ILOCOS SUR

POLYTECHNIC STATE
SantaCOLLEGE
Maria Campus

MODULE

MODULE IN
Elective 104
THE ENTREPRENEURIAL MIND

Module 7

ALBERT G. NAUNGAYAN
Assistant Professor I

Course Code: ELECTIVE 104

Descriptive Title: THE ENTREPRENEURIAL MIND
Instructor: ALBERT G. NAUNGAYAN
 ILOCOS SUR
POLYTECHNIC STATE
SantaCOLLEGE
Maria Campus

MODULE
MODULE 7
STRATEGIC PLANNING FOR SMALL BUSINESS

The resources at the disposal of the entrepreneur are always thought to be limited. Inspite of
the limitations, entrepreneurs are not discouraged from pursuing their objectives. They can make use of
some techniques that have been proven valuable in business operations.
In the quest for attainment of business objectives, one technique has slowly been adopted by
businesspersons. The concept, called strategic planning is borrowed from the military and has found
useful applications in large corporate enterprises. In relevance to small business, however, has also
been recognized.

LISTS OF TOPICS TO BE INCLUDED IN THE MODULE

1. What is strategic planning?
2. Determination of Objectives

LEARNING OBJECTIVES
1. Discuss basic strategies necessary for small business.

LEARNING CONTENT

STRATEGIC PLANNING
It refers to the process of determining the primary objectives of the entrepreneurship and then
adopting courses of action and allocating resources to achieve those objectives.

Strategic Planning --- Determination of Primary Objectives ---- Adoption of Course of Action --- Allocation of Resources

Three Steps Involve:

A. Determination of Objectives
Determination of objectives are one of the most important components of business strategic
planning actions. But in order to have a smooth implementation of all strategic planning activities, the
business’s mission statement should be developed first.

The Mission Statement

 It refers to the basic description of the essential nature, rationale, and direction of the firm.
3 main Concerns:
a. How the entrepreneur intends to use his resources
b. How the entrepreneur expects to relate to the ever-changing environment
c. The kinds of values the entrepreneur intends to offer to his customers

Example:
SANTA MARIA POULTRY PRODUCTS
Mission: To provide various poultry requirements of consumers. The services of retailers located in
various malls and public markets in the province are tapped as means of distributing our products.
Quality and efficiency are emphasize in the assortment of our products. We intend to cover all towns of
the province within five years through effective pricing and promotions.

Strategic Objectives
 This refers to specific performance targets that the entrepreneurship hopes to accomplish. The
objectives define, in specific, terms, how the firm’s mission will be realized.

Course Code: ELECTIVE 104

Descriptive Title: THE ENTREPRENEURIAL MIND
Instructor: ALBERT G. NAUNGAYAN
 ILOCOS SUR
POLYTECHNIC STATE
SantaCOLLEGE
Maria Campus

MODULE
Examples:
a. Expand production capacity by 60% within 2 years
b. Increase sales by 50% by the year 2022
c. Increase market share by 10% every two years
d. Increase the number of outlets by three within three years

B. Adoption of Course of Action

 Once the primary objectives are established, the entrepreneur must develop a strategy which is
alternately called course of action.
 Strategy- is a carefully designed plan for achieving the firm’s objectives
- it indicates how the entrepreneur will attempt to accomplish the goals with the resources
available.

Examples of strategies:
a. Establish branches in strategic locations
b. Design a system that will attract persons with high potentials to work with the company
c. Engage in the recruitment of retailers from nearby provinces
d. Involve in building up the firm’s image as a reliable supplier of quality poultry products

 In order that realistic strategies will be developed, the entrepreneur should make use of the most
popular tools like:
a. SWOT Analysis- firm’s awareness on its internal (strengths and weaknesses) and external (threats
and opportunities) environments is important to develop a strategy that considers the firm’s needs.
 SWOT analysis is an organized method of assessing a firm’s strengths and weaknesses and the
opportunities and threats in the external environment that confront or will confront the firm.
 The purpose of SWOT analysis is to match the firm’s strengths and weaknesses with external
opportunities and threats to determine what strategy to adopt.

STRENGTH
- refers to a skill, a competence, a valuable organizational resource or competitive capability, or an
achievement that gives the firm a market advantage.
Examples:
a. The farm is strategically located in an accessible area
b. The farm’s ownership of the land is a lucrative source of materials for poultry raising and production.
c. The farm has an exclusive and reliable supplier of poultry animals and feeds.
d. The farm employed highly technical and specialized laborers.

WEAKNESS
- refers to something a company lacks or does poorly or a condition that puts it at a disadvantage. It
must be noted that depending on the competitive situation, a weakness may or may not make a
company vulnerable to competition.
Examples:
a. Lack of qualified bookkeeper
b. Poor market
c. Low production rate
d. Poor farm’s location

Course Code: ELECTIVE 104

Descriptive Title: THE ENTREPRENEURIAL MIND
Instructor: ALBERT G. NAUNGAYAN
 ILOCOS SUR
POLYTECHNIC STATE
SantaCOLLEGE
Maria Campus

MODULE
OPPORTUNITY
- refers to the chance offered by the external environment to improve the firm’s situation significantly.
Examples:
a. For a poultry farm- the escalating cost of poultry products
b. For a small restaurant- the withdrawal of the major competitor from business
c. For an agricultural supply- a sole established agricultural supply in the municipality
d. For a motorcycle trading firm- the increasing cost of fuel

THREATS
- refers to a challenge posed by an unfavorable trend or development in the external environment that
would lead to, in the absence of purposeful entrepreneurial action, the erosion of the entrepreneurship’s
position.
Examples:
a. Poultry farms- the increasing costs of poultry inputs like feeds, medicines, etc.
b. Grocery store- the proposed opening of mall in the area
c. PUV operators- the big time price hike of diesel
d. Restaurants- the escalating prices of meat products

b. Forecasts of Future Sales Performance- forecast are supplementary tools for SWOT analysis. It is an
estimate or prediction of the future sales or income of the firm. Forecasts may be short-term (1 year or
less), medium-term (1 to 5 years), long-term (over 5 years).
- sales forecasts are often determined through a combination of statistical and intuitive forecasts
tempered by the experience of the entrepreneur.

Implementing Strategic Plans

 Strategies are are not effective if they are not implemented as planned. In order that it will be
effective, the following activities are required:
1. Identifying Specific Methods- strategies determine the best way to use resources.
- there is a need to develop tactics which will be used to implement the strategies.
- tactics are more detailed and they are used to determine how the specific task can be accomplished
on time with available resources.
- Example: if the establish branches in strategic locations is a stated strategy, the tactical plan to
implement it may appear as follows:
a. Identify strategic locations
b. Determine the potentials of the identified strategic locations
c. Set a timetable for installing branches

2. Deploying the Resources- the aim of planning is to be able to deploy the right quality and quantity of
resources in the various activities required to achieve the objectives.
- the resources would be indicated in terms of human and non-human elements.

Fundamental Strategies for Small Business

1. Flexibility Strategy
 Small business ventures are not usually afforded the advantages enjoyed by large business.
 It is very difficult for small business to effect changes in its environment because its resources are
limited.
 For example, a small business cannot match the advertising budget of a large business if they are
in competition with one another.

Course Code: ELECTIVE 104

Descriptive Title: THE ENTREPRENEURIAL MIND
Instructor: ALBERT G. NAUNGAYAN
 ILOCOS SUR
POLYTECHNIC STATE
SantaCOLLEGE
Maria Campus

MODULE
 When hindrances such as those prevent the small business from pursuing its objectives, it must
consider other means.
 This is possible if the small business is flexible enough.
 For instance, when the small appliance dealer does not have the facility to deliver goods directly to
the consumer, the entrepreneur can hire the services of a small transport operator.
 Another option could be the granting of a discount to offset the delivery expense that will be
shouldered by the customer.
 Such remedies will require a certain degree of flexibility on the part of the small business.

2. Strategy of Effectiveness as a Higher Priority

 Effectiveness is sometimes sacrificed for the sake of efficiency. Although efficiency is a desirable
goal, it is oftentimes disastrous for small business to neglect effectiveness.
 A firm that concentrates on efficiency maybe able to reduce its expenses but it may not be able to
generate sufficient income to keep it afloat.
 At the early stages in the life of the small firm, when the venture is still trying to gain a foothold in
the market, turning out the first products and closing the first sale are of a more basic concern than
making a profit.
 As concerns for organization and structure are aimed at increasing efficiency, such activities must
in the beginning give way to effectiveness.

3. Strategy of Starting Simple

 The general idea as strategy of starting simple business venture is to start simple and absorb
slowly the more complicated tasks as it grows.
 Example: A salted peanut manufacturer who cannot produce packaging for his products at costs
lower than what a package manufacturer produces. As a result, he accepted the package
manufacturer’s offer of a subcontract.

Strategy Concerns of Small Business

a. New Business- refers to one that will be operated for the first time by the small business operator.
- acquiring an existing business
- organizing a new business
- buying a franchise

b. Old Business
- compete with small business
- compete with large business

Strategies for a Going Concerns

a. Segment markets- small business operator will have to identify the market segment with which it has
an expertise, then compete.
b. Efficient use of research and development- small business must focus its research and development
efforts to lowering process costs or to bring new products to the market.
c. Think small- for small business, the emphasis must be on profits rather than sales growth, and
specialization rather than diversification.

Course Code: ELECTIVE 104

Descriptive Title: THE ENTREPRENEURIAL MIND
Instructor: ALBERT G. NAUNGAYAN
 ILOCOS SUR
POLYTECHNIC STATE
SantaCOLLEGE
Maria Campus

MODULE
Why Small Business Operators Ignore Strategic Planning

1. Lack of expertise- few small business operators are trained in strategic planning.
2. Inability to get started- small business operators fail to get started for lack of sufficient exposure to
planning activities.
3. Uncontrollable, often intangible variables- this complicate planning which later on discourages the
small business operator from repeating the exercise.
4. Resource poverty- small business operators must attend to the problems related to lack of adequate
capital, managerial experience, outside advice, management specialist, and other key assets.
5. Focus on daily operations- in small business, usually operator are so busy that he is left with no time
for planning.
6. Failure to realize the importance of strategic planning- to small business operators, benefits of
strategic planning is always disregarded.

Course Code: ELECTIVE 104

Descriptive Title: THE ENTREPRENEURIAL MIND
Instructor: ALBERT G. NAUNGAYAN
 ILOCOS SUR
POLYTECHNIC STATE
SantaCOLLEGE
Maria Campus

MODULE
ASSESSMENT
Answer the following questions.

1. Identify and state a mission statements of two companies and provide comments on their clarity and
comprehensiveness.

2. Identify an industry where small and large businesses compete with each other. If you own one of
the competing small businesses, what strategy would you adapt?

Course Code: ELECTIVE 104

Descriptive Title: THE ENTREPRENEURIAL MIND
Instructor: ALBERT G. NAUNGAYAN