Entrepreneurship Q1 Key Notes
Entrepreneurship Basics
• Term derives from French "entreprendre" = "to undertake" ➔ assumes risk to create enterprise.
• Entrepreneurship = process of creating & managing a new enterprise.
• Relevance:
– Develop managerial skills.
– Create organizations.
– Raise individual standard of living.
– Drive broad economic development.
Types of Entrepreneurs
• Innovative – originates new ideas.
• Imitating – adopts others’ ideas.
• Drone – resists change.
• Fabian – cautiously follows proven innovations.
• Social – pursues ventures with social impact.
• Other labels: entrepreneur (business owner), intrapreneur (inside existing firm), edupreneur (education focus), private/solo, lifestyle, serial, startup founder.
Entrepreneurial Competencies
• Common: decisive, communicative, leadership, opportunity seeking, proactive, risk-taking, innovative.
• Core: economic activity, innovation, profit focus, wise risk bearing.
Career Paths
• Consultant, teacher, researcher, salesperson, business reporter.
Opportunity Recognition
• Mind frame (optimism), heart flame (passion), gut game (intuition).
• Main sources: environmental changes, technology advances, government thrusts, people’s interests, personal experience.
Five Forces of Competition
• Buyers, potential entrants, rivalry, substitutes, suppliers ➔ each exerts threat when power/high.
Market Concepts
• Value Proposition – clear promise of benefit to target customer.
• Unique Selling Proposition – concise reason to buy from you (differentiator).
• Target Market – segment with shared needs; segmentation can be geographic, demographic, psychographic, behavioural.
• Customer Requirements – service (intangible) & output (tangible) expectations.
• Market Size – estimate potential buyers, likely non-buyers, then venture’s share.
Market Research Tools
• Surveys (questionnaires).
• Interviews (personal, phone).
• Focus Group Discussions.
• Data collection must be organized, relevant, plentiful, and critically assessed.
Seven P’s Marketing Mix
• Product – goods/services definition.
• Place – distribution channels (direct, retailer, wholesaler).
• Price – money value exchanged; influenced by supply, cost, product type, substitutes, life-cycle stage, consumer profile; strategies include penetration, psychological, discount.
• Promotion – advertising, personal selling, sales promo, direct marketing.
• People – everyone involved in delivery & experience.
• Packaging – protection, containment, information, utility, promotion.
• Positioning – functional, symbolic, experiential image in customer mind.
Branding Essentials
• Brand = distinctive name/symbol; strategy guided by purpose, consistency, emotion, flexibility, employee involvement, loyalty, competitive awareness.
Basic Pricing Formula
• Mark-up
• Selling Price
Entrepreneurship Basics
Term derives from French "entreprendre" = "to undertake"
Implies taking initiative and assuming inherent financial and operational risks to create a new enterprise or venture.
Entrepreneurship = process of creating & managing a new enterprise.
This involves identifying opportunities, mobilizing resources, developing a business plan, and launching the venture with the aim of generating profit and/or social value.
Relevance:
Develop managerial skills: Fosters leadership, decision-making, problem-solving, and organizational capabilities critical for business operation.
Create organizations: Leads to the formation of new businesses, non-profits, or internal ventures within existing companies, contributing to economic structure.
Raise individual standard of living: Provides opportunities for wealth creation, personal growth, and financial independence for the entrepreneur and their employees.
Drive broad economic development: New ventures spur competition, innovation, job creation, and economic growth at local, national, and global levels.
Types of Entrepreneurs
Innovative – originates entirely new ideas, products, services, or business models. Often seen in technology startups.
Imitating – adopts existing ideas, products, or services from others, often adapting them to a new market or improving on them. (e.g., opening a new franchise location).
Drone – resists change and traditional methods, focusing on maintaining existing processes and products without innovation. Less common in dynamic markets.
Fabian – cautiously follows proven innovations after others have demonstrated their success, showing reluctance to lead but eventual adoption.
Social – pursues ventures primarily with a mission to create positive social or environmental impact, alongside or sometimes instead of financial profit (e.g., fair trade companies, non-profits addressing community needs).
Other labels:
Entrepreneur (business owner): General term for someone who starts and operates a business.
Intrapreneur: An employee within a large existing firm who uses entrepreneurial skills to develop new products or services for the company.
Edupreneur: Focuses on creating new programs, institutions, or technologies within the education sector.
Private/Solo: Operates a business independently, without external partners or significant employees.
Lifestyle: Creates a business to support a particular lifestyle, often prioritizing flexibility and personal interests over rapid growth.
Serial: Repeatedly starts new businesses, often selling off one venture before starting another.
Startup founder: Specifically refers to an entrepreneur who initiates a new, often technology-driven, high-growth potential company.
Entrepreneurial Competencies
Common (Soft Skills & Traits):
Decisive: Ability to make quick, informed decisions under uncertainty.
Communicative: Effectively convey ideas, visions, and strategies to various stakeholders (employees, investors, customers).
Leadership: Inspire and guide a team towards common goals.
Opportunity seeking: Proactively identify unmet needs or market gaps.
Proactive: Takes initiative rather than waiting for things to happen.
Risk-taking: Willingness to take calculated risks for potential gain.
Innovative: Ability to generate and implement new ideas or improve existing ones.
Core (Foundational Principles):
Economic activity: Engaging in the production, distribution, and consumption of goods and services.
Innovation: Creating something new or significantly improved.
Profit focus: Aiming to generate a financial surplus for sustainability and growth in commercial ventures.
Wise risk bearing: Understanding and mitigating risks while being prepared to take calculated ones.
Career Paths
Consultant: Advising businesses on strategy, operations, or specific industry challenges, often leveraging entrepreneurial insights.
Teacher/Educator: Sharing knowledge and fostering entrepreneurial mindsets in academic or vocational settings.
Researcher: Investigating market trends, consumer behavior, or technological advancements to identify new opportunities.
Salesperson: Understanding customer needs and effectively pitching products or services, often with an entrepreneurial drive to meet targets.
Business reporter: Analyzing and reporting on business news, market trends, and entrepreneurial success stories.
Opportunity Recognition
Mind frame (optimism): A positive and open perspective that allows for seeing potential where others see obstacles; a growth mindset.
Heart flame (passion): Deep personal interest and enthusiasm for the problem being solved or the product/service being offered; fuels persistence.
Gut game (intuition): An innate sense or instinct honed by experience, allowing for quick, sometimes subconscious, assessment of an opportunity's viability.
Main sources:
Environmental changes: Shifts in regulations, economic conditions, demographic trends, or cultural values (e.g., rise of eco-consciousness leading to green businesses).
Technology advances: Development of new tools, software, or processes that enable new products or services (e.g., AI, blockchain, mobile technology).
Government thrusts: New policies, incentives, or infrastructure projects that create market demand or support specific industries (e.g., grants for renewable energy).
People’s interests/Unmet needs: Identifying frustrations, desires, or gaps in existing solutions that consumers or businesses experience.
Personal experience: Leveraging one's own skills, hobbies, work history, or life situations to identify a problem that can be solved.
Five Forces of Competition
Framework by Michael Porter to analyze industry attractiveness and competitive intensity.
Buyers (Bargaining Power of Buyers): High when buyers have many choices or represent a large portion of a firm's sales, allowing them to demand lower prices or better quality.
Potential Entrants (Threat of New Entrants): High when barriers to entry (e.g., capital, regulation, technology) are low, making it easy for new competitors to join the market.
Rivalry (Intensity of Rivalry Among Existing Competitors): High when there are many competitors of similar size, slow industry growth, or high fixed costs encouraging price wars.
Substitutes (Threat of Substitute Products or Services): High when alternative products or services from different industries can satisfy the same customer need effectively (e.g., email vs. postal mail).
Suppliers (Bargaining Power of Suppliers): High when there are few suppliers of critical inputs, or when switching suppliers is costly, allowing them to demand higher prices or dictate terms.
➔ Each exerts threat when power/high, impacting profitability and strategic decision-making.
Market Concepts
Value Proposition – a clear, concise promise of specific benefits or value a product or service will deliver to its target customer, explaining why a customer should buy from you instead of competitors.
Unique Selling Proposition (USP) – the single, most compelling reason to buy from you; a concise statement highlighting what makes your product or service distinctly better or different from competitors, addressing a specific customer problem or need.
Target Market – a specific segment of the total market with shared needs, characteristics, or behaviors that a company chooses to serve. Effective segmentation allows for focused marketing efforts.
Segmentation can be:
Geographic: Based on location (e.g., city, region, climate).
Demographic: Based on measurable population characteristics (e.g., age, gender, income, education, occupation, family size).
Psychographic: Based on psychological attributes (e.g., lifestyle, values, personality traits, interests, opinions).
Behavioural: Based on consumer behavior (e.g., purchasing habits, usage rate, brand loyalty, benefits sought, readiness to buy).
Customer Requirements – specific tangible and intangible expectations customers have regarding a product or service.
Service (intangible): Relates to the experience of interaction (e.g., customer support, delivery speed, responsiveness, friendliness).
Output (tangible): Relates to the physical product features or direct results (e.g., product quality, functionality, durability, specific deliverables).
Market Size – an estimate of the total potential buyers for a product or service within a defined market, considering likely non-buyers, and then estimating the venture’s achievable share of that market.
Market Research Tools
Surveys (questionnaires): Structured sets of questions administered to a sample of a target audience to collect quantitative data on opinions, preferences, and behaviors. Can be online, paper, or phone-based.
Interviews (personal, phone): One-on-one conversations with individuals to gather in-depth qualitative insights, opinions, and experiences. Allows for follow-up questions and clarification.
Focus Group Discussions (FGDs): A moderated discussion with a small group of individuals (typically 6-10) from the target market to explore perceptions, opinions, beliefs, and attitudes about a product, service, concept, or idea.
Data collection must be organized, relevant, plentiful, and critically assessed: Ensures that the gathered information is systematic, directly pertains to the research questions, provides sufficient volume for analysis, and is evaluated for accuracy and bias.
Seven P’s Marketing Mix
A comprehensive framework for developing and implementing marketing strategies, especially for services.
Product – the specific goods or services offered to meet customer needs. This includes features, quality, branding, design, packaging, services, and warranties.
Place – the distribution channels and locations through which products or services are made available to customers.
Direct: Selling directly to consumers (e.g., online store, door-to-door).
Retailer: Selling through independent stores that sell directly to the public.
Wholesaler: Selling to businesses that, in turn, sell to retailers or other businesses.
Price – the monetary value exchanged for a product or service; heavily influenced by various factors.
Influenced by: supply and demand, production costs, product type (e.g., luxury vs. commodity), availability of substitutes, product life-cycle stage (e.g., introductory vs. mature), and consumer profile.
Strategies include:
Penetration pricing: Setting a low initial price to quickly gain market share.
Psychological pricing: Using pricing strategies to appeal to consumers' emotions (e.g., 20.00).
Discount pricing: Offering price reductions to stimulate sales or clear inventory.
Promotion – activities undertaken to communicate the value of a product or service to stimulate interest and drive sales.
Advertising: Paid, non-personal communication (e.g., TV ads, online banners).
Personal selling: Direct, one-on-one interaction between a salesperson and a prospective buyer.
Sales promotion: Short-term incentives to encourage purchase (e.g., discounts, coupons, contests).
Direct marketing: Communicating directly with target customers to elicit a response (e.g., email marketing, direct mail).
People – all human actors who play a part in service delivery and thus influence the buyer’s perceptions; including employees, the customer himself, and other customers in the service environment.
Packaging – the design and production of the container or wrapper for a product; serves multiple critical functions:
Protection: Safeguarding the product from damage during transit or storage.
Containment: Holding the product together.
Information: Providing details about ingredients, usage, safety, and branding.
Utility: Enhancing convenience of use or storage.
Promotion: Attracting attention on shelves and communicating brand message.
Positioning – the strategic efforts to create a distinct and desirable image of a product or brand in the mind of the target customer, relative to competitors.
Functional: Highlighting practical benefits and utility (e.g., durable, fast).
Symbolic: Appealing to self-image, social meaning, or group belonging (e.g., luxury brands, eco-friendly).
Experiential: Focusing on the feelings and sensations associated with using the product (e.g., enjoyable, exciting).
Branding Essentials
Brand = a distinctive name, symbol, design, or combination thereof that identifies the goods or services of one seller or group of sellers and differentiates them from those of competitors.
Strategy guided by:
Purpose: A clear understanding of the brand's mission and values.
Consistency: Maintaining a uniform message, voice, and visual identity across all touchpoints.
Emotion: Connecting with customers on a deeper, emotional level.
Flexibility: Ability to adapt and evolve without losing core identity.
Employee involvement: Ensuring employees understand and embody the brand values.
Loyalty: Fostering strong customer relationships and repeat purchases.
Competitive awareness: Understanding competitors' branding to differentiate effectively.
Basic Pricing Formula
Mark-up
Selling Price