ENTREP REVIEWER

Entrepreneurship is the process by which individuals pursue opportunities without

regard to resources they currently control.

Father of Entrepreneurship - Joseph Alois Schumpeter is regarded as the father of

entrepreneurship. He introduced the concept of entrepreneurship

● Concept of Entrepreneurship

1. Risk Bearing Concept - Starting a new enterprise always involves risk. The
enterprise may earn profit or incur loss. The entrepreneurs should be bold enough to
assume this risk.

2. Innovation - refers to introduction of something new in the economy, ex. a new

product or a new method of production.
The innovations may be related to new products, new technology, new sources of raw
material, new market or new organisation.

3. Vision - To be successful, the entrepreneur should have a clear vision of his new
venture. However, to turn the idea into reality, a lot of resources and employees are
required

4. Organization - since entrepreneurship involves employees, it has an ability to

organize enterprise.

● What are the 4 Types of Entrepreneurship? K

It is classified into the following types:
a.) Small Business Entrepreneurship-
These people run or own their own business and hire family members or
local employee. For them, the profit would be able to feed their family and not
making 100 million business or taking over an industry. They fund their business
by taking small business loans or loans from friends and family.

b. ) Scalable Startup Entrepreneurship-

This start-up entrepreneur starts a business knowing that their vision can
change the world. They attract investors who think and encourage people who
think out of the box. The research focuses on a scalable business and
 experimental models, so, they hire the best and the brightest employees. They
require more venture capital to fuel and back their project or business.

c.) Large Company Entrepreneurship-

These huge companies have defined life-cycle. Most of these companies
grow and sustain by offering new and innovative products that revolve around
their main products. The change in technology, customer preferences, new
competition, etc

d.) Social Entrepreneurship-

This type of entrepreneurship focuses on producing products and services
that resolve social needs and problems. Their only motto and goal is to work for
society and not make any profits.
● Characteristics of Success Entrepreneurs

⮚ Passion for the business

⮚ Product / Customer focus
⮚ Tenacity Despite Failure
⮚ Execution Intelligence

● Entrepreneurial Process

Step 1: Deciding to become an Entrepreneur

Step 2: Developing successful business ideas

Step 3: Moving from an idea to an entrepreneurial firm

Step 4: Managing and growing the entrepreneurial firm

Manager is their role in the organization.

A manager, on the other hand, is not an owner of an enterprise. Instead, he is the one
that is responsible for the management and administration of a group of people
or a department of the organization. His day to day job is to manage his employees
and ensure the organization runs smoothly.
An entrepreneur is the owner of the company whereas a Manager is the employee
of the company. Entrepreneur is a risk taker; they take financial risk for their
enterprise. The entrepreneur has a vision and focuses on achievements and profit.

Entrepreneur is a one-man show that runs entrepreneurship. However, such a person

usually has some unique attributes that allow him to be successful in his endeavors. He
is essentially an initiator and a leader. He brings business ideas to start his venture.

Fortunately, all managers can learn to solve problems more effectively by using the 4
step process:

1. Identify and Define the Problem - once managers see a potential issue, they think
through whether this problem they can solve and whether it will make a critical impact
on the team or organization.

2. Analyze the Problem – managers are able to define the root cause of the issue so
that once its been resolved, its unlikely to recur.

3. Develop Solutions – instead, managers use techniques like brainstorming ideas,

and assess the situation and design a long-term solution.

4. Plan and Act – once the best solution has been identified, a good manager
develops a solid implementation plan. This plan should include steps that will be taken
to move forward, as well as contingency plans that will help the manager handle
potential solutions.

Skills that Entrepreneurs possess that make them particularly good problem
solvers:
a. Critical thinking – the entrepreneur analyses the layers of a problem to find the
core of an issue facing a business.

b. Communication skills – entrepreneurs skills use to pool resources for the purpose
of investigating solutions leading to innovative problem solving and competitive
advantage.

c. Decisiveness – Entrepreneurs must be productive even in the face of risk. They

ask what problem needs to be solved, think about solutions, and then consider the
means necessary to implement an idea.
d. Ability to analyze Data – entrepreneur involves understanding what has happened
and what is happening

THE STARTING POINT TO ENTREPRENEURIAL SUCCESS

1. Start to be on your own

2. Explore the business environment
3. Be in control
4. Have a good accountant or a trusted financial adviser
5. Seek the advice of professionals

A business organization is a collection of people working together to achieve a

common purpose related to their organization’s mission, vision, goals and objectives,
and sharing a common organizational culture.

Types of Business

1. Service Business - a service type of business offer professional

skills, expertise, advice, and other similar products.
Ex. 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. A merchandising business sells a product
without changing its for.
Ex: grocery stores, convenience stores, distributors and
other reseller

3. Manufacturing Business- this type of business buys products with

the intention of using them as materials in making a new product.

4. Hybrid Business - are companies that may be classified in more

than one type of business.
 FORMS OF BUSINESS ORGANIZATION

A. Sole Proprietorship - these firms are owned by one person, usually the individually
who has day-to-day responsibility for running the business.

B Partnership - in a partnership, two or more people share ownership of a single

business who bind themselves to contribute :
Money, property or industry

C. Corporations - these firms has a life of its on and does not

dissolve when ownership changes.

D. Cooperative - is a legal entity owned and controlled by its members.

Types of Venture

An entrepreneur has several ways to start a new venture. 3 forms available:

a. Start up

- is a company that recently formed

- It is a process where the entrepreneur creates a completely new business
starting from scratch

Adv:
- Freedom of making own decision
- Ability to make changes to business
- Will not affect the reputation of the business as it is a new venture.

Dis.

- Time consuming and costly

- No ready customers
- Difficulty of obtaining loans from financial institutions

B. Buying an existing business

- Buying or acquiring either the shares or all of the assets of an existing

company or businesses
- It is the safest and most effective way for entrepreneurs to go into
business

Adv:
- Immediate operations
 - Easier financing
- Existing customer

Dis.
- Costly to buy
- Obsolete goods
- Problem of the business

C. Franchising

- An agreement in which the owner of a trademark, trade name or

copyright has licensed others to use and sell its goods or services.

Adv.
- Brand name appeal
- Proven track record
- Training and guidance provided

Dis.

- Franchise fees

A good business plan guides you through each stage of starting and managing your
business. You’ll use your business plan as a roadmap for how to structure, run, and
grow your new business. It’s a way to think through the key elements of your business.

Business plans can help you get funding or bring on new business partners. Investors
want to feel confident they’ll see a return on their investment. Your business plan is the
tool you’ll use to convince people that working with you — or investing in your company
— is a smart choice.

Before venturing into the field of business, the new entrepreneur should look
into the following factors:
1. Know your product or service
2. Analyze the market potential
3. Determine the marketing strategy
4. Know the competitors
Environmental scanning is the process of gathering information about events
and their relationships within an organization's internal and external environments. The
basic purpose of environmental scanning is to help management determine the future
direction of the organization.
Important Factors for Environmental Scanning

Before scanning the environment, an organization must take the following actors
into consideration:
● Events – These are specific occurrences which take place in different
environmental sectors of a business. These are important for the functioning
and/or success of the business. Events can occur either in the internal or the
external environment. Organizations can observe and track them.
● Trends – As the name suggests, trends are general courses of action or
tendencies along which the events occur. They are groups of similar or related
events which tend to move in a specific direction. Further, trends can be positive
or negative. By observing trends, an organization can identify any change in the
strength or frequency of the events suggesting a change in the respective area.
● Issues – In wake of the events and trends, some concerns can arise. These are
Issues. Organizations try to identify emerging issues so that they can take
corrective measures to nip them in the bud. However, identifying emerging
issues is a difficult task. Usually, emerging issues start with a shift in values or
change in which the concern is viewed.
● Expectations – Some interested groups have demands based on their concern
for issues. These demands are Expectations.

Components of Environmental Scanning

1. Internal Environmental Components- The components that lie within the
organization are internal components and changes in these affect the general
performance of the organization. Human resources, capital resources and
technological resources are some of the internal environmental components.
2. External Environmental Components: The components that fall outside the
business organization are called external environmental components. Although
the components lie outside the organization, they still affect the organizational
activities. The external components can be divided into microenvironmental
components and macro environmental components.
Importance of Environmental Scanning

● Goal Accomplishment: The objectives of an organization cannot be

fulfilled unless it adapts itself to the environmental changes. One has
to adjust the strategies to fit in the changing demands of the
environment.

● Threats and Weakness Identification: For an organization to grow, it

must minimize its threats and identify the weaknesses. This is made
possible with the help of environmental scanning with which better
strategies can be developed.

● Future Forecast: Environmental changes are often unpredictable. An

organization cannot anticipate all the future events but based on the
analysis, it can make better strategic decisions in the future. Hence,
environmental analysis helps to forecast the prospects of the business.

● Market Knowledge: Every organization must be aware of the ongoing

changes in the market. If it fails to incorporate strategic changes due to
changing demands, it will not be able to achieve its objectives.

● Focus on the Customer: Environmental scanning and analysis make

an organization sensitive towards the changing needs and expectations
of the customer.

● Opportunities Identification: With the analysis of the current

environment an organization will be able to identify the possible
opportunities and take necessary steps

The following factors are contributory to the development of customer

satisfaction.

1. Business Location for Small Entrepreneurs

A retail outlet would need a site that is convenient to prospective customers
in terms of parking space or availability of transportation. A restaurant or an
entertainment center would need ample parking area where customers would not worry
on where to leave their cars while enjoying their stay. The same could be true with
grocery store.
 In choosing the location, the following factors must be looked into by the
entrepreneur.

a) Rent and Space

b) Terms of Lease Agreement
c) Type of Goods or Merchandise
d) Income level of Prospective Customer
e) Prospective Sales Volume
f) Municipal or City Ordinances including taxes and fees
g) Location of the Areas
2. Location for Small Industrial Plant or Manufacturing Facilities

Environmental Factors in locating a manufacturing plant location is a great factor

in the investment of funds and its profitability in the long run. The industrial facility must
be suitable to the kind of operation . It must comply with government zoning regulations
related to pollution and environmental laws.

The following are important factors to consider:

a) Land Area
The contour of the land, its size , and shape must be suitable to the plant site. It
must be free from floods, or other environmental hazards that will disturb operation. The
assessed value of the property must be reasonable as expenses to start-up of operation
requires a lot of money. The assessed value is also a factor in the payment of taxes.
b) Facilities for Expansion
The land area must have ample space for plant expansion and provisions for
parking facilities for customers and employees. Anticipation of growth and expansion in
plant facilities should be considered as additional site in the future may create a
problem.
 c) Power and Utilities
Availability of power supply and the cost of electricity involve in the operation are
great factors in the production of goods. Continuous power supply is needed to keep the
plant in operation for its target production. Water supply is also needed and the proper
disposal of waste must be put in place to comply with environmental laws.
d) Building and other Utilities
The building must be within the restrictions code of the municipality or city. The
utilities like canteens and other employee’s facilities must be put in place in compliance
with the labor code. Sidewalks and gutters are important component in employee’s
safety while in the plant site. Fire safety and hazards signs are mandatory requirements.
e) Plant site accessibility
The plant site must be accessible to public or service transport for its employees
and valued customers. It must be near highways or expressways to provide ease in
travel time and reduce cost in the transport of raw materials and finish product. Delay in
transport system are added cost that must be avoided.

A target market is a group of consumers or organizations most likely

to buy a company’s products or services. Because those buyers are likely to want or
need a company’s offerings, it makes the most sense for the company to focus its
marketing efforts on reaching them. Marketing to these buyers is the most effective and
efficient approach. The alternative - marketing to everyone - is inefficient and expensive.

Why have a Target Market?

For your business to thrive, you need to know who your customer is. Knowing
your customers will help you to target customers who are willing to pay for your product
or service. This is a much more effective and affordable way to reach your customers
and generate business. You’ll be wasting resources if you aim too broadly, or find out
too late that there aren’t enough customers for your product or service.

By understanding your market you can promote your product or service more
effectively to the right customer group.

1. Research your Market

 To define your target market effectively you’ll need to do some research.
Gathering statistics and other market research data helps you to understand your
potential customers and their needs and make better marketing decisions.

2. Segment your Market

Work out if your market is large enough and accessible. Then segment the
market into groups of buyers with similar preferences and buying habits. For example,
the athletic shoe industry is broken up into several segmented groups – first by gender,
then by the activity or sport. Once you’ve identified your market segments, you can
define your ideal customer for each segment.

3. Define your target Market

Then target your marketing efforts to explain how your product and service will fit
into their lifestyle and how it best meets their needs.

What Factors Are Important In Selecting A Target Market? 

Selection of the target market is a crucial process. That's because a business is

required to consider a lot of factors in order to decide what segments of the market it
should focus on making maximum profit. Here's a list of the top factors that are
considered: 

● Segment size 
The very first factor that affects the selection of the target market is
"segment size" in terms of unit and revenue sales.  

● Competitors 
Every business gets its share of competition. Even if you start a business
that's one of its kind, if it's a hit, you risk a competitor entering the same
marketplace to try to make the most from the lucrative market. 

● Demographics 
Next comes the data regarding the age, gender, location, preferences and
other such elements related to your target audience. Figuring out who requires
your product or service and who would be interested in buying them is crucial
when deciding your target market. 

● Substitute products 
Knowing what products your target customers would use in the absence of
your product. These products or substitutes could threaten the profitability of your
business, especially if they are sold at a lower price. 
 ● Distribution channels 
Lastly, figure out how easy it would be to gain access to the appropriate
distribution channels. 

QUIZZES
Refers to a legal entity owned and controlled by its members.

- Cooperative
Forms of business organization that is simple and easy to organize.

- Sole Proprietorship
Refers to a business organization that composed of two or more individuals.

- Partnership
These firms have a life of its own and does not dissolve when ownership changes.

- Corporation
What type of entrepreneurial business, produce the product they sell?

- Manufacturing
A type of business that sells a product without changing its form.

- Merchandising
A type of business that offer professional skills, expertise, advice and other similar
products.

- Service Business
A type of business that buys products with the intention of using them as materials in
making a new product.

- Franchising
It is a process where the entrepreneur creates a completely new business starting from scratch.

- Start Up Business