1.

1 Introduction, Definition of Terms, Entrepreneur' Skills

Introduction
Entrepreneurship particularly drives the modern global economy, is the primary
source of job creation. Entrepreneurship in its broadest sense is any enterprise or effort
that adds value to the lives of people.
Everything all around has its roots in entrepreneurship in some way. It is the
innermost component in the economic growth, the opening of new markets, and serves
as a critical spur for the money-making, introduction of new goods and services,
innovations, and inventions.
Entrepreneurship is the philosophy in which an individual is an imaginative and
innovative agent with an aspiration for ownership and the right to make proprietary
decisions, a body of knowledge, and create wealth for the individual and value to the
society.
There are various definitions of entrepreneurship. However, the key concept is
innovation. This refers to new or different ways of doing things which include
technology, marketing management, HR management among others. Innovation can be
observed when a creative individual creates a new product or when he sells his product
considering a different approach. Thus, it is the innovation that distinguishes
entrepreneurship from other activities.
In view of the innovative nature of entrepreneurship, it is capable of generating or
creating jobs, goods, services, and even wealth. Because of this, there is a better
economy for a country and a higher standard of living. However, the real contributions
of entrepreneurship can be measured in terms of the welfare of the people.

Who are Entrepreneurs?

Entrepreneurs normally defined as 'risk-takers' in new-venture creations are uniquely
optimistic, hard-driving committed individuals who derive great satisfaction from being
independent. He combines sound judgment and planning with risk-taking to ensure the
success of his or her own business. Entrepreneurs, driven by an intense commitment and
determined perseverance, work very hard. They are optimists who see the cup as half full
rather than half empty. They strive for integrity. They burn with the competitive desire to
excel. They use failure as a tool for learning. They have enough confidence in themselves to
believe that they personally can make a major difference in the final outcome of their
ventures.

Definition of Terms
The ways to define terms will help students better understand the lessons and
discussions and will serve as the standard level on how skilled students may become in
sentence construction when defining terms. At the end of the course, you are expected
to define words or terms or give meaning using the technical and operational definitions.
• The 'corridor principle' is which states that once an entrepreneur starts a firm
and becomes immersed in an industry, “corridors” leading to new venture
opportunities become more apparent to the entrepreneur than to someone
looking in from the outside.

• The entrepreneur is an individual who creates a new business, bearing

most of the risks and enjoying most of the rewards.
• Entrepreneurship is the process of setting up a business, it serves to
generate economic wealth, growth, and innovation.
• External locus of control tends to believe that they are not able to affect a
personal outcome and that luck or destiny are responsible for their actions.
• Ethical Dilemmas a situation in which a difficult choice has to be made
between two courses of action, either of which entails transgressing a moral
principle;
• Entrepreneurial cognition is concerned with the ‘knowledge structures’ that
people use to make assessments, judgments, or decisions involving
opportunity evaluation, creation, and growth

• Internal locus of control individuals generally hold themselves

responsible for actions and consequences
• An intrapreneur is an employee who is tasked with developing an innovative
idea within a company and can draw on its resources to do so.
• Macro view of entrepreneurship presents a broad array of factors that relate to
success or failure in contemporary entrepreneurial ventures;
• Micro view of entrepreneurship examines the factors that are specific to
entrepreneurship and are part of the internal locus of control
• Mountain gap analysis entails identifying major market segments as well as
interstice (in-between) markets that arise from larger markets.
• Social entrepreneurship is to create a benefit to society and humankind,
focusing on helping communities or the environment through their products
and services. They are not driven by profits but rather by helping the world
around them.
• Strategic Entrepreneurship actions are planned for seeking competitive
advantage, which accelerates entering into new products, processes,
technological advancements, and markets by new ventures and incumbents.
 • The triple bottom line maintains that companies should commit to focusing as
much on social and environmental concerns as they do on profits.
• Water well strategies are the ability to gather or harness special resources
(land, labor, capital, raw materials) over the long term.

The Entrepreneur skills

Entrepreneurial skills can encompass a broad range of various skillsets like
technical skills, leadership and business management skills, and creative thinking.
Because entrepreneurial skills can be applied to many different job roles and industries,
developing your entrepreneurial skills can mean developing several types of skill sets.
For instance, to be a successful business owner, you may need to develop your
business management skills. To build and maintain successful project teams you might
need to improve your leadership and communication skills.
Entrepreneurs also have been characterized as the interaction of the following
skills; inner control, planning and goal setting, risk-taking, innovation, reality perception,
use of feedback, decision-making, human relations, and independence. In addition, many
people believe that successful entrepreneurs are individuals who are not afraid to fail
1.2 Success Stories

1. Henry SyLinks to an external site.

2. Tony Tan CaktiongLinks to an external site.
3. Socorro RamosLinks to an external site.
4. John Gokongwei Jr.Links to an external site.
5. Joe MagsaysayLinks to an external site.
6. Edgar SiaLinks to an external site.
7. Cresida TueresLinks to an external site.
8. Milagros, Clarita, and Doris LeelinLinks to an external site.
9. Mariano QueLinks to an external site.
10. Araceli and Jun Manas
1.3 Confrontation with Risk, Characteristics of Successful Entrepreneurs

The Entrepreneur's Confrontation with Risk

Starting or buying a new business involves risk. The higher the rewards, the greater the risks
entrepreneurs usually face. It should be noted that people who successfully innovate and start
businesses come in all shapes and sizes but, they do have a few things others do not. They are willing to
accept risk for what they believe in. Entrepreneurs face a number of different types of risk, the four
basic areas are:

1. Financial Risk. Entrepreneurs must have a solid understanding of financial management and put
that knowledge to use in business every day. The knowledge of entrepreneurial finance is so
often the difference between success and failure, all entrepreneurs should devote themselves
 to understanding the key financial indicators for their particular business. Some at stake are
personal resources that were put into the venture and a likelihood, be lost if the venture fails.

2. Career Risk A frequently raised question by would-be entrepreneurs is whether they will be
able to find a job or go back to their old job, should their venture fail. This is a major concern to
managers who have a secure organizational job with a high salary and good benefits package.

3. Family and Social Risk. To start a new venture requires much of the entrepreneur's energy and
time, which can, in turn, create a family and social risk. His commitments expose his/her
families to the risk of incomplete family experience and the possibility of permanent emotional
scars, even old friends may vanish eventually as they missed get-togethers.

4. Psychic Risk. This may be the greatest risk to the well-being of the entrepreneurs. Some
entrepreneurs who have suffered financial catastrophes have been unable to bounce back, at
least not immediately. The psychological impact has proven to be too severe for them.

Characteristics of Successful Entrepreneurs

Many people dream of running their own businesses. They would like to become
entrepreneurs. Entrepreneurship can be exciting, but many go into it not realizing how difficult it is to
run their own business. In fact, statistics show that most new businesses will fail within a few
years. These start-up businesses fail because of the owner's poor planning, lack of business knowledge,
lack of entrepreneurial characteristics, inability to work with others, or failure to choose the right
business. New characteristics are continually being added to the evergrowing list of the most often
cited entrepreneurial characteristics, it does provide important insights into the entrepreneurial mindset

1.

1. Determination and Perseverance. A total dedication to success as an entrepreneur can

overcome obstacles and setbacks. Sheer determination and an unwavering
commitment to succeed often win out against odds that many people would consider
insurmountable

2. Drive to Achieve. Entrepreneurs are self-starters who appear to others to be internally

driven by a strong desire to compete, to excel against self-imposed standards, and to
pursue and attain challenging goals

3. Opportunity Orientation. It is the constant awareness of opportunities that exist in

everyday life. Successful entrepreneurs start with the opportunity and let their
understanding of it guide other important decisions.

4. Persistent Problem Solving. Entrepreneurs are not intimidated by difficult

situations. Although entrepreneurs are extremely persistent, they are realistic in
recognizing what they can and cannot do and where they can get help to solve difficult
but unavoidable tasks.

5. Seeking Feedback. Effective entrepreneurs often are described as quick learners, with a
strong desire to know how well they are doing and how they might improve their
performance. Feedback is also central to their learning from mistakes and setbacks.
 6. Internal Locus of Control. Successful entrepreneurs believe in themselves. They do not
believe that the success or failure of their venture will be governed by fate, luck, or
similar forces and they believe that their accomplishments and setbacks are within their
own control and influence and that they can affect the outcome of their actions.

7. Tolerance for ambiguity Start-up entrepreneurs faces uncertainty compounded by

constant changes that introduce ambiguity and stress into every aspect of the
enterprise. A tolerance for ambiguity exists when the entrepreneur can deal with the
various setbacks and changes that constantly confront him/her.

8. Calculated Risk Taking. Successful entrepreneurs are not gamblers, they are calculated
risk-takers when they decide to participate in a venture, they do so in a very calculated,
carefully through-out manner.

9. High Energy Level. Many entrepreneurs fine-tune their energy levels by carefully
monitoring what they eat and drink, establishing exercise routines, and knowing when
to get away for relaxation.

10. Creativity and Innovativeness. Entrepreneurs are able to blend imaginative and
creative thinking with a systematic, logical process ability, they think of new ways to
market their businesses and are always looking for new solutions to problems.

11. Vision. They have a vision or concept of what their firms can be, this vision develops
over time as the individual begins to realize what the firm is and what it can become.

12. Passion. Entrepreneurial passion is a fundamental emotional experience for

entrepreneurs to provide a coherent understanding of an emotional experience of
intense arousal and energy mobilization involving an entrepreneur in his or her
venture. This is also characterized by a discrete emotion that is quite intense being
described as an underlying force that fuels our strongest emotions. Thus,
entrepreneurial passion is recognized as a fundamental component of the
entrepreneurial mindset.

2.1 Market Segmentation and Niche Market

Market

A market is a place where parties can gather to facilitate the exchange of goods and services. The parties
involved are usually buyers and sellers. The market may be physical like a retail outlet, where people
meet face-to-face, or virtual like an online market, where there is no direct physical contact between
buyers and sellers.

Market Segmentation

▪ A market segment consists of a group of customers who share a similar set of needs and wants.
The marketer’s task is to identify the appropriate number and nature of market segments and
decide which one(s) to target. We use two broad groups of variables to segment consumer
markets. Some researchers
 ▪ Market segmentation consists of sectioning the target market into smaller groups that share
similar characteristics, such as age, income, personality traits, behavior, interests, needs, or
location.

Geographic Segmentation

Geographic segmentation divides the market into geographical units such as nations, states, regions,
counties, cities, or neighborhoods.

Demographic Segmentation
Demographic segmentation divides the market on variables such as age, family size, family life cycle,
gender, income, occupation, education, religion, race, generation, nationality, and social class.

Psychographic Segmentation

In psychographic segmentation, buyers are divided into different groups on the basis of
psychological/personality traits, lifestyle, or values. People within the same demographic group can
exhibit very different psychographic profiles.

Behavioral Segmentation

In behavioral segmentation, marketers divide buyers into groups on the basis of their knowledge of,
attitude toward, use of, or response to a product.

• Needs and Benefits - not everyone who buys a product has the same needs or wants the same
benefits from it. Needs-based or benefit-based segmentation is a widely used approach because
it identifies distinct market segments with clear marketing implications.

• Decision Roles - It’s easy to identify the buyer for many products but people play five roles in a
buying decision: Initiator, Influencer, Decider, Buyer, and User.

• User and Usage - Real User and Usage Related Variables - Many marketers believe variables
related to various aspects of users or their usage—occasions, user status, usage rate, buyer-
readiness stage, and loyalty status—are good starting points for constructing market segments.

Niche Market

A niche market is a subset of a larger market with its own particular needs or preferences, which may be
different from the larger market. Companies focus on niche markets to better cater to a specific
consumer than competitors who target a broad audience. Catering to the unique demands that
mainstream providers aren't addressing, businesses pursue niche markets to build loyalty and revenue
with a largely-overlooked audience.

Benefits of Niche Markets

There are several benefits to targeting a niche market:

• Reduced competition

• Focused business efforts

• Providing expertise

• Establishing brand loyalty

TAM, SAM, and SOM

TAM, SAM, and SOM are metrics representing different market subsets.

TAM = Total Addressable/Available Market is the total market for your product. This is everyone in the
world who could buy your product, regardless of the competition in the market.

SAM = Serviceable Available Market is the portion of the market that you can acquire. For example,
your product may only be available in one language, so your SAM would be the subset of the TAM that
speaks the language that your product is developed for.

SOM = Service Obtainable Market is the subset of your SAM that you will realistically get to use your
product. This is effectively your target market that you will initially try to sell to.

What’s an example of TAM, SAM, SOM?

You’re starting a concierge service in your city that focuses on doing tasks/running errands for busy
people.

Your TAM (total available market) would be all people who may have a need for help doing tasks and
running errands in your town. If your town has 150,000 people, you may find (through market research)
that the total possible demand for your business in your city is 33 percent (or 50,000 people). You might
arrive at this number by excluding people who are under 18 years old and other groups of people who
can’t purchase your services.

Your SAM (serviceable available market) would be the portion of that 50,000 whom your
current business model Links to an external site. is targeting (this will be outlined in your business plan).
For example, your business model focused on serving people who are ages 35 to 55, with small children
and disposable income. You may then discover that there are 20,000 of these people, which means your
SAM is 40 percent of your TAM.

Your SOM (serviceable obtainable market) would be the portion of your SAM that your business model
can currently realistically serve. For example, you may only have three employees (yourself and two
others) and can only serve people who live within a 2-mile radius of downtown, so realistically what
percentage of your SAM (20,000 people) can you reach in the first 2 to 3 years?

Let’s assume your company can effectively provide concierge services to 100 people a month or 1,200
people a year. This means your SOM is about 6 percent of your SAM.

2.2 Market Positioning and Branding

Market positioning is a strategic exercise we use to establish the image of a brand or product in a
consumer’s mind. This is achieved through the four Ps: promotion, price, place, and product. The more
detailed your positioning strategy is at defining the Ps, the more effective the strategy will be.

For example:

• A ladies shoe company might position its products as a status symbol

• A fast-food chain that serves sandwiches might position itself as the healthier fast-food option

• A car company might position itself as the safest option for a family

Types of positioning strategies

A few examples are positioning by:

Customer needs

Knowing your target market and how you will fulfill their specific needs.

Product price

Positioning your brand/product as competitively priced

Product quality

Positioning your brand/product as high quality

Product use and application:

Associating your brand/product with a specific use

Competitors

Positioning your brand as better than your competitors

Branding

Branding is the process of giving a meaning to specific organization, company, products or services by
creating and shaping a brand in consumers’ minds. It is a strategy designed by organizations to help
people to quickly identify and experience their brand, and give them a reason to choose their products
over the competition’s, by clarifying what this particular brand is and is not.

Origins of the Word “Brand”

The word “brand” literally refers to the process of ranchers putting a mark on their cattle to identify
their individual cows. In addition to providing proof of ownership, these brands began to identify the
quality of the beef. For example, some ranchers fed their cattle salt in order to make them drink more
water before weighing in an effort to jack up the sale price of each cow. Some ranchers also pushed
their cows hard to market, building up muscle. Ranchers who raised their cows correctly and charged a
fair price had a better “brand” than their competitors.

Examples of Branding
 • KFC – “We Do Chicken Right”

• Nike – “Just Do It”

• Burger King – “Have it Your Way”

• Southwest Airlines – “Wanna Get Away?”

• Aflac – Duck mascot and voice

• Energizer – Bunny toy with drum mascot

• Geico – Gekko mascot with British accent

2.3 Packaging and Promotion

Packaging is very important in the promotion of a product. Good packaging and interesting aesthetics
will attract the attention of potential customers. Good packaging can be influential in the decision to
purchase a product. Packaging in combination with an advertising campaign and the right price, a
product can be successful.

The importance of Packaging

1. Protects the product.

2. Displays and Promotes the product.

3. Attracts Buyer.

4. Differentiates the product from competitors.

The packaging design process in 7 steps

1.

1. Understanding packaging layers

2. Choosing the right type of packaging

3. Lining up your printer

4. Creating information architecture

5. Evaluating a packaging design

6. Collecting feedback

7. Getting the right files

Promotion

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.
The main aim of promotion is to ensure that customers are aware of the existence and
positioning of products. Promotion is also used to persuade customers that the product is better
than competing products and to remind customers about why they may want to buy.