entrep prelim

• the value added and profits that they make are limited.

• Most of the time, innovations are introduced to have changes in their production and distribution process.

• the contribution given are minimal and attracts few competitors and imitators.

microentrepreneurs

• they are short in funds, adequate skills, they struggle to undertake projects that involves huge capital, sophisticated technology and extensive risks.

• they contribute in the inclusive growth.

microentrepreneurs

examples of microentrepreneurs:

1. sari-sari store

2. street vendors

3. carpenters

4. farmers

5. freelancers

This type entrepreneurs often engage in micro and small business as an alternative to formal employment.

megaentrepreneur

examples of megaentrepreneur:

1. Microsoft

2. Disney

3. Google

characteristics of an entrepreneur: (4)

1. Level of education

2. Employment Status

3. Entrepreneurs Wealth

4. Risk Appetite

• Studies have shown that entrepreneurs need some formal education to be able to seize opportunities presented by inventions, innovations and other technological developments.

• In bigger businesses, education and proper training is more required.

Level of Education

• Individuals who became entrepreneurs in developed countries are usually former employees of companies in the formal sector.

• The choice of pursuing entrepreneurship is such a big step in the entrepreneur’s professional development.

• These entrepreneurs usually get ideas from the companies that they worked with. Knowing the ins and outs, weaknesses and strengths one’s company may have.

Employment Status

• Another factor that an entrepreneur must consider.

• Most of the megaentrepreneurs got their source of funds from their own wealth and from their families or borrow some from their parents.

• Due to limited human resources, microentrepreneurs often struggle to borrow credit from financial institutions.

Entrepreneurs Wealth

This is important in running a business.

Risk

It is associated with uncertainties in business operations, these can threaten stability of a business enterprise.

Risk Appetite

Entrepreneurial Process:

1. Discovery

2. Business Idea

3. Business Plan

4. Organizing Resources

5. Implementation

6. Reaping

Refers to the recognition of a business idea or the detection of opportunities that could make money for the entrepreneur.

Discovery

they draw their ideas from current inventions and other developments that can bring huge profits for them.

Megaentrepreneurs

• This is transformed into a business concept.

• The development of a business concept gives more details on the general plan.

• It shows the preparation and various activities that is needed from the production to the distribution service.

Business Idea

describes how the enterprise is going to be managed, and how the business is going to be financed among others.

Business Plan

Why is Business Plan important?

1. Helps determine whether a proposed or existing business venture is viable given its target market

2. It guides the entrepreneur in mobilizing the resources needed by the business

3. It serves as a tool in helping get financing for the business

3 Users of Business Plan

1. Entrepreneur

2. Lender

3. Investor

Why the Business Plan is Important to Entrepreneurs?

• serves as a road map for managing the business

• identifies the resources needed to operate and grow the business

• allows the entrepreneurs to anticipate potential business risks

Why the Business Plan is important to Lenders?

• allows the lender to assess whether the entrepreneur will be able to meet debt and interest payments

• provides information about collateral or tangible assets that can be secured for the loan

Why the Business Plan is important to Investors?

• allows the investor to gauge whether projected returns are acceptable

• provides information about the character of the entrepreneur and about the capability of the venture’s management team

Describes the process of identifying, sourcing, and financing human, nonhuman and other resources needed to conduct for business.

Organizing Resources

The process of carrying out a business plan. It covers for number of activities, including the management of human, physical, technological and financial resources of business.

Implementation

• The returns pertains to strategies related to the expansion of the business firm.

• Covers mechanisms in addressing conditions in the business environment that may affect the future of the firm.

Reaping

Characteristics of a Filipino Entrepreneur:

• More females than males are engaged in early stage of entrepreneurial activities.

• Males tend to be more resilient in staying in business, as females withdraw at the intermediate stage.

• Entrepreneurship attracts more young individuals. It becomes more visible employment for the young.

• Half of the entrepreneurs have finished secondary schools.

• Majority of those engaged in early entrepreneurial activities in the PH are consumer services including retail, food, personal beauty care, appliance and electronic repair, cleaning services and laundry services.

Entrepreneurial Decision-Making

1. Critical Thinking

2. Creative Thinking

3. Blue-Ocean Strategy

4. Strategic Thinking

• It refers to the systematic and rational way of providing an answer to a question.

• It follows steps in responding to an inquiry.

• It adheres to the rules of logic in connecting the relationships of variables and in making conclusions.

Critical Thinking

• Refers to thought processes that bring about discovery of new ideas.

• It doesn’t follow a systematic or analytical process.

• These ideas start from a dream, insight or from mere observation.

• The intent of this thinking is to lead to discovery and change.

Creative Thinking

A strategy created by W. Chan Kim and Renee Maubourgne

Blue-Ocean Strategy

New products can arise from a creative complementation of products and services. (e.g Cique de Soleil, which combined circus and opera). Similarly new products and services can surface from differentiating a buyer from a user or by looking for functional and emotional appeal among buyers.

Blue-Ocean Strategy

involves thought processes that assess a current situation, which can still be useful in the formulation of plans in the future.

Strategic Thinking

uncertain situations that may cause loss or failure.

Risks

Two types of Risks

• Internal Risks

• External Risks

Risks from within the business (management, finance, staff, reputation).

Internal Risks

Risks from outside the business (economy, politics, competition, disasters).

External Risks

Examples of Internal Risks

• Financial issues (high-interest loans, poor cash flow)

• Hiring challenges (unattractive compensation)

• Damage to reputation (poor product/service quality)

• Lack of innovation (outdated business models)

Examples of External Risks

• Slow economic growth

• Increased competition or substitute products

• Commodity price fluctuations

• Government regulations and policies

• Natural disasters, power outages, or wars

Process of identifying, assessing, and responding to risks.

Risk Management

Managing Internal Risks

• Control use of resources

• Maintain product/service quality

• Develop and retain best talents

• Invest in research and innovation

Managing External Risks

• Review strategic plans regularly

• Monitor global and national developments

• Prepare contingency and emergency plans

• Stay ready for unexpected disruptions

• The ability to think flexibly and adjust decisions based on changing conditions.

• Requires flexibility, dynamism, and self-control.

• Helps entrepreneurs make sound decisions under uncertainty.

Cognitive Adaptability

Qualities of Cognitive Adaptability:

• Flexibility – Shift between different thinking styles: Critical Thinking, Creative Thinking, Strategic Thinking

• Dynamism

• Self-Control

for solving problems

Critical Thinking

for product innovation

Creative Thinking

for long-term goals

Strategic Thinking

Awareness and responsiveness to environmental changes

Dynamism

Make thoughtful, not impulsive, decisions

Self-Control