Entrepreneurship Introduction (0)

Entrepreneur
-the word " entrepreneur" FROM French verb "Enterprendre”, which means to undertake.
-an entrepreneur is defined as "person in effective control of commercial undertaking; one
who undertakes a business or an enterprise".
-entrepreneur is an innovative person who maximizes his profits by following new strategies
or venturing into new products or services.

Entrepreneurship
-entrepreneurial activities today have become very important and are keys to economic
development.
-growth, industrial development, including employment generation, depend upon
entrepreneurial behaviour of a country

Relevance of Entrepreneurship To an Organization

1. Development of managerial capabilities

-the greatest significance of entrepreneurship lies in the fact that it helps in identifying and
developing managerial capabilities of entrepreneurs.

2. Creation of organizations.
-Entrepreneurship results in the creation of organizations when entrepreneurs assemble and
coordinate physical, human and financial resources and direct them towards achievement of
objectives through managerial skills.

3. Improving standard of living

-by creating productive organizations, entrepreneurship help in making a wide variety of
goods and services available to the society which results into higher standard of living for the
people.

4. Means of economic development

-entrepreneurship involves creation and use of innovative ideas, maximization of output
from given resources, and development of manorial skills. All these factors are essential to
the economic development.

Common Competencies in Entrepreneurship

1. Decisive
- an entrepreneur must be firm in making decisions
2. Communicator
- an entrepreneur must have a convincing power.
3. Leader
- an entrepreneur must have the charisma to be obeyed by his employees.
4. Opportunity seeker
- an entrepreneur must have the ability to be the first to see business chances.
5. Proactive
- controlling a situation by making things to happen or by preparing for possible future
problems.
6. Risk Taker
- they have the courage to pursue their business ideas.
7. Innovative
- the entrepreneurs have big business ideas and they do not stop improving and thinking of
new worthwhile ideas for their business.

Core Competencies in Entrepreneurship

 Economic and dynamic activity

 Innovation
 Profit Potential
 Risk Bearing

Where can you work

1. Work for a business
 Type--Retail, service, manufacturing, or resource
 Franchise or non franchise
 Ownership --Properitorship, partnership, corporation, cooperative
 Position-Clerk to a manager...to a vice- president..and anything in between.

2. Run your own business

3. Teach business courses

Introduction to Entrepreneurship (1)

Factors Affecting Entrepreneurship

1. Personality Factors which includes:

a. Initiative
- which means doing things even before being told.
b. Proactive
-which means he can classify opportunities and seize it.
c. Problem Solver
- which means he can retain good relations with other people
d. Perseverance
- meaning he will pursue things to get done regardless of challenges.
e. Persuasion
- means that he can entice people to buy even if they don’t.
f. Planner
- meaning he makes plan before doing things and do not fail to monitor it.
g. Risk-taker
- which means that he is willing to gamble but he will calculate it first.

2. Environmental Factors
-which include political, climate, legal system, economic and social conditions and market
situations.
 Types of Entrepreneurs

1. Innovative entrepreneur
-they are those who always make new things by thinking of new ideas. They have the ability
to think newer, better and more economical ideas.

2. Imitating entrepreneurs
-they are those who don’t create new things but only follow the ideas of other
entrepreneurs.

3. Fabian entrepreneurs
-they are skeptical about changes to be made in the organization. They don’t initiate but
follow only after they are satisfied.

4. Drone entrepreneur
-they are those who lives on the labor of others. They are die-hard conservatives even ready
to suffer the loss of business.

5. Social entrepreneurs
-they are those who initiate changes and drive social innovation and transformation in the
various fields such as education, health, human rights, environment and enterprise
development.

Recognize a Potential Market (3)

POTENTIAL MARKET
-a potential market is the part of the market you can capture in the future.
-your potential market includes the groups that do not currently your customers but could
become customers in the future.
-they might become your customers because you expand your available products or
services, or because you begin marketing your current products and services in a new way
and to new groups of buyers.

Market problems
-are the target market's stated or silent problems.
-this could refer to existing inefficiencies, awkward workflows or non-optimal solutions. The
key to finding a market problem is to listen for frustrations, or “if only” statements, that
arise during interviews.
-businesses should start by knowing the consumer's interests, desires and needs. It’s easier
to sell what consumers want and need than try to sell something they don’t see the benefit
in buying. In a fast moving world, it should be a competitive edge having the chance of
monitoring the market, detecting what can be a source of a profitable new business.
-market needs a marketing concept that relates to the functional or emotional needs or
desires of a target market.

Identify the Market Problem

-In building product, entrepreneurs can meet customers’ needs. In identifying market
problem, the following can be considered:
1. Existing customers
2. Target market users
3. Prospects

How to evaluate market problems?

1. Consider if the market problem is urgent.

2. Evaluate if the market problem is pervasive or easily diffused.
3. Determine if the buyers will pay to have this problem solved.

The entrepreneurial process of creating a new venture is presented in the diagram below.
(Aduana, 2017)

Creation of Entrepreneurial Ideas >>> Opening of Entrepreneurial Venture >>>

Identification of Entrepreneurial Opportunities

Opportunity Seeking
-is the process of spotting, evaluating and pursuing relevant and sustainable revenue and
profit generating activities in the market place.

SEEKING THE OPPORTUNITY

Some of the sources of opportunities:

1.Changes in the environment

-Entrepreneurial ideas arise when changes happen in the external environment.
-External environment refers to the physical environment, societal environment, and
industry environment where the business operates.

2. Technological Industry and Advancement

-A person with entrepreneurial interest sees possibility of business opportunities in any new
discovery or because of the use of latest technology.

3.Government thrust programs, and policies.

-The priorities, projects, programs, and policies of the government are also good sources of
ideas.

4. People’s interest
-The interest, hobbies and preferences of people are rich sources of entrepreneurial ideas.

5. Past experiences
-The expertise and skills developed by a person who has worked in a particular field may
lead to the opening of related business enterprise.

Forces of Competition Model

-It is also known as the “five forces of competition,” An industry environment is a

competitive environment. Regardless of what product or services you have, competition is
always present.
Competition
-it is the act or process of trying to get or win something

These are the five forces competing within the industry:

- Buyers
- Potential new entrants
- Rivalry among existing firms
- Substitute products
- Supplier

Buyers
-The buyers are the one that pays cash in exchange to your goods and services.
-The buyer has a strong and magnified bargaining power. The threat of its bargaining power
will be less if the following factors notice:

a. There are several suppliers available in the market.

b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
e. The buyer purchases large portions of the seller’s product or services.

Potential New Entrants

-A new entrant is defined as the one who enters something. For example, the level of capital
requirements, if the business requires huge capital, new entrants should decline to join the
business. This gives a threat to the business. This can be notice if there is the presence of the
following factors:

a. Substantial capital requirement.

b. Strict government policy.
c. Difficulty in accessing distribution channels.
d. Economies of scale. (savings in costs gained by increase in production)
e. High cost of product differentiation(what makes your product more attractive to
consumers)

Rivalry among Existing Firms

-Rivalry is a state or situation in which people or groups are competing with each other. For
example it depends on the Marketing strategy of your competitor, like giving freebies and
special offers.

Substitute Products
--Substitute means anything that takes the place or function of another. For example the
consumers decide to use margarine as a substitute for butter. In case the price of butter
increases, preferably the consumer will gradually switch to margarine. A substitute product
can give a big threat in the industry environment if the following factors are notice:

a. Switching cost is low.

b. Preferences and tastes of the customers easily change.
c. Product differentiation is highly noticeable
d. The quality of substitute products dramatically improves.
e. The price of substitute product is substantially lower.
Suppliers
-The Suppliers are the one that provide something that is needed or wanted. For example if
the supply and services being offered is unstable or keep. The intensity of the threat is
strong in this kind of the competitive force in the industry.

*By identifying and pursuing potential markets, you are not increasing your market share for
today; you are ensuring your market share will increase for the future.

Recognize and Understand the Market (3)

Value Proposition
-is a business or marketing statement that summarizes why a consumer should buy a
company’s product or use its service. This statement is often used to convince a customer to
purchase a particular product or service to add a form of value to their lives.

In creating Value Proposition, entrepreneurs will consider the basic elements.

- Target customer
- Needs/opportunity
- Name of the product
- Name of the enterprise

Importance of a Value Proposition

1. The development of a value proposition is a vital part of a company’s business strategy.

Since the proposition provides a company with a method to influence the decision-making of
customers, it is frequently displayed on the company’s marketing materials, such as a
website.

2. The value proposition is a powerful tool to drive sales and build a customer base.
Additionally, a perfect and compelling value proposition can advance the effectiveness of
the company’s marketing strategies.
Generally, it is regarded as the most effective and wide-reaching marketing activity.
is it?

How to Create a Value Proposition

1. Know your customers

-Before creating your value proposition, you must analyze the market and potential
customers. Identify your target customers and target market segment to understand their
desired benefits.

2. Understand your costs and benefits

-Identify and assess the benefits delivered by your company and its products or services,
along with the costs incurred to provide them. It is important to do this because the value to
your customers is essentially the difference between the benefits and costs of your product
or service.

3. Don’t forget about your competitors

-After the analysis of target customers and your own company, evaluate the competitive
landscape in the market.
-Determine the strengths and weaknesses of your major competitors and identify ways you
can differentiate your business from them.

4. (KISS) keep it short and simple

-Don’t forget that an effective value proposition is clear and concise. Your target customers
must quickly grasp the message you want to convey. It should not exceed two or three
sentences

5. Make your proposition visible and appealing on all marketing materials (e.g., website). -
Remember that if you have created a powerful value proposition, but no one can see it, the
effect of the proposition will be zero.

What is it?

UNIQUE SELLING PROPOSITION

-It refers to how you sell your product or services to your customer. You will address the
wants and desires of your customers. A marketing concept that persuade your target
market.

UNIQUE - clearly sets you apart from the competition

SELLING- it persuades another to exchange money for a product or service
PROPOSITION- It is a proposal or offer suggested for acceptance

How to write a Unique Selling Proposition (USP)

- Identify and rank the uniqueness of the product.
- Be specific
- Keep it short and simple

Commonly used Methods for Segmenting the Market

A. Target Market

1. Geographic segmentation
-Variables to consider: climate Culture, dominant ethnic group, density (rural or urban)

2. Demographic segmentation
-gender, age, income, occupation, educational attainment, religion, family size

3. Psychological segmentation
-needs and wants, attitudes, social class, brand concept, lifestyle

4. Behavioral segmentation
-benefits, loyalty, perceptions, reaction, buying habits

B. Customer Requirements
-Are the specific characteristics that the customers need from a product or a service.
Types of customer requirement:
1. Service requirement
2. Output requirement

1. Service requirement(intangible)
-It includes all aspects of how a customer expect to be treated while purchasing a product.

2. Output requirement (tangible things)

-Characteristic specifications that a customer expects to be fulfilled in the product.

Market Size
-It is like a size of arena where entrepreneurs will play their business. It is the approximate
number of sellers and buyers in a particular market.

Steps to estimate the potential market

1. Approximate number of customers that will buy the product
2. Estimate the customers who probably dislike to buy your product.
3. Estimate the market share, that means plotting and calculating of the competitor’s
market share to determine the portion of the new venture.