping customers happy
READ:

1. What is promotion in simple words?

2. How do I start business promotion?
3. How do you do a promotion?
B. MULTIPLE CHOICES:
1. The idea is to make people aware, attract and induce to buy the product, in
preference over others.
A. advertising b. selling c. promotion d. General news
2. This type of press release needs to clearly explain the details of an event.
A. launch press release b. event press release c. General new
D. Product
3. Extra commissions for salespeople and distribution partners to increase sales volume.
A. Push Money b. Dealer Loader c. Free Trials
D. Personal Selling
4. It involves conveying information and generating awareness about products and

services to the general public or target audiences through various media.
A. Sales Promotion c. Advertising C. Selling d. Publicity
5. The use of a company’s website to generate sales through online ordering,

information, interactive components such as games, and other elements of the website.
A. Online Selling b. E-commerce c. Internet d. Webmail

MODULE 6
MANANAGING HUMAN RESOURCES
OVERVIEW:
The success of a small business will depend largely on the skill and motivation of its
human resources. If the employees work as team, the competitive stance of these firm will be
enhanced, making it easier for the firm to accomplish its objectives. This will require however, a
systematic approach to the management of human resources.
Human resource management does not just handle the recruitment of new employees; it
also oversees redundancy for companies that want to downsize. HR management also
oversees orientation programs to introduce new employees to the company’s goals, objectives,
and policies. Overall, human resource management guarantees the smooth running of
employees within a company.
LEARNING OUTCOMES:
After successful completion of this modules, you are able to:
A. Describe the functions of Human Resource Management

B. Discuss the importance of Human Resource Management
C. Explain the role of HR Manager
D. Identify the different recruitment, selection process
D. Understand interview and compensation benefits
COURSE MATERIALS:
HUMAN RESOURCE MANAGEMENT DEFINE:
Human resource management is the process of putting the right people with the right
skills in the right place of the right time with the right motivation in order to accomplish strategy.
Human resource management refers to the process of recruiting and developing a company’s
workforce. The HR department is concerned with identifying talent gaps in a company,
advertising for positions, evaluating potential candidates, and hiring top talent.
FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
• Recruitment
• Compensation of Employees
• Designing work.
PRINCIPLES OF HUMAN RESOURCE MANAGEMENT
1. Commitment
One aspect that the HR department tries to deal with is job security. To guarantee job security,
many employees know that the firm demonstrates its long-term commitment to the workers by

providing regular training, performance evaluations, and goal-setting activities’ need to show
commitment to the company and their job duties.
2. Competence
Competence is one of the core principles that supports a company’s growth and development. It
is also an aspect that affects employees’ job satisfaction and how the company benefits society.
The success of a firm depends on the competency of its employees. The HRM department tries
to sustain workforce competency by providing training opportunities.
MAIN FUNCTIONS OF HUMAN RESOURCE MANAGEMENT
1. Employee Recruitment
Recruitment is the process of identifying talent gaps in a company and finding the right people
to fill the roles. There are four stages in the employee recruitment process:
Job analysis – This involves defining the various aspects of a job through job description
and specification. Through job description, the HRM department identifies the tasks required for
a specific job while the latter defines the requirements an individual needs to fulfil that job.
Sourcing – This encompasses the different techniques a company employs to attract

potential candidates to fill a given position. This can be achieved through internal and external
advertisements.
Screening and selection – This is the process of evaluating the candidates who apply for
the job. The evaluation is performed to determine the skills, qualifications, competency, and job-
related experience that potential candidates bring to the table.
s
Selection of the right candidates – Once the best candidate has been selected, the next
process that follows is on boarding. This is simply helping the new recruits become productive
members of the company.
2. Employee Orientation
Another core function of human resource management is employee orientation. Also known as
on boarding, it is the process of teaching new recruits the necessary skills, knowledge, and
behaviors so that they can transition to the new company effectively.
Employee orientation is a broad process conducted by the HR department, and it’s done
through different methods, including lectures, meetings, videos, mentoring, and team-building
exercises. The main objective of the orientation is to provide new recruits with adequate
information regarding the company’s targets, rules, policies, and activities.
3. Employee Development
Employee development refers to all the efforts for improving personal, team, and
organizational effectiveness. One aspect the human resource department tackles is talent
development. This involves aligning the employees’ skills with the company’s needs. In addition
to hiring, training, and orienting employees, HRM should also improve their career opportunities.

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT
1. To maintain quality of work life-Quality of work life is concerned with the employee’s
perception of physical as well as psychological wellbeing at workplace and it can be obtained by
maintaining work autonomy, work freedom, job recognition, belongingness, rewards, etc.
2. To increase productivity and profit - Human resource management ensures right quality
and quantity of personnel in workplace, apart from which, it creates opportunities to facilitate
and motivate individual and group of employees to grow and advance their career.
3. To produce employees who are easily adaptable to change - Training and development
programs keep employees updated with skills necessary to adjust with alteration of
organization’s environment, structure and technology.
4. To match demand and supply of human resource - Human resource management probes
existing human resource in certain interval of time to identify if the company has adequate
number of workers, human resource management performs activities like recruitment and
selection to balance the need.
5. To retain employees and motivate them to accomplish company’s goal - HRM performs
tasks like providing fringe benefits, compensation and rewards to the deserving employees.
6. To recognize merit and contribution of employee- Human resource management

performs timely appraisal of employee’s performance in order to recognize excellent and poor
workers.
7. To create a feeling of belongingness and team spirit in the employee - As teamwork
demands contribution from every team member, HRM focuses on making each and every
employee feel valued so that employee contributes best from their side.
8. To sustain business in the market - Human resource management makes sure that the
company has the best employee because promising employees are capable of taking their
company ahead in the race by delivering excellent results.
9. To resolve conflicts - Conflicts are inevitable and they should not be ignored. Human
resource management acts as a consultant to sort out such conflicts timely and conduct other
organizational activities smoothly.
10. To develop corporate image -Every company should maintain good public image in order
to sustain in the market. Any individual would like to work for companies which are known for
moral and social behavior.
ROLE OF HR MANAGERS
Recruitment: One of the major responsibilities of a HR manager is to recruit personnel. The

success of an organisation largely depends on the workforce employed, so it is essential that
the right people are hired for the right role.
Learning and development: HR managers are responsible for the orientation and induction
of new employees, as well as the professional development of existing employees. They are
responsible for strategizing development programmes.

Building employee relations: Effective employee relations go a long way in boosting
productivity and contributes significantly to an organisation’s success. Employee relations
strategies are implemented to ensure that an organisation caters to the overall well-being of
employees.
Compensation and benefits: They are responsible for devising compensation strategies,
performance management systems and compensation structures, as well as negotiating pay
and benefit packages with potential employees.
IMPORTANCE OF HR MANAGERS IN ORGANISATIONS
Strategy management: HR managers manage strategies to ensure the organisation reaches

its business goals, as well as contributing significantly to the corporate decision-making
process, which includes assessments for current employees and predictions for future ones
based on business demands.
Benefits analysis: HR managers work towards reducing costs, such as with recruitment and
retention. HR professionals are trained to conduct efficient negotiations with potential and
existing employees, as well as being well-versed with employee benefits that are likely to attract
quality candidates and retaining the existing workforce.
Training and development: Since HR managers contribute significantly to training and

development programmes, they also play a pivotal role in strengthening employer-employee
relationships. This contributes to the growth of employees within the company, hence enhancing
employee satisfaction and productivity.
Interactivity within employees: HR managers are responsible for conducting activities,

events and celebrations in the organisation which gives way to team building opportunities.
Conflict management: The department to go to when any kind of professional conflict arises
between employees is HR. They ensure that issues and conflicts are resolved effectively,
approaching the problem with an unbiased attitude and encouraging effective communication to
reach a solution.
Establishing a healthy work culture: A healthy work culture is pivotal in bringing out the
best in employees. HR managers contribute significantly in setting up a healthy and friendly
work culture, which further translates into better productivity among employees.
SOURCES OF RECRUITMENT
1. Job Boards. Think of where your talent pool would go to find a job—if you’re looking for a
graphic designer, post your job on boards that designers usually visit.
2. Company Website. Posting all job opportunities on your company’s website is a given.
Whether candidates arrive there directly or are directed there from another site, this is the place
where all your recruiting lives.
3. Social Media. LinkedIn, Google+, Facebook, Twitter, among others—these social media
networks are key recruiting sources. Yet social media is not just for posting jobs; it also offers an
opportunity for a conversation. It’s a place where you can promote your company’s brand and
contribute insightful information about your company and industry.

4. Referrals. Consider offering referral incentives, like bonuses. Make sure your employees
know that they can refer candidates to current openings. Establish a system for doing so,
whether it’s having the employee submitting the candidate’s resume for him or specifically
asking for an employee referral in all your job applications.
5. Direct Contact. Similar to employee referrals, direct contact leverages current employees
specifically going after a candidate. These employees seek out candidates, cultivate
relationships, and bring them in as referrals when the right time comes.
6. Temp-to-Hires. Another way to bring in new employees is through temporary or part-time

employment first. Portals that help you find temporary and seasonal employees can all be seen
as a recruiting source.
7. Career Fairs. Having a company presence at career fairs puts you in the center of a pool of
candidates. Also consider career fairs at colleges and universities, which offer a great
opportunity to reach a pool of potential entry-level candidates.
8. Agency. Recruiting agencies can be cost-effective options for finding top candidates from
wider talent pools, or to find heavily sought-after candidates in more specialized industries.
9. Newspapers. Depending on the job and the industry, more of the candidates you’re looking
for may rely on print job ads when searching for openings.
SELECTION PROCESS
Selection process can be defined as the process of selection and shortlisting of the right
candidates with the necessary qualifications and skill set to fill the vacancies in an organisation.
The selection process varies from industry to industry, company to company and even amongst
departments of the same company.
Steps in Selection Process
1. Application - can and should be selection tools, helping you sort candidates as qualified or
unqualified.
Gamification - Gamifying your recruitment process isn’t a new trend, but with the
progress of technology. You can shortlist promising people and your hiring team will
have better chances of interviewing only a few truly qualified candidates.
2. Resume screening. Now that you have wrapped up the application phase of the employee
selection process, you have a collection of resumes or CVs to sift through and filter those
deemed suitable for a screening call.
Background. You’ll want to know if they have the academic knowledge or professional
expertise – or both – to perform a job well.
Resume layout. The skill of organizing and presenting information in a clear and
concise way is on full display here.
Consider the following examples of how a resume’s layout can offer a quick
demonstration of a candidate’s skill set:

• If you’re looking to fill a creative position – such as graphics or web design – the
resume layout can be a powerful indicator of how well they can design.
• If you’re looking to fill a sales position, the manner in which they present a
resume can show you how they might be able to catch your client’s eye with
important, relevant information to convert them into buyers.
• If you’re looking for a marketing copywriter, the resume shows their ability to
describe things in a tight, concise and engaging manner.
Cover letter
Describe their skills and background in a relevant way to the position being applied for?
Show their knowledge of your company and its goals, and how they can contribute?
Write in a professional, error-free manner that reflects their ability to communicate via
email and other channels?
Intangibles
It may initially seem corny to list one’s hobbies and personal interests in a resume, but
even those can be great indicators of the kind of person applying for the role.
Unconscious bias. As through every step of the employee selection procedures, you
want to keep your unconscious bias in check. Maintain that awareness as you sift
through resumes.
3. Screening call. The screening call, or phone screen, is among the initial hiring stages where
recruiters shortlist applicants. The purpose of this call is to establish whether the candidate is
truly interested in the job and (at least) minimally qualified to do it successfully. This way, only
the best applicants will go to the next, stricter (and more expensive) hiring stages, like
assessments and in-person interviews, saving your team time and money.
Schedule a phone screen. The email you’ll send to candidates to schedule a screening
call is important; that’s because it may very well be your very first communication with that
candidate. So this is your chance of setting the tone of your relationship with that candidate and,
who knows, future employee.
Prepare well beforehand. The key is to prepare thoroughly: know exactly what you’re
looking for and what you want to learn about each candidate, as well as what information
you’d like to convey, before you begin with the selection process.
• Write down your requirements. You probably already know the basic
qualifications you’re looking for, so make a list of basic ones you’d like to check
during the screening call.”
• Read candidate resumes. This is important for two reasons: you’ll show
candidates that you’re serious about their application, and you’ll be able to spot
discrepancies you can ask about.
• Make sure you can answer basic questions. To persuade a good candidate to
complete and assessment or come in for an interview, you should pitch the
position and your company effectively.

• Select the right questions. So make sure you address both those points during
the screening call (without going into too much detail in terms of skills – reserve
these questions for later hiring stages.
4. Assessment test. Once you’ve screened candidates and sorted them out into “promising”,
“maybe”, and “disqualified” groups, you want to look at the surviving candidates and further
assess their ability to do the job you’re looking to fill. These assessments can take place in a
multitude of forms in the selection process:
An in-person audition for an acting position, a sales job where you request the candidate to
pitch you a product, or a kitchen position where you ask them to cook something for you on the
spot.
• A written or online test to test for aptitude, personality, intelligence, etc.
• A practical skills test to determine a candidate’s typing speed, data entry capabilities,
memory, etc.
Navigate the assessment stage effectively
Communication is key. Explain clearly to candidates the scope and purpose of the
assessment, so they understand fully why you’re doing it.
A follow-up interview – separate from other interviews – dedicated to this particular

assessment can shed valuable insight on how candidates worked on the project and
their takeaways and learnings from it.
5. In-person interviewing
You’re now deep in the selection process, having screened candidates, evaluated their
skills, assessed their abilities, and created a shortlist of the most qualified people.
A list of job-related questions that assess how well candidates can manage regular
job duties. You can ask a mix of:
• Role-specific questions, to evaluate candidates’ knowledge and experience
• Soft skills questions, to identify candidates who are good not just on paper
• Situational questions, to learn how candidates would address different scenarios
and issues that may arise on the job
• Behavioral questions, to discover how candidates have previously handled
professional challenges
Cultural fit questions that will help you pick these candidates who are more likely to
thrive in your work environment. For example, you could ask:
• Career goals questions, to find candidates whose professional goals align with
your business objectives
• Collaboration questions, to identify team players
• Adaptability questions, to learn which candidates are more flexible and will have
a smooth transition to their new role if hired
Schedule interviews at least two or three business days in advance. Surely, if

you’ve found the perfect candidate or if you’re in a rush to close an open role, you want
to speed up the process. But, calling candidates to ask them to meet on the same or
next day could send the wrong message and make you look desperate.

Provide candidates all necessary information. This includes:
• the exact day and time of the interview, taking into consideration different time
zones if you’re interviewing remote candidates
• the address of your offices along with directions on how to get there (or,
instructions on how to log in to a video platform, in case of a video interview)
• the names and roles of the interviewers
• the scope of the interview (e.g. “We’ll go over your assignment” or “You’ll meet
with the CEO”)
• the estimated duration of the interview
6. Background checks
Background checks reassure you that your finalists are reliable and don’t pose risks to your
company. In fact, there are several types of background checks including:
• Criminal records
• Credit reports
• Driving records
• Verification reports (e.g. identity, education, work history, social security number.
Consider legal aspects of background checks

• First, some background checks are mandated by law in certain industries or roles
depending on location.
• Choose a reputable and reliable background check provider
• Navigate discussions with candidates appropriately. The law in many places mandates
that you ask candidates’ permission before you conduct checks in an employee
selection process.
• Interpret results correctly
7. Reference checks
This way, you’ll get feedback about their performance from people they’ve actually worked with
in the past, such as former managers, former colleagues or business partners and clients.
During reference checks, you will:
• Confirm what candidates have already told you (e.g about time of employment and
previous job responsibilities)
• Learn how candidates use their skills on the job
• Discover potential weaknesses or lack of practical experience
• Understand how candidates behave in the work environment (e.g. if they’re punctual, if
they receive feedback well, etc.)
INTERVIEW DEFINE
An interview is a formal meeting at which someone is asked questions in order to find out if they
are suitable for a job or a course of study.

Two kinds of Interview:
1. Structured interview is a series of job-related questions with standardized that are

consistently applied across all interviews for a particular job.
2. Unstructured interview consists of a loose interchange of question and answers between

an interviewer and the job candidates.
Training and development define
It refers to attempts made to improve employee performance through learning. The general
aims of training and development are:
• To teach specific skills, like how to operate a computer and others.

• To improve organizational process, like designing new products.
Two classification of Training
A. On-the-job training is one conducted while employees perform job related tasks. On-
the-job training allows employee to work under the guidance of an experienced
employee who can offer advice and suggestions for performing the job efficiently and
effectively.
B. Off-the-Job Training refers to internal and external programs to develop a variety of

skills and to foster personal development that occurs away from the workplace.
COMPENSATION DEFINE
Compensation is the total cash and non-cash payments that you give to an employee in
exchange for the work they do for your business.
DIFFERENT KINDS OF COMPENSATION
• Salary
• Hourly Wages
• Sales Commission
• Tips
• Stock Options
• Bonuses
• Incentive Pay
• Other Variable Pay
• Benefits (healthcare, paid leave, etc.)
• Non-monetary compensation (recognition, meals, etc.)
TYPES OF COMPENSATION
1. Direct compensation includes money paid to employees as cash, such as hourly wages,
salaries, bonuses and commission. Wages and salary typically fall under the category of base
pay whereas bonuses and commission fall under the category of variable pay.

2. Indirect compensation is still monetary in nature — meaning it has a financial value that can
be calculated — but is not a direct payment in the form of cash. What is considered indirect
compensation can vary across organizations but typically includes much of the benefits package
that comes with employment, such as employer sponsored health insurance and employer
contributions to an employee’s 401(k) retirement plan. Stock options and profit sharing also
usually fall under indirect compensation as can some other employee benefits such as tuition
assistance or a company-paid gym membership.
3. Non-monetary compensation includes time off, flexible work hours, coaching and training
opportunities, recognition and awards, some fringe benefits and other perks (like catered
lunches or a company car) that may not be measured in dollar amounts as part of a
compensation package but are still valuable to employees and make a difference in the
workplace culture and overall attraction of the job opportunity.
PERFORMANCE APPRAISAL DEFINE
Performance appraisal is the process of evaluating individual job performance as a basis for
making objective personnel decisions.
Types of Appraisal
1. Straight ranking appraisals. This compares all employees to each other, ranking them from
best to worst. It also assumes that everyone is the same, and in reality a business needs a mix
of different people and characters to succeed.
2. Grading. This systematic method that allows a manager to quickly see an employee’s level
for any given skill e.g. teamwork, communication, attention to detail etc.
3. Management by objective. This form of appraisal is a process rather than a one-off

evaluation and it’s all about planning and being proactive rather than reactive to events and
circumstances.
4. Trait and behaviour-based appraisals. Trait-based appraisals assess characteristics that

contribute to an individual’s personality, such as creativity, extroversion and confidence.
5. Behaviourally anchored rating scale. Half-way between behaviour and trait-based

appraisals, the behaviourally anchored rating scale aims to combine and benefit from both. It’s
particularly useful for employees who need to perform detailed tasks with accuracy but also
need to possess certain traits such as empathy and caring.
6. 360-degree appraisals. This method involves feedback from several people who have
contact with each employee, keeping biases firmly at bay. 360-degree appraisal is hailed as the
best approach because it’s all-encompassing (the secrets in the name!) and can give such a
well-rounded view of an employee.
This appraisal method has five integral components like:
1. Self-appraisals. Self-appraisals offer employees a chance to look back at their performance

and understand their strengths and weaknesses. However, if self-appraisals are performed
without structured forms or formal procedures, it can become lenient, fickle, and biased.

2. Managerial reviews. Performance reviews done by managers are a part of the traditional
and basic form of appraisals. These reviews must include individual employee ratings awarded
by supervisors as well as the evaluation of a team or program done by senior managers.
3. Peer reviews. As hierarchies move out of the organizational picture, co-workers get a unique
perspective on the employee’s performance making them the most relevant evaluator. These
reviews help determine an employee’s ability to work well with the team, take up initiatives, and
be a reliable contributor. However, friendship or animosity between peers may end up distorting
the final evaluation results.
4. Subordinates Appraising manager (SAM). This upward appraisal component of the 360-
degree feedback is a delicate and significant step. Reportees tend to have the most unique
perspective from a managerial point of view. However, reluctance or fear of retribution can skew
appraisal results.
5. Customer or client reviews. The client component of this phase can include either internal
customers such as users of product within the organization or external customers who are not a
part of the company but interact with this specific employee on a regular basis.
READ:


1. What is the purpose of human resource planning?
B. Enumerate
1. List the sources of recruitment
2. Different Kinds of compensation
3. Types of compensation
4. Two kinds of Training

MODULE 7
MANAGING BUSINESS FINANCE
OVERVIEW:
People invest their money in business with the hope that they will be afforded with
certain financial benefits. There are some measuring tools that indicate whether the investor is
successful or not. The financial rewards that are anticipated, however, do not happen by
chance. They come as a result of conscious efforts in making the right financial decisions.
These efforts consist of financial planning, implementation and control.
LEARNING OUTCOMES:
A. Understand financial planning

B. Describe the importance of financial planning
C. Explain the benefits of financial planning
D. Discuss budgeting and types
E. Describe how to compute the financial ratios
COURSE MATERIALS:
FINANCIAL PLANNING DEFINE
Financial planning may be defined as an activity that involves analysing the financial flows of the
firm as a whole, forecasting the consequences of various investments, financing, dividend
decisions, and weighing the effect of various alternatives.
IMPORTANCE OF FINANCIAL PLANNING
Financial planning helps you determine your short and long-term financial goals and create a
balanced plan to meet those goals.
1. Income: It's possible to manage income more effectively through planning. Managing income
helps you understand how much money you'll need for tax payments, other monthly
expenditures and savings.
2. Cash Flow: Increase cash flows by carefully monitoring you’re spending patterns and
expenses. Tax planning, prudent spending and careful budgeting will help you keep more of
your hard earned cash.
3. Capital: An increase in cash flow, can lead to an increase in capital. Allowing you to consider
investments to improve your overall financial well-being.
4. Family Security: Providing for your family's financial security is an important part of the
financial planning process. Having the proper insurance coverage and policies in place can
provide peace of mind for you and your loved ones.

5. Investment: A proper financial plan considers your personal circumstances, objectives and
risk tolerance. It acts as a guide in helping choose the right types of investments to fit your
needs, personality, and goals.
6. Standard of Living: The savings created from good planning can prove beneficial in difficult
times. For example, you can make sure there is enough insurance coverage to replace any lost
income should a family bread winner become unable to work.
7. Financial Understanding: Better financial understanding can be achieved when measurable

financial goals are set, the effects of decisions understood, and results reviewed. Giving you a
whole new approach to your budget and improving control over your financial lifestyle.
8. Assets: A nice 'cushion' in the form of assets is desirable. But many assets come with
liabilities attached. So, it becomes important to determine the real value of an asset. The
knowledge of settling or cancelling the liabilities, comes with the understanding of your finances.
The overall process helps build assets that don't become a burden in the future.
9. Savings: It used to be called saving for a rainy day. But sudden financial changes can still
throw you off track. It is good to have some investments with high liquidity. These investments
can be utilized in times of emergency or for educational purposes.
10. Ongoing Advice: Establishing a relationship with a financial advisor you can trust is critical
to achieving your goals. Your financial advisor will meet with you to assess your current financial
circumstances and develop a comprehensive plan customized for you.
BENEFITS OF FINANCIAL PLANNING
1. Forecast of cash flows. This involves forecasting of cash inflows and cash outflows from the
ordinary (regular transactions) and unexpected (irregular transactions such as bulk orders,
discounts, etc.) business opportunities.
2. Raising finances. Financial planning is important to plan for raising (mobilizing) finance from
different sources so that the requisite amounts of finance are made available to compensate the
requirement of business processes.
3. Managing internal funds. Financial planning is essential to keep a track of the realized
surplus available in the treasury. This is required to make certain that they are properly utilized
to meet the requirements of the business which will results in maintaining the liquidity position
with a minimum amount of external borrowings.
4. Facilitate cost control. Financial planning is beneficial to recognize the cost of production
(material, labor, factory overhead, etc.), cost of administration (salary, legal expenses, office
overhead, etc.) and cost of sales (advertisement, marketing and other promotional expenses).
Cost control is analysed by comparing the actual cost with standard (pre-determined) cost.
5. Facilitate pricing of product. Financial planning is necessary for pricing of a product since
pricing is the mode of determining, “How much a business will swap (in exchange) for its
products? “ Price is the only revenue generating tool of the business. Pricing has a direct
relationship with demand and supply of a product.

6. Forecasting profits. Financial planning is a model demonstrating comprehensive and
forecasted analysis of profitability for the particular business in a specific market condition, with
a pre-determined projected financial-plan. A forecasted profitability plan is required to estimate
the course of action. A profit is the residual result of the agreed business operations.
7. Measuring required returns. Financial planning is required to evaluate the required returns
from the project. This may results in acceptance or rejection of a business proposal. It depends
on whether the expected return from the proposed business is equal to or more than the
required returns.
8. Managing assets. Financial planning is required to manage the assets (owned and leased)
of the business. Such assets shall be properly maintained to avoid any break-down (failure). It
shall assist to determine the total investment in assets to carry out business operations properly
and promptly.
9. Managing funds. Financial planning is required to manage the funds of the investors and to
conduct the activities of the business in the interest of the organization. Funds are the liquid
assets of the company. Therefore, Funds should be managed (evaluated) with dual virtual
(imaginary) vision, i.e. w.r.t. liquidity and profitability.
10. Managing cost. Financial planning is also required to manage the cost of operations of the
business. If the costs of operations are not measured carefully, then it may result in paying
excessive money with a subsequent decline in profits.
11. Miscellaneous importance. Financial planning may have a strategy to convert idle
equipment into cash. It may also have a strategy to reduce the cost (for e.g. by not giving
increments to employees, by not upgrading technology, etc.
BUDGET DEFINE
A budget is an estimation of revenue and expenses over a specified future period of time and is
usually compiled and re-evaluated on a periodic basis. According to Ferrell and Hirt defines
budget as “an internal financial statement that presents expenditures and revenues for a week,
month, quarter or years.”
10 REASONS WHY BUDGETING IS IMPORTANT.
1. Budgeting Helps You Control You’re Spending. Budgeting is important if you want to
keep a close eye on your daily spending habits, understand the impact of seemingly small
expenses, and take control of your spending.
2. Budgeting Keeps You on Track for Your Financial Goals. Along the same lines of
controlling your spending, budgeting is important because it keeps you on track when you are
trying to achieve your financial goals.
3. Budgeting Can Help Your Marriage. If you are married, your budget plays an extremely
important role in keeping you and your spouse on the same page. It helps you plan your
financial future together, hold each other accountable, and make sure you are fighting on the
same team.

4. Budgeting Helps You Find Financial Contentment. Financial contentment is one of the
foundational elements of good financial behavior. It keeps you from spending money that you
don’t have, and helps you to enjoy your financial journey.
5. Budgeting Keeps You from Feeling Financially Overwhelmed. If there is one thing in
particular that doesn’t mix well with overwhelm, its personal finance.
6. Budgeting Helps You Avoid or Get Out Of Debt. It’s really this simple: if you want to have
money (i.e. build wealth), then you need to stop spending it on things you can’t afford. In
particular, you need to stop hindering your monthly income by using a large portion of it to pay
somebody back (with or without interest) for things you couldn’t afford in the past.
7. Budgeting Keeps You Organized. Disorganization is another one of those words that
doesn’t mix well with personal finance. And the longer you live without a budget, the easier it
becomes for your financial life to get messy. Between all your monthly bills, debt payments, and
all your other expenses, things can just slip through the crack.
8. Budgeting Helps You Prepare For Emergencies. On the other hand, if you make a point
to save for emergency expenses in your monthly budget, then you can avoid all sorts of
financial difficulty.
9. Budgeting Helps You Save Money. In a roundabout way, I have already talked about this,
but one of the more obvious benefits of budgeting is that it helps you save money.
10. Budgeting Helps You Get (And Stay) Ahead. Ok, after everything we’ve talked about, this
might also seem a little obvious, but budgeting helps you get (and stay) ahead. Beyond that,
living on a budget can help you finally build that financial life you always imagined.
SIX BUDGETING PROCESS
1. Assess your financial resources. The first step is to calculate how much money you have
coming in each month. This might be investment income, government assistance, student
loans, employment income, disability benefits, retirement pensions or money from other
sources.
2. Determine your expenses. Next you need to determine how you spend your money by
reviewing your financial records. If your records aren't clear, consider keeping a financial diary
to track your spending. Be sure to separate the fixed expenses that you must meet (mortgage,
rent, car payments, and insurance) from variable expenses (food, clothing, entertainment,
charitable gifts). Once you see your spending patterns, you may be able to make adjustments to
certain expenses.
3. Set goals. Establish a list of the goals you wish to achieve. These can be long-term goals
like purchasing property or funding your retirement. Or they can be short-term goals such as
home improvements or car maintenance.
4. Create a plan. Once you've figured out how much money is coming in and where it's going,
you can put together a plan that matches your goals with your financial situation.
5. Pay yourself first. When you pay yourself first you simply set aside a certain amount of
money each month to go into an account that you will not touch. You can set up a separate
savings account for infrequent but anticipated expenses, such as property taxes, vacations,
automobile insurance or car maintenance. Our Jumpstart® is specially designed for these types
of savings plans.

6. Track your progress. At the end of each month, you should re-evaluate your budget.
Compare your actual expenses and income to your budget and make appropriate adjustments.
TYPES OF BUDGETING
1. Incremental budgeting. Incremental budgeting takes last year’s actual figures and adds or
subtracts a percentage to obtain the current year’s budget. It is the most common method of
budgeting because it is simple and easy to understand.
2. Activity-based budgeting. Activity-based budgeting is a top-down budgeting approach that

determines the amount of inputs required to support the targets or outputs set by the company.
3. Value proposition budgeting. Value proposition budgeting is really a mindset about making
sure that everything that is included in the budget delivers value for the business. Value
proposition budgeting aims to avoid unnecessary expenditures – although it is not as precisely
aimed at that goal as our final budgeting option, zero-based budgeting.
4. Zero-based budgeting. Zero-based budgeting is very tight, aiming to avoid any and all
expenditures that are not considered absolutely essential to the company’s successful
(profitable) operation. This kind of bottom-up budgeting can be a highly effective way to “shake
things up”.
LEVELS OF INVOLVEMENT IN BUDGETING PROCESS
1. Imposed budgeting. Imposed budgeting is a top-down process where executives adhere to

a goal that they set for the company. Managers follow the goals and impose budget targets for
activities and costs. It can be effective if a company is in a turnaround situation where they
need to meet some difficult goals, but there might be very little goal congruence.
2. Negotiated budgeting. Negotiated budgeting is a combination of both top-down and bottom-

up budgeting methods. Executives may outline some of the targets they would like to hit, but at
the same time, there is shared responsibility for budget preparation between managers and
employees. This increased involvement in the budgeting process by lower-level employees may
make it easier to adhere to budget targets, as the employees feel like they have a more
personal interest in the success of the budget plan.
3. Participative budgeting. Participative budgeting is a roll-up approach where employees

work from the bottom up to recommend targets to the executives. The executives may provide
some input, but they more or less take the recommendations as given by department managers
and other employees (within reason, of course). Operations are treated as autonomous
subsidiaries and are given a lot of freedom to set up the budget.
FINANCIAL ANALYSIS
1. Financial Statements
2. Break-even points
3. Financial Ratios
Financial Statements refer to statements which provide the major financial data about the
business.

Different kinds of Financial Statements
1. Balance sheet or Statement of Financial Position – shows the financial position/ condition
of the business in a given period. It consists of Asset, liabilities and Capital.
2. Income Statement or Statement of Comprehensive Income - The income statement

shows the result of operations for a given period. It consist of the Revenue, Cost, and
Expenses.
3. Statement of Changes in Owner’s Equity or Statement of Owner’s Equity-shows the

changes in the Capital or Owner’s Equity as a result of additional investments or withdrawals by
the owner, plus or minus the net income or net loss for the year.
4. Statement of Cash Flows- summarizes the cash receipts and cash disbursements for the
accounting period. It summarizes the cash activities of the business by classifying cash inflows
(receipt) and cash outflows (payments) into operating, investing, and financing activities. It
shows the net increase or decrease of cash in a given period and the cash balance at the end of
the period. This allows management to assess the business’ ability to generate cash and project
future cash flows.
Break-Even Analysis
A break-even analysis is a useful tool for determining at what point your company, or a new
product or service, will be profitable. It establishes the break-even point, where the small
business operation makes enough money to cover his costs but does not make any profit.
Break-even analysis may be used to produce the following figures which are useful to the small
businesses man.
1. Sales in pesos for a period, resulting in a zero net income.

2. Sales in pesos for a period, resulting in a reasonably calculated (and desired) net
Income.
3. Sales in pesos for a period, resulting in maximum net income for capacity available.
Calculating the Break-Even Point
The break-even point may be calculated using the following formulas:
1. Break-even point in units

BEPU = F/P –V
2. Break-even point in pesos

BEPP = F/1 – V/P
Where P = price per unit

F = Fixed cost
C = variable cost per unit
Formula to compute variable cost = Variable cost/ units sold
485, 000/115 = P4, 217.39

FOR EXAMPLE
An example of how the break-even point is calculated is shown below
Given:
Price per unit = P60, 000
Fixed costs =P3, 615,000

Variable cost =P485, 000
Units sold = 115
Variable cost per unit = P4, 217.39
Solution:
FORMULA
1. Break-even point in units
BEPU = F/P –V
BEPU = P3, 615,000/P60, 000-4,217.39

= 3,615, 000/55,782.61
= 64.80
= 65 units
2. Break-even point in pesos

BEPP = F/1 – V/P
BEPP = P3, 615,000/ 1-4,217.39/P60, 000

= 3,615, 000/ 1- .07029
= 3,615, 000/.9297
= 3,888, 351.08
Ratio Analysis
Ratio analysis is a useful tool in determining the financial health of the small business. It
enables the small business operator “to gauge what the financial weaknesses and strengths are
in the operation of the business so appropriate action can be taken.”
Financial ratios represent “numerical measures of an organization’s financial health.”

They may be classified as follows:
1. Liquidity ratio
2. Activity ratios
3. Profitability ratios
4. Leverage ratios
Liquidity Ratios
Liquidity ratios reveal the firm’s ability to pay debts as they become due. The most
commonly used liquidity ratios are (1) current ratio, and (2) quick ratio.
Current ratio is calculated by dividing current assets with current liabilities. Applying the
formula to Romans Vicente’s Metal craft, the result will be as follows:

Current ratio = current assets/current liabilities
= P4, 740, 000/915,000
= 5.18 times
Quick ratio is arrived at by subtracting inventories from current assets divided by

current liabilities. This formula will effectively disregard the influence of “slow-moving
inventories” in covering current liabilities. Applying the formula to Romeo Vicente’s Metal craft,
the result will be as follows:
Quick ratio = current assets – inventory/current liabilities

= P4, 740, 000 –P2, 150,000/P915, 000
= 2.35 times
Activity Ratios
Activity ratios, also referred to as turnover ratios provide a glimpse of how effectively
the firm is using its assets. The following ratios will determine activity (1) accounts receivable
turnover, and (2) inventory turnover.
Accounts receivable turnover provide an understanding of the appropriate level of

accounts receivable. This shows how many times the accounts receivable is paid off during the
latest accounting period. To compute for the accounts receivable turnover the formula used is
as follows:
Accounts receivable = total yearly sales

Outstanding accounts receivable at the end
As applied to Romeo Vicente’s Metal Craft:
Accounts receivable = P6, 900,000

1, 965, 000
= 3.51 times
The average collection period must also be calculated along with the accounts receivable:
Along with the accounts receivable turn over to determine how long the accounts
receivables are collected. The formula for average collection period is:
Average collection period = accounts receivable

Daily sales
= P1, 965, 000

P6, 900, 000/360
= P1, 965, 000

19, 166.66
= 102 days

The average collection period will be more meaningful if it is compare with the following:
1. The previous years’ collection period of the firm and

2. The average collection period for the industry where the small firm belongs.
The inventory turnover ratio measure the number of times that the average peso invested in
inventory turns over in a year. Normally, the higher inventory turnover there is, the higher the
opportunity for profit exists. The method of calculating the inventory turnover is as follows:
Inventory turnover = cost of goods sold

Inventory beginning + inventory end/2
Applying the formula to Romeo Vicente’s Metal craft, the result will be as follows:
Inventory turnover = 2, 600,000

P3, 500,000 + 1, 100,000/2
= 2, 600,000
4, 600,000/2
= 2, 600, 000
2, 300, 000
= 1.13 times
Profitability ratios
Profitability ratios consist of a group of ratios which indicate the profitability of the firm.
The ratios show “the combined effects of liquidity, asset management, and debt management
on operating results.”
The most important profitability ratios, the formula used and their meanings are the
following.
1. profit-on-production ratio = gross margin/sales

(The ratio indicates the total margin available to cover other expenses beyond
Cost of goods sold, and still yield a profit).
2. return-on-sales ratio = net profit/sales

(This shows how much after-tax profits are generated by each peso of sales).
3. return-on-assets ratio = net profit/total assets

(This measures the rate of return on the total assets utilized in the company)
4. return-on equity ratio = net profit/net worth

(The measures the rate of return on the book value of owner’s total
Investment in the firm).
When applied to Romeo Vicente’s Metal Craft, the following results will be derived:

1. profit-on-production ratio
= Gross margin/sales
= P4, 300,000/P6, 900,000
= 0.62 or 62%
2. return-on-sales ratio
= net profit/sales
= P 350,000/6,900, 000
= .05 or 5%
3. return-on-assets ratio
= net profit/total assets
= P350, 000/P12, 470,000
= 0.0028 or 2.8%
4. return-on-equity ratio
= net profit/net worth
= P350, 000/7,555,000
= 0.0463 or 4.6%
Leverage ratios
Leverage ratio refers to a group of ratios designed to assess the balance of financing
obtained through debt and equity source. The ratios show the extent to which borrowed money
is used to obtain the assets of a business.
The most common leverage ratios used are: (1) debt ratio, and (2) debt-equity ratio. The
debt ratio compare the total liabilities of the firm to the total assets. The debt-equity ratio
compares debt to equity.
The ratios, with formula and application to Romeo Vicente’s Metal Craft are as follows:
1. Debt ratio = total liabilities/total assets
= P4, 915,000/P12, 470,000

= 0.3941 or 39%
2. Debt-equity ratio = total liabilities/equity

= P4, 915,000/P7, 555,000
=0.6505 or 65%

READ:

1. Why financial planning important in the business activity?
B. Compute for the following:

A. BEPU and BEPP
Given:
Price per unit = P70, 000
Fixed costs = 4, 200,000
Variable cost = 475,000
Units sold = 220
Variable cost per unit =?
B. CURRENT RATIO
Given:
Current assets = P4, 860, 000
Current Liabilities =P880, 000
C. QUICK RATIO
Given:
Current Assets = P4, 860,000
Inventory = 2, 140,000
Current Liabilities = 880,000

MODULE 8
THE BUSINESS PLAN
OVERVIEW:
The company overview is the part of your business plan that gives the basics and
background of your business. It’s the foundation on which you will build the rest of your
business plan.
A company overview provides the reader of your business plan with basic background
information about your company so they have an understanding of what you do, who the
management team is, and what customers your business serves.
The company description is the second piece of a business plan, falling right after the
executive summary. Similar to the executive summary, your company overview will be short and
succinct. Your reader needs to have a grasp on what your business does and who your
customers are, even if they have limited time.
LEARNING OUTCOMES:
A. Discuss the preparation of a business plan

B. Identify the purpose of business plan
C. Explain the different plan.
d. List down the components of each part of the business plan
BUSINESS PLAN DEFINE
A business plan is a written document that describes in detail how a business — usually
a startup — defines its objectives and how it is to go about achieving its goals. A business plan
lays out a written roadmap for the firm from each of a marketing, financial, and operational
standpoint.
OVERALL PURPOSE OF BUSINESS PLAN
1. Maintaining Business Focus. A business plan contains all of your product information,
manpower and financial estimates and your plans for the future. As you look to grow your
business, you should refer to your business plan, according to the Small Business
Administration.
2. Securing Outside Financing. As you start your business, and even as your business moves
along, you will constantly need to concern yourself with financing your business. Financing
concerns begin with the start-up costs and then continue with business expansion and new
product development.
3. Fuelling Ambitions and Mapping Growth. Starting your own business can seem like a
daunting task if you have never done it before. When you break down your business into a
business plan, it can motivate you because it presents the business in an organized fashion,
according to the University of Colorado. Following a business plan can help you to map out the
growth of your company and give you confidence when you need it.

4. Enlightening Executive Talent. As your business grows, you will need to consider adding
executives to your team that can help move your company in the right direction. A business plan
will help executive talent see your business vision and determine whether or not your company
is a worthwhile investment of time and resources.
THE PARTS OF THE PLAN
Here are the key pieces to a solid Business Plan.
Title page or Cover page
The title, or heading, of the plan, and very brief description of the business.
The date
The name of the owner
The company name and location
A copyright or confidentiality notice
Table of Contents
A list of the individual sections and their page numbers, starting with the Title Page and
ending with a section for Special Materials (references, etc.).
Executive Summary/Overview
A brief, but focused statement (a few sentences or paragraphs) stating why the business will
be successful. This is the most important piece of a Business Plan because it brings everything
together.
Background of the study: History, Current conditions, the concept, over all Objectives,
Specific objectives.
Description/ Definition of the Company
A close look at how the different components of the business fit together, such as:
• Nature of business
• Products and services offered by the company
• Nature of the Industry
• Opportunities available that can be exploited by services and products to be
offered
• The rationale for the creation of the company ‘=
• The rationale for the catering to a specific Market
Information about the nature of the business and the factors that should make
Successful.
Special business skills and talents that provide the business with a competitive advantage, such
as a unique ability to satisfy specific customer needs, special methods of delivering a product or
service, and so on.

Market Analysis/ Market Research
Identifies specific knowledge about the business and its industry, and the market (or
customers) it serves. An analysis that identifies and assesses the competition. Overall Market,
competitive Factors, other market influences, marketing orientation, market strategy and
contingency plans.
1. Situational analysis and target markets;

2. Marketing objectives and goals
3. Marketing strategies
4. Marketing tactics
5. Schedule and budgets
6. Financial data and control
• Situational analysis is a detailed description of the environment or the company

and the product, product line, or services at the time the plan will be initiated and
implemented.
• Marketing objective must be stated. To attain the objective, a goal or goals
must be established like being able to sell to a certain area or group of
establishments.
• Strategies refer to the actions taken to reach the goals and objectives. An
example of a strategy is direct marketing.
• Marketing tactics refer to how strategy will be carried out. An example is
recruiting sales agents.
• A marketing plan schedule must be prepared showing in detail every marketing
activity and how much money must be allotted.
• Financial date section must contain the following:
Sales estimates on a monthly basis
Cash flow requirement
Development and Production plan
This portion of the business plan will show how the proposed products will be developed
before it is finally scheduled for production. A description of additional work needed or any other
activity must be provided.
Manufacturing Plan
The quantity and quality of the company’s product or service as described in the
marketing plan will be produced through a well-conceived manufacturing plan. This aspect
constitutes an important portion of the business plan. The manufacturing plan includes a
description of the following: manufacturing facilities, location, size, rentals, purchases, required
equipment, equipment costs, labor requirements and costs, inventory requirements and control,
and others.
Distribution and service plan
The distribution and service plan provides the steps required to effectively bring the
product or service to the market. Pricing, sales, service policies, market penetration, and timing

are indicated. Also included are specific statement about when anticipated events are to take
place, and the assignments of specific responsibilities individual.
A detailed description of the product or service – from the customer’s point of view:
• How they will benefit from the product or service?
• Specific needs or problems that the business can satisfy or solve,
focusing especially on areas where the business has the strongest skills
or advantages
Organization Plan
The organizational plan indicates how the total job is broken down into man-size jobs
which are provided with specific job titles. Each job title comes with a description of specific
duties, and to whom the person assigned to the job will report. However, in writing the
organizational plan as a part of the business plan, only the description of the exact duties and
responsibilities of each of the key members of management team must be provided. The
functions must be matched with the qualifications of the person assigned to do a specific job. In
this regard, the qualification of the management team must be described.
Development Schedule
This portion of the business plan will provide information on the series of activities
required to make the business idea a fully operational undertaking. Each stage must indicate
the amount of time required for completion. The use of a Chart will depict the stages in the
schedule.
Financial plan
The financial plan is a document indicating the financing requirements necessary to

support a given set of plans in other areas.” Its main components are the projected income
statement and balance sheet, supported by a cash budget, personal budget, production budget,
purchasing budget, and break-even analysis. The projected income statement is a forecast of all
items in the income statement of the firm for a given period. The cash budget is a projection of
future each receipts and cash disbursement of the firm over various intervals of time.
Explains or projects how the company is expected to perform financially over the next
several years. (Sometimes called a “pro-forma projection.”) Because investors and lenders look
closely at this projection as a measure of your company’s growth potential, professional input is
strongly recommended.
Funding
• The amount of current and future funding needed to start or expand the business.
Includes the time period that each amount will cover, the type of funding for each (i.e.,
equity, debt), and the proposed or requested repayment terms.
• How the funds will be used: For equipment and materials? Everyday working capital?
Paying off debt?

Appendix
Provides specific information that certain individuals (such as creditors) may want review. It
allows the addition and/or deletion of information as needed, such as:
• Credit histories (personal & business)
• Resumes of key personnel and partners
• Letters of reference
• Details of market studies
• Copies of licenses, permits, patents, leases, contracts, etc.
• A list of business consultants, attorneys, accountants, etc.
READ:

1. It is the “battle plan” of the technopreneur in running his business and effectively competing in
Its industry.

a. Business plan
b. Executive summary
c. Strategic direction
d. Financial features
2. It is usually a very short document consisting of one to three pages that presents the general
picture of the entire business plan.
a. Business plan
3. It briefly describes the overall strategic (or long-range) direction of the company the general
picture of the entire business plan.
a. Business plan
4. This states expected revenues and profits for this year, next year, and for five years in the
future.
a. Business plan
5. It explains when and how the investors will get their money out of the business.
a. Financial Arrangement/Exits
b. Concepts
c. Market analysis
d. SWOT Analysis

COURSE GRADING SYSTEM
Class Standing 70%

• Assessment
• Activities
• Case Study
• Quizzes
Midterm / Final Examinations 30%

100%
Midterm Grade + Final Term Grade = FINAL GRADE

2
REFERENCES:


Comp 2033 Technopreneurship

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Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

NIMFA M. DEL ROSARIO, MBE

1 | COMP 20233 TECHNOPRENEURSHIP

2 | COMP 20233 TECHNOPRENEURSHIP

3 | COMP 20233 TECHNOPRENEURSHIP

4 | COMP 20233 TECHNOPRENEURSHIP

5 | COMP 20233 TECHNOPRENEURSHIP

6 | COMP 20233 TECHNOPRENEURSHIP

After successful completion of this modules, you should be able to:

A. Describe the technopreneurship and entrepreneurship, cyberpreneurship

Integration of technology, innovation and entrepreneurship. Act of turning something into

Technopreneurship helps the unemployed person to be employed, by creating or

As nouns the difference between entrepreneur and technopreneur is that entrepreneur is a

7 | COMP 20233 TECHNOPRENEURSHIP

KEY CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURS

1. Entrepreneurs excel at identifying business opportunities and staying focused on

TEN D’S OF AN ENTREPRENEUR

8 | COMP 20233 TECHNOPRENEURSHIP

Cyberpreneurship is a business activity and business by using improved computer technology,

1. Learning to See Possibilities Everywhere. An entrepreneur has to develop the skill

9 | COMP 20233 TECHNOPRENEURSHIP

➢ Perceive opportunities in the environment

INTRAPRENEUR – he is an entrepreneur within an existing organization, referred as the

10 | COMP 20233 TECHNOPRENEURSHIP

11 | COMP 20233 TECHNOPRENEURSHIP

• Promotes self-help and employment

SUMMARY OF VARIOUS ECONOMIES VIEW OF ENTREPRENEURSHIP

12 | COMP 20233 TECHNOPRENEURSHIP

2. What is the main reason that entrepreneurships fail?

3. What factors will make the company succeed?

B. MULTIPLE CHOICES: Encircle the correct answer

13 | COMP 20233 TECHNOPRENEURSHIP

14 | COMP 20233 TECHNOPRENEURSHIP

• Better teamwork and team bonding;

15 | COMP 20233 TECHNOPRENEURSHIP

16 | COMP 20233 TECHNOPRENEURSHIP

RECOGNIZING CREATIVE TECHNIQUES

2. Negative brainstorming - It uses brainstorming to generate bad solutions to the problem

17 | COMP 20233 TECHNOPRENEURSHIP

7. Metaphorical thinking - A metaphor is a thinking method which connects two universes of

The creation, development and implementation of a new product, process or service,

18 | COMP 20233 TECHNOPRENEURSHIP

2. Disruptive Innovation - involves applying new technology or processes to your company’s

BENEFITS OF INNOVATION IN BUSINESS

IMPORTANT ROLE OF INNOVATION

19 | COMP 20233 TECHNOPRENEURSHIP

4. Reduced sickness, poverty and hunger - As already mentioned, developing countries

5. Environmental sustainability - Sustainability and environmental issues, such as climate

IMPORTANCE OF INNOVATION IN ENTREPRENEURSHIP EDUCATION, IDEAS

Innovation and education

Money and innovation

Idea execution and innovation

Patience, persistence and innovation

20 | COMP 20233 TECHNOPRENEURSHIP

1. Be action oriented - a cross-disciplinary learning-by-doing approach to problem solving is

IMPORTANCE OF CREATIVITY AND INNOVATION TO:

21 | COMP 20233 TECHNOPRENEURSHIP

FACTORS SUPPORT CREATIVITY AND INNOVATION

1. Management practices that support creating a culture of innovation.

Factor as part of work environment

• Challenging Work: Challenging assignments give employees an opportunity to work

• Managerial Encouragement: A boss should set and communicate clear innovation