ENTREP | ETA Reviewer

Entrepreneur | Etymology

It is derived from the French verb enterprendre, which means “to undertake.”

Entrepreneur | Definition

• Innovators who are willing to take the risks and generate unique ideas that can provide profitable solutions to the needs of the market and the society.

• They start and run the business, with the business idea encompassing a new product or service rather than an existing model.

• They are responsible for all corresponding rewards and risks.

Personal Entrepreneurial Competencies

1. Opportunity Seeker

2. Persistence

3. Proactive

4. Risk Taker

5. Leader

6. Decisive

7. Innovative

Opportunity Seeker

the ability to be the first to see business chances

Persistence

doing something consistently even though others say that you will not succeed or that you are just wasting your time and effort

Proactive

controlling a situation by making things happen or by preparing for possible future problems

Risk Taker

deliberately calculating risks and evaluating alternatives, and placing self in situations involving a challenge

Leader

having the charisma to be obeyed by his employees

Decisive

being firm in making decisions

Innovative

having big business ideas while continuing to improve and think of new worthwhile ones

Types of Entrepreneurship

1. Small Business

2. Scalable Startup

3. Large Company

4. Social

Small Business Entrepreneurship

involves starting and operating a business without the intention of scaling it into a large enterprise

Scalable Startup Entrepreneurship

focuses on developing innovative ideas that can be expanded significantly

Large Company Entrepreneurship

involves creating new business divisions within established companies

Social Entrepreneurship

aims to create social or environmental benefits rather than focusing solely on profits

Types of Innovation

1. Product

2. Process

3. Physical Environment

Product Innovation

creating new or improved products or services

Process Innovation

improving efficiency and effectiveness of how the business operates and is managed

Physical Environment Innovation

the ways in which the physical surroundings can be designed and modified to foster creativity, productivity, and overall well-being, ultimately leading to innovation

Career Opportunities

1. Business Consultant

2. Teacher

3. Researcher

4. Salesman

5. Business Reporter

Business Consultant

with the expertise of in the field of entrepreneurship, he can be a very
good source of advice to other entrepreneurs and would be businessmen

Teacher

where a graduate of an entrepreneurship can use their knowledge in teaching

NGO

• obtains the needed funds through donations, philanthropy, and grants

• provides goods and services (if any) without charge

Social Enterprise

• obtains the needed funds through loans and capital investment

• aims to become financially sustainable and generate income

Importance of Social Entrepreneurship

1. Employment Development

2. Innovation/New Goods & Services

3. Social Capital

4. Equity Promotion

Employment Development

Social enterprises provide employment opportunities and job training to the disadvantaged segments of society.

Innovation/New Goods & Services

Social enterprises provide solutions for societal problems like illiteracy, hunger, malnutrition, gender equality and environmental protection.

Social Capital

Social enterprises value social capital which is the long-term relationship between communities and countries that practices the ethics of cooperation.

Equity Promotion

Social enterprises are change agents that provide unmet social needs. Their framework starts at the social and economic grassroots level to seriously address the issues rather than profit maximization.

The Entrepreneurial Process

1. Business Idea Generation

2. Development of a Business Plan

3. Gathering of Resources

4. Managing of Resulting Enterprise

Business Idea Generation

• Also known as the identification and evaluation of opportunities.

• Generating an idea that you would like to innovate.

Development of a Business Plan

• A document that outlines a company's goals and the strategies to achieve them.

• Can use the Business Model Canvas

Gathering of Resources

• Methods that you will use to create your product.

• The materials and machine that you need in the production process.

Managing of Resulting Enterprise

• Opening up the business itself.

• Managing and monitoring the business operations

Michael Porter’s Five Forces of Competition

It is an analysis of competitive environment, which leads to some businesses inherently being more profitable. These include:

1. Buyers

2. Potential New Entrants

3. Rivalry among Existing Firms

4. Substitute Products

5. Suppliers

Buyers

• the ones that pay cash in exchange for your goods and services

• it is better for them to have lower power as they will not be able to easily switch businesses

Potential New Entrants

• companies or businesses that have the ability to penetrate or enter into a particular industry depending on the area’s rules and laws

• the stricter the laws of the area, the harder it is to enter the industry, making it less attractive

Rivalry among Existing Firms

• when business organizations compete with each other in a particular market

• an industry would be less attractive if there are more businesses to compete against

Substitute Products

• one that serves the same purpose as another product in the market, albeit provides different benefits

• an industry would be less attractive if there are more potential substitutes for your products

Suppliers

• the one that provide something that is needed in business operations such as office supplies and equipment

• an industry would be less attractive if there are less suppliers as a low number of suppliers entail that they control the market

Steps in Analyzing the Forces of Competition

1. Define the industry to be analyzed.

2. Identify the current situation relevant to the analysis.

3. Analyze the power of each force of competition and how they would impact the industry attractiveness.

4. Determine the overall attractiveness of the industry and the needed business strategy.

Target Market

aims to determine buyers with common needs and characteristics that you need to focus on for your enterprise

Importance of Target Market

While multiple people want to purchase your product/service, they may want that product for different reasons. Selecting your target markets allows you to know accurately how to promote and sell your product.

Segmentation

grouping of potential customers together by focusing on certain traits such as age, gender, income, occupation & family status and education

Marketing Segmentation

aggregating prospective buyers into groups or segments with common needs and who respond similarly to a marketing action

Segmentation Variable Types

• demographic

• geographic

• psychographic

• behavioristics

Demographic Variables

based on the statistical characteristics, examples include:

• age

• gender

• race

• ethnicity

• income

• education

• occupation

• family size

• family life cycle

• religion

• social class

Geographic Variables

based on the location of the buyer, examples include:

• climate

• dominant ethnic group

• culture

• density (rural or urban)

Psychographic Variables

based on the way the buyers think, examples include:

• needs and wants

• attitudes

• social class

• personality traits

• knowledge and awareness

• brand concept

• lifestyle

Behavioristic Variables

based on the way the buyers act, examples include:

• volume usage

• end use

• benefit expectations

• brand loyalty

Marketing Mix

the actions and strategies taken by entrepreneurship to market their product, or make it known to consumers

Product

• refers to any goods or services that is produced to meet the consumers’ needs, wants, tastes and preferences

• is considered excellent if the received benefits by the consumer exceeds the amount of money they paid

Goods

tangible products

Service

intangible products that improve the quality of life for you or your possessions

Value Proposition

is a general business or marketing statement that summarizes why a consumer should buy a company's product or use its service

Unique Selling Proposition

• refers to how you sell your product or services to your customer, addressing the their wants and desires.

• statement that sets your product apart from other competitors

Feature-Advantage-Benefit (FAB) Table

helps produce a unique selling proposition

FAB Table | Feature

shows how one’s product is differentiated from its competitors

FAB Table | Advantage

shows the advantage of the aforementioned feature

FAB Table | Benefit

shows what benefits the product features can provide

Packaging

the outside appearance of a product and how it is presented to the customers

Basic Functions of Packaging

1. Protection

2. Information

3. Utility of Use

Protection of Packaging

provides this for the effects of time and environment on natural and manufactured goods

Information of Packaging

conveys necessary information to the consumers

Utility of Use of Packaging

the convenience packaging has been devised for foods, household
chemicals, drugs, adhesives, paints, cosmetics, paper goods and a host of other products

Place Strategy

How products and services get from the produce to the consumer

Business Vicinity Map

• helps understand the area to better understand the potential customers such as:

  • the demographics of the area to know how to target the customers

  • the major roads to better understand the foot traffic

Consumer Markets

those from households who purchase for personal consumption

Business Markets

those who purchase for resale, direct use in the production of other products, and/or daily business operation use

Distribution Channel Strategy

how the products are distributed

Direct Distribution

A strategy where the product goes from seller to end consumers. This prevents any additional mark-up from being added. Examples include

• Manufacturer to End Consumer

• Manufacturer to Agent to End Consumer

• Manufacturer to Business Markets

• Seller to End Consumer

Indirect Strategy

The product is handled by an intermediary before reaching the customer. It is helpful for newer businesses as it allows them to have a wider reach. Examples include:

• Manufacturer to Wholesaler to Retailer to End Consumer

• Manufacturer to Retailer to End Consumer

• Wholesaler to Retailer to End Consumer

Channel Types

1. Single-channel

2. Multi-channel

3. Omni-channel

Single-channel

There is only one warehouse and one physical store, both of which have a direct communication with each other. The physical store distributes it directly to the customers. It is ideal for start-up businesses.

Multi-channel

There is multiple warehouses, one for each store (i.e. one for an online store and another for a physical store). This allows for each store to have their own inventory. It is ideal for large companies with plenty of bulk orders.

Omni-channel

There is one warehouse for both the online and physical stores. They share the inventory, allowing for proper integration between both stores. It is ideal for medium sized channels.

Positioning Strategy

refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors

Steps of Positioning Strategy

1. Determine company uniqueness by comparing to competitors.

2. Identify current market position.

3. Competitor positioning analysis.

4. Develop a positioning strategy.

Promotional Strategies

• the complete set of activities, which communicate the product, brand or service to the use

• focuses on creating the awareness and persuading the customers to initiate the purchase

Promotional Mix Types

1. Advertising

2. Direct Marketing

3. Sales Promotion

4. Personal Selling

Advertising

Any paid form of non-personal presentation and promotion of goods and services by the identified sponsor in the exchange of a fee.

• Print

• Electronic

• Television

• Word of Mouth

• Social Media

Personal Selling

a face to face interaction between the company representative and the customer

Sales Promotion

Short term incentives given to the customers to have an increased sale for a given period.

• Free Sample

• Free Trial

• Free Gifts

• Special Pricing

Direct Marketing

With the intent of technology, companies reach customers directly without any intermediaries or any paid medium.

Pricing Strategy

refer to the processes and methodologies businesses use to set prices for their products and services

Price

• The value of money in exchange for a product or service.

• The amount or value that a customer gives up to enjoy the benefits of having or using a product or service.

Types of Pricing Strategy

1. Penetration Pricing

2. Psychological Pricing

3. Optional Pricing

4. Dynamic Pricing

Penetration Pricing

the price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased.

Psychological Pricing

the practice of setting prices slightly lower than rounded numbers, in the belief that customers do not round up these prices

Optional Pricing

company earns more through cross-selling products along with a basic core product. The main product does not have many features which can be enhanced through optional or accessory products.

Dynamic Pricing

the practice of varying the price for a product or service to reflect changing market conditions, in particular the charging of a higher price at a time of greater demand.

Unit Cost

the total cost of producing, storing, and selling a single unit of a product or service

Unit Cost Formula

Variable Cost + (Fixed Costs / # of Units)

Variable Cost

materials you can directly see on the product (e.g. raw materials/ingredients, packaging)

Fixed Cost

related costs not seen on the product (e.g. equipment, rent, wages)

How to Get the Unit Cost

1. Identify and compute for the variable and fixed costs

2. Compute for the unit cost using the formula.

Using Mark-Up Pricing

1. Compute for the mark-up percentage to obtain the peso mark-up value (PMV).

2. Add the PMV to the unit cost to obtain the mark-up price.

3. Apply any pricing strategy if needed, assuming it is based on market research.

People Strategy

ability to select, recruit, hire and retain the proper people, with the skills and abilities to do the job you need

Human Resource Management

the practice of recruiting, hiring, deploying and managing an organization's employees

Human

the skilled workforce in an organization