ENTREP

Lesson 1-7 under 3rd Quarter lessons Lesson 1: Character Traits Common to Successful Entrepreneurs

Self-assessment: very first measure to determine whether you have the entrepreneurial inclination
Character Trait: mark or attribute that distinguishes an entrepreneur from the owner of an ordinary small
business

There are ten entrepreneurial characteristics grouped into 3 major clusters (acerdg to Small Enterprise
research and development foundation of the department of trade and industry):

1. Achievement cluster - directly related to the entrepreneur's desire to be an achiever

- enterpreneur ordinarily does not settle for mediocrity but instead aspire for quality
- enterpreneurs are achievers by nature and they strive to achieve
- they feel guilty when they are less active

Enterpreneurs who belong to achievement cluster is:

• An opportunity-seeker - ability to identify with great ease
A business opportunity-seeker is an enterpreneur who
• Sees and acts on buiz opportnies
• Seizes unusual opportniy to obtain financing, ete.

Question to ask to assess:

1. Can you easily identify a business opportunity?
2. Can you differentiate it from others?
3. Will you borrow and act on the business idea of others?
4. Will you act immediately on the business opportunity that you have identified?
5. Will you really seize any business opportunity that you have identified?

A moderate score may indicate that you have the potential

• Committed - displays full commutment to the work or endeavor that he or she is undertaking. He or she
does not entertain negativity and skepticim. He or she:
1. Accepts full responsibility for what has been promised to the customers
2. Establishes proper coordination with and among workers
3. Seeks to prioritize the satisfaction and interest of customers Commitment is directly related to interest. For entrepreneur, going
an extra mile is the very essence of commitment
Questions to assess:
1. Will you accept full responsibility on the problems encountered in the production and delivery?
2. Can you work harmoniously with the workers?
3. Will you be willing to help the workers ?
4. Will you consider satisfying the customers as a primary concern of your business?
5. Will you be cautious of the deadlines in the production and delivery?
6. Will you be worried in case the customers are not satisfied?
• Persistent - failures challenges the enterpreneur to be persistent. He or she learns to:

1. take repeated or different actions to overcome the obstacles

2. Make personal sacrifices to complete the required task
3. Stick to his own judgment in times of failure

Questions to assess:
1. Are you easily discouraged because of failures?
2. Do you consider quitting or surrendering as the final recourse?
3. Do you take another action when your first plan fails?
4. Are you willing to sacrifice in order to complete what you have started?
5. Is your decision firm and not easily swayed by an opposing suggestion?
6. Do you view failure as a challenge in your journey?

Persistence: foundation of commitment

• A risk-taker - there is risk in entrepreneurship because of uncertainty. Risk is inseparable from entrepreneurship.
It is inherent in all entrepreneurial ventures.

Three types of risk-taker:

1. Aggressive risk-taker: not scared to take any risks in business
2. Moderate risk-taker: more calculative in taking risks. Analyzes situation before taking the leap
3. Conservative risk-taker: not very eager to take any kind of risk. Satisfied with managing a small business and a
regular clientele

A successful entrepreneur evaluates all the available courses of action before making the final decision

Question to assess:
1. Do you take chances?
2. Do you engage in risk-taking activities?
3. When you take the risk, do you adopt any stance?
4. Do you thoroughly evaluate the pros and cons of a particular endeavor before engaging in it?
5. Do you have alternative courses of action in case your decision fails?

• Efficient and quality-oriented - Values efficiency. He or she:

1. Always perform the required task in accordance with the existing standard of excellence
2. Strives to do things better and faster with the minimal cost

The concept of efficiency in an entrepreneurial endeavor is related to the cost involved in the production of goods
and services. The basic rule is that you should incur the lowest minimal cost without sacrificing quality. An efficient
entrepreneur produces more output using less input. They are productive

The concept of quality deals with defect. The quality of product is measured by the response of customers to them
Questions to assess:
1. Do you adopt a standard that will serve as a benchmark in evaluating your performances?
2. Do you evaluate your past performance in order to improve your next performance?
3. Do you exert extra effort in order to do things better and faster?
4. Do customers return the products because of defects?
5. Do customers complain about the products and services?
2. Planning cluster
- set of characteristics of successful entrepreneurs that basically supports the character traits in the achievement
cluster
- the concept of planning is inherent in the entrepreneur

The entrepreneur who belongs to the planning cluster is:

1. A goal-setter - setting goals and objectives. Goals and objectives are the guiding points. Goals are long-term and
objectives are short-term. Entrepreneurs are usually guided by SMART principle.

Questions to assess:
1. Do you have clear goals and objectives in life?
2. Do you have specific dates to meet your desired goals and objectives?
3. Do you set your goals and objectives in accordance with the SMART principle?
4. Do you regularly review your goals and objectives?

2. An information-seeker
- constantly make decisions that can affect the operations of their business ventures. These must be based on their
whims. Successful entrepreneurs seek a strong basis to make sound decisions

In the philippines, the usual constraints or limitations in the gathering of information are data bank that
1. Are incomplete, dated and irrelevant
2. Are costly in maintenance
3. Lack personnel to maintain them

A successful information-seeker:
1. Seeks relevant information on target customers, suppliers for raw materials and competitors
2. Verifies available information from various sources
3. Seeks opinions and advices from experts in the business field
4. Finds other possible ways to make sure that the desired information is complete

Questions to assess:
1. Will you consider information a significant element in any entrepreneurial activity?
2. Will you seek all available information before making a business decisions?
3. Will you be ethical in gathering information about your customers, suppliers and competitors?
4. Will you seek the opinion and advice of an expert in the business field?
5. Will you base your decision on the relevant and timely information that you will be able to gather?
6. Will you find alternative ways in case the desired or needed information is not readily available from an office
that is expected to provide it?

3. Systematic in planning and monitoring

- does not simply set goals, it follows a systematic pattern of planning

Systematic: there is a rational and logical approach in performing the activities. Step by step procedure

Planning: Refers to the setting of goals and objectives. Monitoring refers to the evaluation of the activities and
adopted courses of action. Planning and monitoring is inseparable entrepreneurial activities
He or she:
1. Gathers all the quali and quanti info before formulating plans
2. Develops a logical step by step approach in the formulation of plans
3. Monitors the progress of activities and switches to alternative strategies when deemed necessary
4. Evaluates constantly the alternatives in achieving the goals
Questions to assess:
1. Will you prepare a plan in any form of business engagement?
2. Will your plan have a logical basis?
3. Will you adopt a pattern in the preparation of the plan?
4. Will you monitor the progress of your enterpreneurial endeavor?
5. Will you evaluate and consider alternative courses of action?
6. What will you do after evaluation?

4. Power cluster
-includes a set of character traits that reflect the degree of the interpersonal relations. It defines how enterpreneurs
project themselves in the business community. It indicates the type and level of their linkages with the groups they
are involved with

An entrepreneur in the power cluster is:

1. Persuasive and positive networker - able to establish good and positive networking. Successful entrepreneurs
completely discard the concept of bribery in dealing with people.

They usually:
1. Adopts specific strategies that will influence and convince others while maintaining the highest degree of respect
2. Makes use of positive contacts in the business community in order to meet the goals and objectives of the
business.

Question to assess:

1. Do you have persuasive or convineing power?

2. Can you convince in a positive way the suppliers, creditos and competitors to your ideas?
3. Will you have the specific strategies that can win others to your side?
4. Have you tried bribing others for a good cause?
5. Do your personal linkages increases?
6. Will some organization or persons in their individual capacity seek advice from you in economic, financial, and
marketing areas?

2. Self- confident
- successful entrepreneurs are known to have a high level of self-confidence. They project a favorable image of
themselves which is founded on respect and good deeds in the business

Enterpreneurial self-confidence is actually a manifestation of the enterpreneur's strong trust or belief in himself or
herself

Questions to assess:

1.Do you have a strong belief in yourself?

2. Do you have a specific and unique skills or abilities that help you build self-confidence?
3. Do you have the confidence to complete a difficult task on time?
4. Do you have the necessary ability to meet the challenges of an enterpreneurial venture?
5. Are you confident of your decisions?
6. Do you have trust in your own abilities?
Lesson 2: Skills and Core competencies in entrepreneurship

Skills: considered as the personal abilities to do things well. They come from the totality of knowledge, practice and
experience. These are acquired and developed by person through constant practice. They connote excellence in
performing a particular tasks.

Enterpreneurial skills: set of cognitive, technical and interpersonal skills required in the practice of
enterpreneurship
Cognitive skills: mental ability of the enterpreneur to learn new things generate new ideas. The human brain is
responsible for the development of cognitive skills which are essential in making systematic and effective plans

The cognitive skills of an enterpreneur includes:

1. Ability to understand written materials
2. Ability to learn and apply new information
3. Ability to solve problems systematically
4. Ability to create new ideas
5. Ability to innovate new products and procedures methods

Problem-solving skills: common in the life of enterpreneur. Problems must be face by enterprenuers. The
enterpreneurs adopts the scientific approach instead of making an intuitive decision

The scientific approach in solving business problems involved:

1. Defining the real problem
2. Gathering information about the problem
3. Formulating alternative solutions
4. Evaluating alternative solutions
5. Selecting and implementing the optimal solutions
6. Evaluating the decisions

Technical Skills: enterpreneurs must be fully equipped with the right technical skills. These skills relate to their
knowledge and proficiency in a specialized field

In the absence of technical skills, the output of the cognitive skills may not carry any significant value. Without this,
an idea will remain an idea. It is highly mechanical rather than theoritical.
1. Information technology
2. Feasibility study and business plan preparation
3. Technical writing skills
4. Marketing
5. Management and finance

Interpersonal skills: basically about the relationship and interaction of the enterprenuers with the workers, etc.

This may include:

1. Skills in verbal communication
2. Skills in non-verbal communication
3. Skills in listening
4. Skills ins leading
5. Skills in negotiating
They must developed
1. Saying what he or she wants to say
2. Working with the employees
3. Negotiating
4. Communicating his ideas

Core competencies: what it takes to stand out to competitors

Enterpreneurial competency indicates that successful enterpreneurs possess a full understanding of the concepts of
enterpreneurship. It provides competitive advantage in the venture and becomes the core competency.it is
considered inherent in the enterpreneur

Enterpreneurial core competency is defined as the combination of enterpreneurial concepts and become the
ultimate source of competitive advantage

Competitive advantage: Generally establishes the solid foundation. It is the strategic position and condition of the
enterpreneurial venture that:

1. Provides the necessary attributes to outperform competitors

2. Distinguishes venture form competitors
3. Achieves superior performance in the industry
4. Produces a product method that can hardly be copied by competitors

Total Perspective of successful enterpreneur

Core competencies defining competitive advantage:

1. Fully understand the concepts and principles of enterpreneurship
2. Internalize and live out on the character traits that are common among successful enterpreneurs
3. Acquire, develop and sharpen enterpreneurial skills

Lesson 3: Physical Environment

Enterpreneurial venture is created out of the business opportunities

Three layers of environment:

1. Physical environment - first layer

- composed of natural elements that are inherent in the earth

• Climate
- must consider the prevalent climate condition of the area
• Physical Resources
- availability of raw materials
• Wildlife
- he or she must ensure that it contributes to the preservation and not the destruction of ecological
system

Lesson 4: Environmental Scanning: Societal analysis

Wheelen and Hunger (2010) - Changes in the physical environment have a direct impact on the societal
environment in terms of cost
Societal Environment: generally composed of social, political, cultural, economic, legal and technological forces.

In scanning the societal environment:

1. PESTEL analysis - tabular framework
- Political, economic, sociocultural, technological, ecological legal forces
- most widely accepted environmental scanning tool
- simply list down the trends and developments
- does not present the frequency of occurrence

2. Environmental forces matrix: modified version of the issue priority matrix by Wheelen and Hunger broadly
classifies the various environmental forces into their frequeney of occurences

Environmental Scanning: critical evaluation and thorough study of the environment

It is important because:
1. clearly portray the trends and events in society
2. Identifies the expected threats
3. It points out the possible factors to success
4. Helps define the future path of the business
5. Assist in the formulation of the most appropriate strategies

Economic forces: factors that are primarily caused by changes or movements in the PH economy
These includes:
1. Interest rates
2. Inflation rates
3. Fiscal policy
4. Monetary policy
5. Income
6. Exchange rates
7. Employment
8. Consumer confidence

Cultural forces Culture: refers to the integrated characteristics of a group of people in a particular society

Cultural forces includes:

1. Religion
2. Language
3. Beliefs
4. Customs
5. Education

Social forces: elements in society resulting in human interaction product of the action of the people

Social forces includes:

1. Values
2. Traditions
3. Literacy level
4. Consumer psychology
5. Time Orientation
6. Lifestyle patters
7. Professional career roles
Political forces:

Political forces includes:

1. Trade regulation
2. Taxation
3. Government stability
4. Unemployment
5. Worker's benefits
6. Election practices

Legal Forces: elements and bodies that are directly involved in the legislation of laws

Legal forces includes:

1. Product control
2. Health and safety of the workers
3. Administration of election process
4. Advertising and promotion
5. Exercise of profession
6. Education administration and fees

Judiciary system: started at a barangay

Technological Forces: refer to the trends and developments in IT

Technical forces includes:

1. Internet
2. Social media
3. E-commerce
4. Technological advancement
5. Technological infrastructure

Lesson 5: Environmental Scanning: Industry analysis

Industry environment: next environmental layer

: where business conducts its various activities
:external environment layer considered the immediate environment

Macro environment: composed of individual person, company and non-governmental organization

- have influence on the path of business
- define the appropriate business strategy to be adopted

Industry forces includes:

1. Government: refers to the system that handles the affairs of a particular country sit can be democracy, autocracy,
republic, monarchy, or dictatorship promotes ventures through programs
2. Suppliers: provides required materials they can adversely affect the production process
3.Customers: buyers
4. Competitors: forces existing in the industry

• Direct competitor: sells the same product

• Indirect competitors: different product or substitute
 5. Employees: workers of the business
: help ensure the quality of products
: they are the backbone of the business
6. Creditors: refers to banks, institutions engaged in lending money

INDUSTRY ANALYSIS SCANNING TOOLS

In scanning the industry environment, these are the tools:
1. SWOT model
The primary objective in scanning industry environemnt is to determine the strategies position of the business

2. Forces of competition model: "five forces of competition"

: Michael Porter - prominent figure in competitive strategy

Five forces: considered threats

1. Potential new entrants - one competitive force

• Strict government policy

• Substantial capital req
• High cost of product differentiation
• High switching cost
• Difficulty in accessing distribution channels

2. Buyers - has strong and magnified bargaining power

• Has potential for backward integration

• Cost of switching the supplier cost is minimal
• Buyer purchases large portions of the seller's products
• There are several suppliers
• Product represents a high percentage of the buyer’s cost

3. Substitute products

• Prices is Substantially lower

• Preferences of customers easily change
• The quality of substitute products dramatically improves
• Switching cost is low
• Product differentiation is hardly noticeable

4. Supplier

• The product is unique

• Switching cost is very high
• Suppliers in the industry are few, but the sales volume is high
• Substitute products are not readily available in the market
• The supplier has the ability for forward integration
5. Rivalry among existing firms

• Number of competing firms

• Rate of industry growth
• Characteristics of the products
• Amount of fixed cost
• Increased capacity
• Diversity of rivals

3. Competitive forces matrix: view the total perspective of the competition Possible barriers - primary
determining factors

Lesson 6: environmental scanning: internal analysis

Internal environment: environment within the business

Business resources: aspects owned by the business

: serves as the basic foundation of the business
: can either be tangible (can be touched or seen) or intangible (do not have physical
appearance)

Capability: required capabilities to utilize available resources

Two questions regarding the resources:

1. Does the business have enough resources to exploit the business opportunities
2. Does the business have the capability to fully and efficiently utilize the resources?

Business culture: "organizational or corporate culture"

: collection of values, beliefs shared by emplyces etc.
Two types of cultures operating in the internal environment :
1. Culture of the business
2. Individual culture

Cultural acceptance: the employees accept the culture of the business

Cultural integration: all units share a common culture
Business structure: formal organizational arrangement of the business
Types of leadership: dominant variable

SCANNING OF THE INTERNAL ENVIRONMENT

Internal environment scanning:

1. Swot analysis: "TOWS"

: two harvard business school professor : george albert smith, jr and roland christensen
: popular tool to evaluate internal environment
Strengths: strong attributes
Weaknesses: poor attributes
Opportunities: potential in growth
Threats: may provide harm
2. BCG analysis matrix : Boston Consulting Group (BCG)
: most appropriate when there are several products rendered by business
: equally effective

Stars: have high market share but low market growth

Cash cows: high market share and high market growth
Question marks: products that are usually facing problems not usually moving
Dogs: low market share
Competency: combination of enterpreneurial concepts
Distinctive business competency: able to perform better than its competitors

Lesson 7: Nature and type of enterpreneurial venture

Two significant factors to consider before opening a business:

1. Competency of the enterpreneur

2. Competency of the business

FORMS OF ENTERP VENTURE

Sole proprietorship: one person

: ease in its formation and management

• Easy to form
• Simple business operation
• Has a limited pool of resources
• Growth is limited
• Owner has unlimited liability

Partnership: two to 5
: called "partners" " liable for liabilities

• Death of one of the partners

• Admission of a new partner Corporation
• Personal insolvency of one of the partners
• Permanent withdrawal of the investment

Corporation : 5 to 15 : called "incorporators"

Stock corporation: authorized to issue shares of stock to stockholders owners are called "stockholders" or
"shareholders"

Non-stock corporation: not authorized

: owners are called "members"
Certificate of stock: an evidence of ownership
Domestic corporation: organized under the law of PH Foreign corporation: organized under the law of foreign
countries
Nature: whether business is simply selling product or rendering services
CLASSIFICATION OF ENTERPRENEURIAL VENTURE:

1. Merchandising: buying and selling

: no alteration mode
2. Service: provides services
Non-professional venture - ex. laundry
Professional services - ex. Law offices

3. Manufacturing: producer of goods

:engaged in buying raw materials

Four M's: Method : "production method"

- converting raw materials to finished products
Machine - manufacturing equipment
Materials - raw materials
- form part of finished products

Manpower - human workforce

4. Agriculture: production of agricultural goods

5. Hybrid business: combined types of business entities
6. Special corporation: special type of business

PRODUCTION SYSTEM

Input: critical
: man power, materials, machine, design, infrastructure
Production process: : “transformation process”
: critical
: materials are transformed
Output: final products