ENTREPRENEURIAL MANAGEMENT

MODULE

Lesson 1 : The Environment For Business Entrepreneurship

“ Everyone Lives By Selling Something”, according to Robert Louis Stevenson.
A. What is an Entrepreneurial Mindset?

It involves the ability to rapidly sense, act and mobilize, even under uncertain
conditions. It is to be developed where individuals must attempt to make sense of opportunities
in the context of changing goals, constantly questioning the “dominant logic” in the context of a
changing environment and revisiting “deceptively thinking on simple questions” about what is
thought to be true about markets and the firm.
Example: Effective entrepreneurs are thought to continuously “rethink current strategic actions,
organizational structure, communication systems, corporate culture, asset deployment,
investment strategies that have bearing on the firm’s operations and long-term health.

B. The Nature of Entrepreneurship

Entrepreneurship is a process of owning a business. The person who runs it is

the Entrepreneur. He is a business man who assumes risks of organizing and managing an
enterprise for the sake of potential rewards. He manages and capitalizes his own business where
all the profits go to him as personal income.

C. Criteria considered in the study of Entrepreneurship:

1. Innovation/ Creativity – is the process of discovering new products and services in
the market place for its new uses, new users and for the new market segments.
2. Risk Taking – is the system in which any entrepreneur can absolutely calculate risks
for his economic venture/s.
3. Creation of Wealth – is the chance of making more money in the business that will be
utilized for expansion purposes.

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 Steps to start an Entrepreneurial Venture:

1. The Decision to leave one’s career and lifestyles.

2. The Decision that an entrepreneurial venture is desirable.
3. The Decision that both internal and external factors have made the economic
developments of making a new business very possible in an ideal place.

What makes a good economic venture?

1. Develop Management Styles

2. Understand Key Variables For Success
3. Identify Potential Problems
4. Implement Control Systems
5. Formulate Growth Strategies

Three (3) major factors in conceiving a business enterprise

1. Having Financial Resources

2. Having Business Skills
3. Having Marketing and Distribution Systems to commercialize innovation

Eminent psychologists indicate that apart from heredity, an environment in business

entrepreneurship plays a very significant influence in the personality of an individual. He is
affected much by his family, neighborhood, school, community and the nations’s economy.

It is not uncommon for a family engaged in business to raise children who will later become
entrepreneurs. As education begins at home, business-oriented family has a definite advantage in
teaching their kids to become business people too.

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 C. Characteristics of an Entrepreneur in three (3) major clusters:
1, Achievement Cluster
1. Opportunity Seeking
2. Persistence
3. Commitment to Work
4. Risk Taking
5. Demand for Efficiency and Quality
2. Planning Cluster
1. Goal Setting
2. Information Seeking
3. Systematic Planning and Monitoring
3. Power Cluster
1. Persuasion and Networking
2. Self – Confidence

E. Rewards of Entrepreneurship
1. Income
2. Independence
3. Power
4. Business Leader
5. Drive for Creativity

Risks of Entrepreneurship are traceable to:

1. Bankruptcy
2. Mismanagement
3. Non – competitive Products and Services
4. Limited Capital
5. Vulnerability to Unpredictable Business Conditions

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F. Three (3) types of Skills required in Entrepreneurship:

A. Technical Skills
1. writing
2. oral communication
3. monitoring environment
4. interpersonal
5. activity to organize
6. networking building
7. management style
8. a team player
9. coaching

B. Business Management Skills

1. planning and goal setting
2. decision making
3. human relations
4. marketing, finance, accounting, management and control
5. negotiation
6. venture launching
7. managing growth

C. Personal Entrepreneurial Skills

1. inner control and discipline
2. risk taker
3. innovativeness
4. change oriented
5. persistent
6. visionary leader
7. ability to manage change and control

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 ENTREPRENEURIAL MANAGEMENT
MODULE

Lesson 2: Nature of Small Business

The entrepreneur identifies an economic need, considers offering business solutions,

proceeds to assemble the resources needed and assumes the risks of either succeeding or failing.
He is that provider with the willingness to exploit creativity or innovation as a path to become
competitive and lucrative business operator in the place where he lives.

He sets the so-called entrepreneurial creativity by himself to do the following attributes:

1. able to invent something that is entirely his own idea
2. able to use his skills and build a new business
3. able to be motivated by the number of his new ideas
4. able to originate something is important
5. able to perceive his role as the main provider of necessary good and services

A. Small Business Definition

Many entrepreneurs put a great deal of time and effort into launching their own businesses.
Most of the world’s businesses are small enterprises, where surprisingly, the principles involved
in managing any economic undertakings, medium or large are the same. However, the operation
of a small business is not the same as that of a medium or large one as certain characteristics may
vary in each category. It is also noted that most wealthy businesses started out as small
entrepreneurial ventures.

Broadly speaking, a small business is one wherein most functions of it include production,
marketing, finance, and management are all essentially organized by the owner himself - who
makes most of the major decisions and runs the day-to-day activities of his own economic
enterprise. The owner has a very few or no specialized staff or managers helping him in the

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affairs of his undertaking. The following are other characteristics commonly associated with a
small business, namely:

1. single proprietorships and family-based operations

2. single product line or very limited product range like consumer products
3. small volume production
4. limited markets usually local
5. labor-intensive production methods
6. few employees other than family members and many on part time basis
7. “patriarchal” management style where employees are often treated as extended family
members
8. low level use of technology
9. marginal capital assets, mainly sourced from the owner-manager’s savings and those of
the immediate household members

The government defines a small business based on how much the business owns (asset
size) and the number of people that work for it (employment) for purposes of rationalizing
assistance and incentives to business enterprises.

In terms of asset size, a small enterprise has the capital assets between P3 Million to P15
Million. In terms of employment, a small business employs from 10 to 99 workers. Below the
level of asset size and employment, the classification of business is Micro Enterprise. Above
such level, the classification is Medium or Large Scale Business.

Generally speaking, however, micro, small and medium-scale businesses are categorized
as small. Just like any other business, small businesses, are found in manufacturing (for example,
food processing, or garment making), services (auto repair or internet café), agribusiness
(farming or fishing), or trading (grocery store, buy-and- sell).

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 B. Strengths and Weaknesses of a Small Business

By contrast, in most small factories, an individual worker gets to work on a whole or part of
an operation. In furniture making, for example, some work processes that require individual
attention are carpentry, finishing; in garment manufacturing works include cutting, embroidery,
sewing the collar or the sleeves, etc.

Usually small enterprises are those engaged in pottery, basket weaving, papier mache
making, woodcraft, jewelry making, Small businesses often use materials and methods that are
friendly to the natural environment constantly free from pollution and depletion of resources.

The strengths include:

 small scale producers are able to make use of raw materials and by-products in
limited volume
 owner managers can make decision making so fast due to centralized authority
 in times of rapid changes in market demand and preferences, small scale
production units can readily modify their manufacturing set-up for
diversification variants
 the patriarchal (informal management style) gives employees a sense of
belonging like a family
 in seasons of economic crisis, small enterprises are often better able to make
adjustments in their production and personnel systems for survival
 in season’s of economic crisis, like recession and inflation, small enterprises
are often better able to make adjustments in their production, personnel and
other systems

The weaknesses include:

 marketing in small firms is characterized by competitors selling a large number
of similar products mostly to small local markets resulting in small sales and
narrow profit margins.
 small businesses lack skills in market planning and in doing market studies.

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  small businesses hardly undertake promotional activities like in social media
advertising
 In production, the most commonly-cited problem has to do with raw materials
availability, quality and cost.
 labor related problems are also experienced, like demand for higher wages,
negative attitudes of workers, high worker turnover and low productivity of
workers.
 Because of limited capacity, small enterprises cannot avail of economies of
scale not only in production, but also in procuring raw materials.
Consequently, they tend to operate at higher costs
 other production-related problems include machine breakdowns, lack of
technical know-how, quality control problems, and obsolete technology
 in finance, many small businesses fail or falter because of a basic lack of a
realistic and workable business and financial plan.
 lack of capital remains a major problem

C. What does it take to succeed in business?

The entrepreneur is the most important person in business. he takes the key role in
controlling and administering the firm in all its aspects and functions. He is the one who
takes most of the risks and receives most of the rewards.
The entrepreneur is sometimes described as someone who allocates and manages the factors
of production, bears risks, innovates and makes major decisions.
The following roles are played by an entrepreneur:
 The entrepreneur plans, organizes and puts together all the resources required
to start a new business and to run and operate it on a sustained basis. These
resources include human ( workers, managers customers, and suppliers and
non-human (land, building, money, machines, methods and methods).
 The entrepreneur takes the risks in terms pf putting resources together in order
to realize business objectives. He takes risk-taking to invest money, efforts and

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 others into a new undertaking whose result may be deemed uncertain. He
might win or lose, but he takes chances anyway,
 The entrepreneur innovates. he continuously creates and develops new
products and services providing the needs of society. He also looks for ways
by which these goods and services can be produces more economically.
 he helps build the development of an economy and be considered as the
backbone or the engine of growth to the community with regards to:
1. bring about employment
2. improve the quality of life
3. contribute to a wider distribution of income
4. utilize resources for national productivity
5. generate social benefits through the government

D. Types of Small Business

Small business may be classified according to five types, to wit:

1. manufacturing – is one that is involved in converting raw materials into products
needed in society, e.g. printing press, garment manufacturing, assembly shops,
etc.
2. services – are those that provide business and personal services to other
businesses, e.g. accounting firms, security services, collection agencies, tutorial,
massage parlors, voice lessons, etc.
3. wholesaling – refers to those activities of persons or establishments which sell to
retailers and to other merchants, e.g. softdrinks dealers, supplies and equipment,
grains wholesalers.
4. retailing – covers all those activities involved in the sale of goods and services to
the final consumers, e.g. retail drugstores, fastfood, appliance stores, etc.
5. general construction firms – are those engaged in the construction of buildings
whether for private individuals or for government units, e.g. subcontracting jobs
on electrical and water facilities.

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E. Economic Importance of Small Business

Small business plays an important role in the development of one’s economy to assume
the following functions:

1. providers of economic opportunities for entrepreneurs – people who don’t feel to

be employees have the option to engaging in small business undertaking
2. providers of products and services – the production of many products and
services are oftentimes not feasible for big and medium entrepreneurs and these
are passed on to small businesses
3. suppliers of products and services to other businesses – some businesses require
raw materials, semi-finished parts, finished components which they could not
produce and which small operators perform this task
4. distributors of products and services – some manufacturers are not able to
distribute their products and services which many small businesses assume this
role for them
5. supporters of government – small businesses support the government by paying
taxes
6. providers of employment – a large proportion of the labor force are employed by
small businesses.

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 ENTREPRENEURIAL MANAGEMENT
MODULE

Lesson 3: Entrepreneurial Personality

The study on personality is paramount in entrepreneurship, as it identifies those traits or

characteristics of entrepreneurs that are highly applicable among would- be businessmen.
According to Edouard Spranger, a noted german psychologist classifies people to what values
they believe are important : they are either, theoretical, political, economic, aesthetic, social or
religious.

A. Personality Defined
It is the sum of those habit patterns or conditional responses to various stimuli required for
a successful career in entrepreneurship. This concept is vital because it guides us in making the
necessary adjustments in training future entrepreneurs.
Personality describes the unique and relatively enduring internal and external aspects of an
individual’s character that influence behavior over long periods and in different situations,
(Schultz). However, according to Spranger, he insinuates that those people with values classified
as “economical” are most fit people to having business inclinations.

B. Characteristics of Entrepreneurs

The entrepreneur has attracted the attention of social scientists. If so, - they are significant
to economic growth – then it follows that the tribe of entrepreneurial members of society should
multiply and be identified. Entrepreneurs are those described as:
1. opportunity seekers – a business minded person looks the chance of making an
opportunity for business to acquire space, markets, materials, equipment, loans or
training programs to begin an undertaking.
2. persistent – entrepreneurs stand on their ground in the face of those negative comments
saying it is unwise or not good to invest in an unsure business. The more they failed,
the more they are determined to try again. Some would try a different line of business,

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 different product, different market, different strategy while learning more than from
their past mistakes.
3. risk takers – entrepreneurs calculate moderate risks to study a market and its
environment for any investment made for a purpose.
4. goal setters - they always set goals according to a plan and in which it is clear for a
future endeavor. He is expected to accomplish things in the business for a long-term
business direction with an effective market performance.
5. committed to work – they are motivated to work and give honor to their word of duty
in meeting societal needs on time.
6. efficient for demand and quality – this is dominant by entrepreneurs who are achievers
and excellent to do business tasks completely in meeting demand and selling standard
goods and services.
7. information seeker – they seek information useful to the business. Information seeking
is related to planning. They consult experts, clients, competitors and suppliers to plan
any business in decision making. They will not also hesitate to approach government
promotion agencies, banks and other sources of information and guidance.
8. systematic planner and evaluator – a successful entrepreneur does not only plan but
also follows through the plan systematically and he checks if the activities and the
expected outputs are going on as planned. Planning enables him to avoid costly
mistakes and anticipates problems. Planning also enables the business man to
determine what he needs for the business in terms of materials, supplies, skills and
finances.. Likewise, it allows to program activities in advance.
9. persuasive and networker – the entrepreneur is a natural leader who can win people
over to his way of thinking. He must be able to persuade partners to put in their money
in his business. He also builds a network of contacts to starting and building up his
business career.
10. self-confident – an entrepreneur is one who believes in himself. He starts with the
premise that “ I can”. He is a person who believes in his capacity to achieve despite the
overwhelming odds in business.

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 C. Rewards and Risks of Being An Entrepreneur

Whatever it takes in business, an entrepreneur finds out iwhether he is willing to accept the
rewards and risks of becoming such. For many, the biggest motivation for going into business is
the chance to be rich or it is a way of expressing their creative and leadership abilities. being in
business can be most rerwarding and fulfilling and on the other hand, most risky and demanding.
A business can provide all these and more such as:
 make money – there is no limit to the amount of money an entrepreneur earns
in business. It is usually commensurate to the amount of his sacrifice, energy,
time and resources he invests in it.
 be one’s boss - the entrepreneur makes the shots to make his decisions and
takes full responsibility for hos own. If he makes the right decision he gains, on
the other hand, if he makes the wrong ones, his business loses.
 express creativity – any kind of business begins as an idea that an entrepreneur
has in his mind. The “seed” of his idea grows as he makes plans into action.,
thus he makes more productive ideas into innovations and diversify other
products and services. Creativity is also used when solving problems day-to-
day.
 feel fulfilled = usually a business allows a person to innovate, demonstrate
capability in securing and managing resource to face challenges. Satisfaction
will also come from recognition from family, friends, employees and the
community as a whole.

The risks in business are equally enormous and cannot be ignored. An entrepreneur must
think many times more and finding it, if he could be able to risk failure, to cope with
unpredictable business conditions, to work for long hours or to make small and big personal
sacrifices. The drawbacks in any business endeavor shall include, the following:
 the risk of failure – by nature, a small business is prone to risks and possibility
of failure. A single bad decision can make a small business bankrupt. A small
business is often weaker and like to fail than a large enterprise for reasons such

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 as: the inability to access loans, limited bargaining power and competition
from bigger companies.
 long hours of work – especially at the beginning, when a product or service is
just new and being developed and introduced in the market, business means
long hours and hard work. Sometimes, entrepreneurs have to miss lunch, sleep
holidays and weekends.
 unwanted responsibilities – entrepreneurship means social responsibility. If
one is in business, he is responsible to his employed workers, the customers he
serves and to the community he works for. He is also obliged to pay decent
wages, provide value for the customer’s money, compete fairly, and share his
wealth and good fortune to the community or society.

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 ENTREPRENEURIAL MANAGEMENT
MODULE

Lesson 4. Identifying Business Opportunities

In many entrepreneurial fora, the most frequently asked question by aspiring

entrepreneurs is: What is the best business to go into? The standard answer they always receive
is: “It depends”, which is explained in terms of the internal and external variables of a business
environment. Does this satisfy any one else?
Firm’s operate in a dynamic environment where success or failure is determined by how
well they match and counter the offerings of competitors. getting ahead of the competition
assures the survival and growth of a business.

A. Ways of Achieving Business Opportunities

An entrepreneur must be better advised in the following processes to achieve opportunities,

among them are:
1. better performing products and services
2. products and services to be economically maintained
3. products and services of lower acquisition costs
4. of higher salvage value
5. of more uses and users
6. products and services which are more easily available
7. the business is less susceptible to obsolescence

To best achieve any of the above, a small business is faced with any of the two (2) strategic
problems:
1. What products or services to offer at the start of the business?
2. What new products or services to offer when the business is already in operation for
some time?

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 An entrepreneur should look within and outside to identify what is the best business
opportunity he goes into:

B. Looking Within An Opportunity

In a way, the best business of one actually depends on – who you are, what you know and
what you have. Begin by looking for products, processes or services about which you already
know something. It is now a fact that many ideas for small businesses were the direct result of
experience in a previous job.

Example: Carpenters would be confident in going into construction, furnish making or sash
making. Seamstresses would have a best chance in going into garment making or stuffed toy
manufacturing.

By starting with what you know and what you have, you should not miss your goal.
Similarly, a hobby could become the basis for a full-time successful enterprise.
do you have one which you can expand into a business opportunity?
Example: A commercial garden on an idle lot which you can rent for a small fee would also be a
good possibility. Bonsai plants and desktop garden fountains are very much in demand.

Technical training is also closely linked with entrepreneurship. One can do well to begin a
business based on some vocation or trade skills he have learned, such as auto repair, metal
working, computer assembly, bookkeeping and deskstop publishing.

C. Looking Outside An Opportunity

After looking within, an entrepreneur can look around at the total business environment to
identify more opportunities. In other words, he can observe developments and trends in the
economy, demography and society as a whole – including political, ecological and technological
events of which will greatly affect his decision on what products to produce or services to offer.
hence, the following techniques are useful:

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 1. find a business opportunity in every market need – an entrepreneur must be in
business for serving human need, whether it ia a product or a service, it must
respond to what buyers need or want.
2. study demand and supply gaps - a business minded person must look into the
present demand for certain products and services that will meet societal needs. He
must check the local demand around in order to fill up the gap and at the same time
to meet supply trends.
3. study import-export movements – an entrepreneur must take the competitive
advantage of producing products at a much lower cost and offer cheaper-priced
products against those importers and exporters in the market place.
4. capitalize on available resources – the availability of certain resources in an area
can provide business opportunities. This resources may be in the form of raw
materials, skills, information or technology.
5. industry information - reading technical and business journals will keep
entrepreneurs to have more business ideas or opportunities. They could conduct
periodic studies which will provide reviews and expansion in some ways for
industry’s growth and market performance.

D. Other Business Options

Entrepreneurs may usher other business opportunities in any given market place who, in
return, can be more challenged to sniff out more business ideas competitively, such as:
1. Screen and Select the Best Investment Alternative
2. Explore Forward-Backward Industry Linkages
3. Adapt, Complement and Reshape Business Situations
4. Buying An Existing Business
5. Taking Franchise

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 ENTREPRENEURIAL MANAGEMENT
MODULE

Lesson 5 : Selecting An Entrepreneurial Undertaking

Engaging into an economic venture is indeed a promising opportunity. Its underlying

motive benefits one another in a way societal needs can be catered effectively. An important
consideration when deciding to hold a small business is the study of the external environment in
which it will operate. Is the environment a positive one for business in general and for one’s own
enterprise in particular?

As an entrepreneur one has the control of the internal environment. One can put in place
productivity and quality systems, train employees to be more productive or more to be quality-
oriented and acquire new technology. On the other hand, the external environment is hard to
control that one can only respond or adjust to its changes.

The external environment is essentially composed of the interaction of political-legal,

economic, technological and its intra-industry structures. Thus, the environment is affected by
political upheavals, technological advances and foreign market trends including price
fluctuations, inflow and outflow of capital and many things. There is a need in the study of
business environment of those economic and industrial policies, business laws and regulations
with the system of business incentives.

A. The Right Type of Business

The continuous success of a small business will truly depend on its dynamic market
systems. One way is to keep the customers satisfied with new and innovative products and
services. This will, however require activities suitable to the production of sound business ideas.

A sound business idea is a new offering that is feasible and which will provide an added
value to the entrepreneurs and society. At this time off, one has a shortlist of business ideas to

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think about and the next move is to decide which of these ideas to pursue that are more
challenging and interesting.

It is a sensible act for any aspiring entrepreneur to weigh his options carefully well and
come up a choice that will match his strengths, needs and business goals. Hence, a review of the
list and sorting out of ideas according to type of business activity will help the businessman.

B. How Does One Start?

An entrepreneur will have to consider a business idea that can be used as an entry tool or a
competitive weapon. He has to search an enterprise that matches his interest and personality.
When he exactly knows himself to run an undertaking, it would always be a good start.

A selection checklist of the entrepreneur’s business ideas can bring the best choice putting
the following elements together: knowledge of the business, skills to be used, experience in the
field, ease of entry in the market and the uniqueness of products and services offered for a sale in
a given market. At this point, a concrete criteria must be established in order to narrow down the
specific choices the business person gets into.

Screening business ideas will generate a good match to help the entrepreneur assess the
profitability of his economic entity to meeting the functional areas of his own business, namely:
1. market assessment – that generally concerns the presence or absence of buyers for
the entrepreneur’s available products in the market area and to which he could
determine his possible income;
2. use a technology in his venture and his acquisition power to obtain materials,
technical assessment – this examines the capability of the entrepreneur to equipment,
processes and skilled workers for his business;
3. financial assessment – this gives the entrepreneur’s idea on how much it will cost
him to start his undertaking and keep it going until revenues would begin coming in;

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 4. organizational assessment – this measures the familiarity of the entrepreneur’s type
of business he wants to manage, knowing the ins-and-outs of his money and as well,
on how he puts together all the resources required in his business.

C. Knowing The Market Potentials

A market is a place where buyers and sellers meet for mutual exchanges. It represents the
forces of demand and the forces of supply that entrepreneurs would want to engage potential
benefits for the purpose of creating full satisfaction with each other.

Afterwards, the entrepreneur has narrowed his choices in the selection process – he can
look around for the business opportunities in the market that will match his definite choice/s.. On
this phase, he will collect, list down, and examine data that have something to do with the selling
of goods and services he will offer. This scheme he will take part is the conduct of market
research.

Market Research will allow the entrepreneur to know more about the following:
 the demand for product or service – this will consider the people who will
likely buy or use the available commodities or services, how many they are
and finding out whether these buyers will have influence the location of the
business conducted;
 the supply for products or services – this will take into account the quantities
of goods and the degree of services that the marketers are willing to bring to
the market for business
 the prices of goods and services – this will define and entail how each
businessman can sell his goods/services to consumers at affordable or minimal
costs;
 the use of promotions and advertisements – this will inform the entrepreneurs
on how their products and services can be known and be available to the
public for consumption;

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  the study of competition – this is on the point that free market enterprise
system is challenging to all market participants; and
 the use of marketing strategies – this encourages all entrepreneurs to use their
own distinct techniques in selling a variety of goods and services at free
choices of competition.

D. Product and Service Innovations

A small business to continue its growth aand development in a market place must undergo
product and service innovations. Having the sound business ideas would greatly imply the
implementation of successful innovations. Aftermath, business ideas are regarded as outputs of
the creative skills of entrepreneurs.

Creativity is defined as the “the reorganization of experiences into new configurations”.

This will mean mentally taking things apart, rearranging the pieces in new and potentially
productive arrangements, and looking beyond the normal frameworks for new solutions.
The creative process has four (4) phases:
1. preparation – refers to the collection of two or more large bodies of information
that become associated with new and unique ways of creation
2. incubation - the creative person relaxes and withdraws from the intense
preparation period
3. insight – this phase occurs when the creative individual discover new
associations and patterns which provide a solution to a problem
4. verification – this involves testing, refining, demonstrating and communicating
the creative process during the preparation stage
To be able to reap the fruits of innovation, one must be familiar with what forms of innovation
may be considered. That is why, Innovations are classified in three (3) principal types, namely:
1. product innovation – refers to new products or services as well as improvements
of old products and services.
2. process innovation – refers to the improvement of processesin the organization.
3. marketing innovation – refers to the improvements in the marketing functions of
promotion, pricing, distribution, packaging and advertising

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 ENTREPRENEURIAL MANAGEMENT
MODULE

Lesson 6 : The SWOT Analysis

The distinctive competence of a small business would always lie at the hands of
entrepreneurs. Its successes and failures are both determined by the knowledge, skills and values
of those operators with one common bond to achieve business goals and objectives.

Nevertheless, the success of any economic undertaking is measured by the study of its
business environment. The most dominant consideration would take into account the interactions
of its internal and external environment using tools of assessment.

One famous managerial weapon that has been used in research and with those successful
entrepreneurs is the use of SWOT Analysis. Indeed, this was already proven by experienced
economic managers in the field of business management.
Any organization is confronted with adjustments of changes that are the results of the analysis of
the internal and external factors, affecting or influencing the development of such business in the
industry where it operates.

A. The Meaning of SWOT Analysis

SWOT analysis stands for Strengths, Weaknesses, Opportunities and Threats of the
business. Strengths and weaknesses refer to the factors internal to the company that must be
identified, while opportunities and threats are the conditions in the external business environment
which must be similarly analyzed.

B. What are Strengths?

Strengths refer to the resources or skills that provides the organization with a competitive
advantage in the marketplace. They represent the positive factors that contribute to the success of
the business. They include the skills of employees, expertise of workers, availability of resources
needed such as materials, information, machines, money and a strong demand for products and

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services. A small business can be made to maximize profits if its identified strengths are
exploited successfully.

Examples: a movie production’s unique line-up of talents. a company’s exclusive contract

with a reliable supplier, the strategic location of the company’s outlets and a company’s
exclusive marketing contract with distributors.

C. What are Weaknesses?

Weaknesses refer to the negative internal conditions that can lead to a lowering of
organizational performance. They are negative factors that may cause the business to stagnate or
be sluggish. They consist of having unclear goals and targets, poor leadership, inadequate skilled
workers, low morale among workers, inefficient processes and equipment, unstable supply of
materials, seasonal demand and lack of capital.

Examples: the company’s obsolete equipment, the absence of required skills among the
company’s working force, unrelaiable source of raw materials and poor location of the business.

D. What are Opportunities?

Opportunities refer to the current or future conditions in the environment that are favorable
to an organization’s potential outputs. They are factors in the environment that will allow the
business to earn more income. Government support particularly in terms of loans, good
infrastructure, technical and marketing assistance, incentives, technological innovations
specifically in communications technology, cost-saving devices and software programs for
business operations are some of the opportunities that an entrepreneur can seize to make his
business grow.

Examples: for the manufacturer of solar-powered equipment – the increasing public concern
for the preservation of the environment; for a construction company – the continuing destruction
caused by lahar; for a small telephone company – the fast-increasing number of households with
sufficient income in the franchise area and for a book publisher – the enactment of a law
allowing publishers access to servicing the book requirements of public schools.

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 E. What are Threats?
Threats are the opposite of opportunities. They refer to the negative external forces that
inhibit the firm’s ability to achieve its objectives. They represent unfavorable conditions or
effects in one’s business. They include an emerging and strong market competition, entry of
cheap imports, flight of skilled labor in favor of overseas jobs, declining market, shortage of raw
materials, political crisis, too much legislation and others.

Examples: to the small manufacturing firm serving the local market – the proposed
agreement on trade and tariff with other nations like in the General Agreement on Tariffs and
Trade and the Asean Free Trade Association; to the furniture manufacturing firm – the growing
difficulty in procuring raw materials; to the pawnshop operator - the likely entry of competitors
and to the local private high school – the proposed opening of a local branch of a prestigious
university.

As a summary, this lesson on SWOT Analysis can guide any entrepreneur to select a
business idea that is right and promising for him. Any demanded examination and evaluation of
the market, technical, financial and organizational aspects using the SWOT Analysis can assure
him greatly with good business prospects.

Course Requirements/Assessment:
1. Case Study, Reflection Paper, Researches, Quizzes and Major Examinations.
2. Grading System
 Prelim/Midterm/Final Exam 33.3%
 Quizzes 33.3%
 Attendance, Portfolio, Class Participation/Interaction 33.4%

Course Policy: (Attendance, Punctuality, Oral Exams, Portfolio and Case Oral Defense
activitie, Department Clearance and Exam Permit).

Course References; (APA Format)

1. Hisrich, Robert D. et al., Entrepreneurship, 10th Edition (2017), New York:
McGraw-Hill Education

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2. Greene, Clinton L. Entrepreneurship in Action, 4th Edition (2014): South-Western
Cengage learning
3. Mariotte, Steve, et al,.Entrepreneurship: Starting And Operating A Small
Business, 3rd Edition (2014), New Jersey: Pearson Prentice Hall, Incorporated
4. Calvin, Robert J. Entrepreneurial Management (Executive Journal Series), 2012,
USA: McGraw-Hill Education
5. Chaston, Ian. Entrepreneurial Management in Small Firms, 2010 Edition,
California: Sage publications, Incorporated.

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