Entrepreneurship

Concept of Entrepreneurship
The word “entrepreneur” was derived from the French verb
enterprendre, which means “ to undertake” This is pinpointing to those
who ”undertake” the risk of enterprise. The enterprise is created by an
entrepreneur and the process is called

“Entrepreneurship”
Entrepreneurs are innovators, willing to take risks and generate new
ideas to make it unique and profitable solutions to the present-day problems.

Factors Affecting Entrepreneurship

1. Personality Factors which includes:

a. Initiative- which means doing things even before being told
b. Proactive-which means he can classify opportunities and seize it.
c. Problem Solver- which means he can retain good relations with
other people
d. Perseverance-meaning he will pursue things to get done
regardless of challenges

e. Persuasion- means that he can entice people to buy even if they

don’t.
f. A Planner- meaning he makes plan before doing things and do not
fail to monitor it.

g. Risk-taker which means that he is willing to gamble but he will

calculate it first.

2. Environmental Factors which include political, climate, legal system,

economic and social conditions and market situations.

Common Competencies in Entrepreneurship

1. Decisive- an entrepreneur must be firm in making decisions.

2. Communicator- an entrepreneur must have a convincing power.
 3. Leader-an entrepreneur an entrepreneur must have the charisma to
be obeyed by his employees

4. Opportunity seeker- an entrepreneur must have the ability to be the

first to see business chances.

5. Proactive- controlling a situation by making things to happen or by

preparing for possible future problems.

6. Risk Taker- they have the courage to pursue what is their business
ideas.
7. Innovative- the entrepreneurs have big business ideas and they do
not stop improving and thinking of new worthwhile ideas for their
business.

Core Competencies in Entrepreneurship

1. Economic and dynamic activity- Entrepreneurship is an economic

activity because it involves the creation and operation of an enterprise
with a view to creating value or wealth by ensuring optimum utilization
of limited resources.

2. Innovative- Entrepreneurs constantly look for new ideas, thus he

needs to be creative.

3. Profit Potential- meaning the entrepreneur can be compensated by

his profit coming from the operation.

4. Risk bearing –meaning the entrepreneur needs to gamble but wise

enough to offset the risk.
Types of entrepreneurs

1. Innovative entrepreneur- they are those who always make new things
by thinking of new ideas.

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

3. Fabian entrepreneurs- they are those skeptical. They don’t initiate but
follow only after they are satisfied.
 4. Drone entrepreneur- they are those who lives on the labor of others.
They are die-hard conservatives even ready to suffer the loss of
business.

5. Social entrepreneurs-they are those who initiate changes in the

various fields such as education, health, human rights, environment
and enterprise development.

Career Opportunities of Entrepreneurship

1. Business Consultant- with the expertise of the entrepreneur he can

be a very good source of advices to other entrepreneurs and would be
business man.

2. Teacher- a graduate of an entrepreneurship can be use his

knowledge in teaching

3. Researcher- the entrepreneur can be employed as researcher by an

enterprise.

4. Sales- the entrepreneurship graduate can apply as salesman

5. Business Reporter- the entrepreneur being expert in the field, he can
be employed as business reporter.

Types of Entrepreneurs

1. Innovative entrepreneurs- have the ability to think newer, better and

more economical ideas.

2. Imitating- these are people who follow the path show by innovative
entrepreneurs

3. Fabian Entrepreneurs- are skeptical about changes to be made in the

organization.
4. Drone entrepreneurs- are persons who lives on the labor of other
5. Social entrepreneur- are people who drive social innovation and
transformation in various fields including education, health, human
rights and many others
 The creation of an entrepreneurial ideas leads to the identification of

entrepreneurial opportunities, which in turn results in the opening of an

entrepreneurial
Creation of venture. Identification of Opening of
entrepreneurial entrepreneurial entrepreneurial
TheIdeas
entrepreneurial process Opportunities
of creating a new venture is presented
Venture in the
diagram below. (Aduana, 2017)

Figure 1. The Entrepreneurial Process of Creating New Venture

Essentials in Entrepreneur’s Opportunity Seeking

These are the basic foundation that the entrepreneur must have in seeking
opportunities:

Entrepreneurial mind frame. This allows the entrepreneur to see things in a

very positive and optimistic way in the midst of difficult situation. Being a risk - taker,
an entrepreneur can find solution when problems arise.

Entrepreneurial heart flame. Entrepreneur's driven passion, they are

attracted to discover satisfaction in the act and process of discovery. Passion is the
great desire of an entrepreneur to achieve his/her goals.
Entrepreneurial gut game. This refers to the ability of the entrepreneur of
being intuitive. This also known as intuition. The gut game also means
confidence in one’s self and the firm believes that everything you aspire can
be reached.

Sources of Opportunities

There are many ways to discover opportunities. Looking at the big picture
some have noticed the emerging trends and patterns for business
 opportunities. While others are trying to find out their target market. Some are
the following sources of opportunities:

1. Changes in the environment

Entrepreneurial ideas arise when changes happen in the external
environment. A person with an entrepreneurial drive views these changes positively.
External environment refers to the physical environment, societal environment, and
industry environment where the business operates.

1.1 The physical environment includes

a. Climate- the weather conditions.
b. Natural resources- such as minerals, forests, water, and fertile
land that occur in nature and can be used for economic gain.

c. Wildlife- includes all mammals, birds, reptiles, fish, etc., that live in
the wild.

1.2 The Societal environment includes the various forces like

a. Political forces- includes all the laws, rules, and regulations that
govern business practices as well as the permits, approvals, and
licenses necessary to operate the business.

b. Economic forces- such as income level and employment rate.

c. Sociocultural forces- customs, lifestyles and values that
characterize a society.

d. Technological environment- New inventions and technology

innovations.

1.3 The industry environment of the business includes:

a. Competitors
b. Customers
c. Creditors
d. Employees
e. Government
f. Suppliers
For example, one factor in the physical environment that can easily
change is the climate. The temperature is very high during summer but very low
 during the rainy season. An individual with entrepreneurial drive can be extremely
imaginative and inventive in identifying opportunities. He/she can venture a
business that responds to the needs of the people during summer and rainy
season.

2. Technological discovery and advancement

A person with entrepreneurial interest sees possibility of business

opportunities in any new discovery or because of the use of latest technology.

For example, an individual with knowledge in repair and installation of a

machine engine discovers that additional engine parts that considerably reduce fuel
consumption.

3. Government’s thrust, programs, and policies

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

For example, the use of firecrackers to celebrate New Year’s Eve is strictly
prohibited. People without entrepreneurial interest will view the ordinance as a plain
restriction. However, for an entrepreneur, it is a business opportunity to come up with
a new product that will serve as a substitute for firecrackers.

4. People’s interest
The interest, hobbies, and preferences of people are rich source of
entrepreneurial ideas. Like the increasing number of Internet Café at present could
be lead to the strong attachment of young people to computers.

5. Past experiences

The expertise and skills developed by a person who has worked in a particular
field may lead to the opening of related business enterprise.
 For example an accountant who has learned the appropriate accounting and
management skills and techniques in a prominent accounting firm can start his/her
business venture by opening his/her own accounting firm.

Forces of Competition Model

It is also known as the “five forces of competition,” An industry environment is
a competitive environment. Regardless of what product or services you have,
competition is always present.

Competition – it is the act or process of trying to get or win something.

For example, the prices are lower when there is a competition among the
stores.

These are the five forces competing within the industry:

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

1. Buyers
The buyers are the one that pays cash in exchange to your goods and
services. For example, the influenced of the price or in the bargaining strategy. The
buyer has a strong and magnified bargaining power. The threat of its bargaining
power will be less if the following factors notice:

a. There are several suppliers available in the market.

b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
e. The buyer purchases large portions of the seller’s product or services.
2. Potential New Entrants
A new entrant is defined as the one who enters something. For example, the
level of capital requirements, if the business requires huge capital, new entrants
should decline to join the business. This gives a threat to the business. This can be
notice if there is the presence of the following factors:

a. Substantial capital requirement.

b. Strict government policy.
c. Difficulty in accessing distribution channels.
d. Economies of scale.
e. High cost of product differentiation.
f. High switching cost

3. Rivalry among Existing Firms

Rivalry is a state or situation in which people or groups are competing with
each other. For example it depends on the Marketing strategy of your competitor, like
giving freebies and special offers. The intensity of rivalry among existing firms is
characterized to the following factors:

a. Diversity of rivals.
b. Number of competing firms.
c. Characteristics of the products or services.
d. Increased capacity.
e. Amount of fixed costs.
f. Rate of industry growth.

4. Substitute Products
Substitute means anything that takes the place or function of another. For
example the consumers decide to use margarine as a substitute for butter. In case
the price of butter increases, preferably the consumer will gradually switch to
margarine.

A substitute product can give a big threat in the industry environment if the
following factors are notice:
a. Switching cost is low.
 b. Preferences and tastes of the customers easily change.
c. Product differentiation is highly noticeable
d. The quality of substitute products dramatically improves.
e. The price of substitute product is substantially lower.

5. Suppliers
The Suppliers are the one that provide something that is needed or wanted. For
example if the supply and services being offered is unstable or keep. The intensity of
the threat is strong in this kind of the competitive force in the industry. This can be
notice if there is the presence of the following factors:

a. The supplier has the ability for forward integration.

b. Suppliers in the industry are few, but the sales volume is high.
c. Substitute products are not readily available in the market
d. The switching cost is very high.
e. The product or service is unique.

Definition of Terms
Opportunity seeking - Process of considering, evaluating, and pursuing
market based activities that are accepted to be beneficial for the business.
Entrepreneurial process - can be defined as the steps taken in order to
begin a new enterprise. It is a step-by-step method, one has to follow to set up
a business. Entrepreneurial ideas - an innovative concept that can be used
for financial gain that is usually centered on a product or service that can be
offered for money.

Essentials of entrepreneur’s opportunity seeking - These are the basic

foundation that the entrepreneur must have in seeking opportunities, such as
entrepreneurial mind frame, heart flame and gut game.

Sources of opportunity - can be attain by assessing and looking at changes

in the environment; technological discovery and advancement; government’s
thrust, programs, and policies; people’s interest, and past experiences.

External environment - refers to the physical environment, societal

environment, and industry where the business operates.
 Government - refers to the local government (municipality, city, or provincial)
or the national government and its branches.

Competition – it is the act or process of trying to get or win something.

Substitute – anything that takes the place or function of another.
New entrants – the one who enters something.
Suppliers – are the one that provide something that is needed or wanted.
Buyers – are the one that pays cash in exchange to your goods and services.
Rivalry – is a state or situation in which people or groups are competing with each
other.

Value Proposition (VP) is a business or marketing statement that

summarizes why a consumer should buy a company's product or use its service.
This statement is often used to convince a customer to purchase a particular
product or service to add a form of value to their lives. In creating Value
Proposition, entrepreneurs will consider the basic elements:

• Target Customer
• Needs/opportunity
• Name of the product
• Name of the enterprise/company
There are many competitors in the market to establish superiority to them.
Entrepreneurs should think some alternative and how it works better. An important
aspect in Value Proposition must be truthful that will establish credibility to the
consumers.

Example: Potential value proposition is most common in small businesses of

your locality.

Aling Charing Sari-sari Store open only from 6:00 am to 6:00 pm, but Aling
Charing noticed that there are customers who go nearby town to look for a
convenience store at around 10:00 pm to 6:00 am. She believes that this is a great
opportunity for her store to operate 24/7. In this example, proposed value
proposition: “Charing Sari-sari Store, opens 24/7”.

The business describes sari-sari store – a basic retail store. The assurance
from this value proposition is because of the phrase “opens 24/7”, Aling Charing
Sari-sari Store opens 24/7, which make it different from other competitors.
Unique selling proposition (USP) refers to how you sell your product or services
to your customer. You will address the wants and desires of your customers.

As entrepreneur, you think of marketing concept that persuade your target

customers. The following questions you may ask in doing this, What the customers
want? What brand does well? What your competitor does well?
Some tips for the entrepreneur on how to create an effective unique selling
proposition to the target customers:

• Identify and rank the uniqueness of the product or services character

• Very Specific
• Keep it short and simple (KISS)
As entrepreneur, present the best feature of your product or services that
are different from other competitors. Identifying the unique selling proposition
requires marketing research that you will learn from the other modules. In
promoting your products or services, make sure that it is very specific and put
details that emphasize the differentiator against the competitors. Keep it short and
simple and think of a tagline that is easy to remember. Right now, the proposed
unique selling proposition:

“Charing Sari-sari Store, opens 24/7”.

Readers get confused between value proposition and unique selling
proposition. The two propositions are used to differentiate the products from
competitors. For example, Jollibee is known to have a Filipino taste burger. This
brand has a unique selling point because of its tagline “Langhap Sarap”

Unique Value Proposition and Value Proposition are two most famous tools
used to explain why prospect customers buy each products and services. Base on
each definition, we learn that USP and VP are frameworks of each business
industry. The two propositions are valuable for the entrepreneurs.

After you understand the value proposition and the unique selling
proposition, now it’s time to understand the target market, customers requirement
and market size.

A. Target Market
 Market Targeting is a sage in market identification process that aims to
determine the buyers with common needs and characteristics. Prospect customers
are market segment that entrepreneurial venture intends to serve.

In targeting a specific market, it will exclude people even if it will not fit your
criteria. Rather, target marketing allows you to focus your marketing money and
brand message on a specific market that is more likely to buy from you than other
markets. Product is more affordable, efficient, and effective way to reach potential
clients and generate business.

Commonly used methods for segmenting the market are follows.

1. Geographic segmentation – the total market is divided according to
geographical location.

• Variable to consider
a. Climate
b. Dominant ethnic group
c. Culture
d. Density (either rural or urban)
2. Demographic Segmentation – divided based consumers.
• Variable to consider
a. Gender
b. Age
c. Income
d. Occupation
e. Education
f. Religion
g. Ethnic group
h. Family size
3. Psychological Segmentation- divided in terms for customers think and
believe.

• Variable to consider
a. Needs and wants
b. Attitudes
 c. Social class
d. Personality traits
e. Knowledge and awareness
f. Brand concept
g. Lifestyle

4. Behavioral Segmentation- divided according to customers behavior

pattern as they interact with a company.

• Variable to consider
a. Perceptions
b. Knowledge
c. Reaction
d. Benefits
e. Loyalty
f. Responses
B. Customer Requirements

Customer requirements are the specific characteristics that the customers need
from a product or a service.

There can be two types of customer requirements:

1. Service
Requirement
2. Output
Requirement Service
Requirement:

Intangible thing or product that is not able to be touched but customer can
feel the fulfillment. There are elements in service requirement like on-time delivery,
service with a smile, easy-payment etc. It includes all aspects of how a customer
expect to be treated while purchasing a product and how easy the buying process
goes.
 Output Requirements:
Tangible thing or things that can be seen. Characteristic specifications that a
consumer expects to be fulfilled in the product. Costumer that will avail services as
a product, then various service requirements can take the form of output
requirements. For example, if the consumer hires a multi cab, then on-time arrival
becomes an output requirement. Customer buys gadgets (phone speaker), the
specification like the loudness and clarity are the output requirements.

C. Market Size
Entrepreneur’s most critical task is to calculate the market size, and the
potential value that market has for their startup business. Market research will
determine entrepreneur possible customers in one locality.

What is Market Size?

Market size is like a size of arena where the entrepreneurs will play their business. It
is the approximate number of sellers and buyers in a particular market. Companies
are interested in knowing the market size before launching a new product or service
in the area. In determining the market size, entrepreneur will conduct a strategic
marketing research from reliable sources using the following method. First step is to
estimate the potential market – approximate number of customers that will buy the
product or avail your services. Second step is to estimate the customers who
DATA COLLECTION is the most valuable tool of any type of research study.
Inaccurate data collection may cause mistakes and ultimately lead to invalid results.

TIPS in GATHERING DATA

• Organize collected data as soon as it is available

• Know what message you want to get across and then collect data that is
relevant to the message
• Collect more data
• Create more data
• Regularly run experiments or collect data
• Challenge your assumptions
• Set reasonable expectations
• Take note of interesting or significant data

In this lesson, we will consider the three different data collection techniques –
SURVEY (Questionnaire), INTERVIEW and FOCUS GROUP DISCUSSION – and
evaluate their suitability under different circumstances

SURVEYS are the most common way to gather primary research with the
use of questionnaires or interview schedule. These can be done via direct mail,
over the phone, internet (e.g. Google) or email, face-to-face or on Web (e.g.
Skype or Viber).

When designing or constructing your own research questionnaire, remember

the following guidelines. (Edralin, 2016)

• Keep it simple as possible.

• Make sure it is clearly appealing and easy to read.
• Cluster or block related questions.
• Move from complex questions to more specific questions.
• Make sure questions are concise and easily understood.
• Avoid questions that are difficult to answer.
• Make sure any response scales used are consistent with categories that
are mutually exclusive.

INTERVIEW is one of the most reliable and credible ways of getting

relevant information from target customers. It is typically done in personal
between the researcher/entrepreneur and a respondent where the researcher
asks pertinent questions that will give significant pieces of information about the
problem that he will solve. The interview is also helpful even when the business
has already started because the customers’ feedback provides the entrepreneur
a glimpse of what the customers think about the business.
Interviews normally last from 15 to 40 minutes, but they can last longer,
depending on the participants’ interest in the topic.

In a structured interview, the researcher asks a standard set of questions

and nothing more.(Leedy and Ormrod, 2001)

• Personal interviews are the traditional method of conducting an

interview. It allows the researcher to establish relationship with potential
 participants and therefore gain their cooperation. It generates highest
response rates in survey research. They also allow the researcher to
clarify indefinite answers and when necessary, seek follow-up
information.

• Telephone interviews are less expensive and less time consuming, but
the disadvantages are that the response rate is not as high as the face-
to- face interview, but considerably
higher than the mailed questionnaire.

FOCUS GROUP DISCUSSION (FGD) - is an

excellent method for generating and screening
ideas and concepts. It can be a moderated group interviews and brainstorming
sessions that provide information on user’s needs and behaviors.

The following are considerations in the use of focus group discussions in market
research:

• The length of the session is between 90 and 120 minutes.

• Usually, conduct focus groups discussion with 8 to 10 participants per
group.

• Assign an expert moderator / facilitator who can manage group

dynamics..
• Use a semi-structure or open-format discussion
• Strive for consistency in the group’s composition (for example, it may not
be advisable to have business customers and retail customers in the
same focus group, their needs are very different)