HUMMS 12A

Entrepreneurship – Strategic Planning and Business Development

After this lesson, you should be able to:

- Discuss the factors that should be studied before venturing in new business;
- Explain the importance of environmental scanning;
- Explain the importance of selecting the proper business location;
- Discuss the important role of SWOT analysis before starting the business;
- Give the characteristics of weak products and management;
- Identify the business opportunities in the countryside.

The entrepreneurs are not discouraged with the constraints during the cause of our economic
malady. It should be turned into positive note and new solutions must be made to make them
different from other individuals. There are a lot of opportunities for entrepreneurs who are
hardworking, creative and resourceful, and would like to take care of the calculated risk.
Business opportunities are wide open for people who would like to invest their money into
gainful business activities. They need to find out this new venture that interests them and how
they can harness their technical knowledge of the trade.
Before venturing into the field of business, the new entrepreneur should look into the
following factors:
1. Know your product or service.
First, you must believe on the product or service that you will offer to your customers. If
it is a new idea or concept then you must be able to convince that you have a unique
product that would satisfy customers’ needs and wants.
2. Analyze the market potentials.
The entrepreneur must know his needs and wants and figure out how to satisfy these
needs. Analyze customers’ profile as to their buying habits, income, and social status.
3. Determine the marketing strategy.
A unique product or service needs effective distribution strategy to get customer into the
basket of demand potential. Outlets must be developed that would answer customers’
demand.
4. Know the competitors.
In launching a product with existing competitors, you must know their strengths and
weaknesses. Develop new product and marketing strategy and turn their weaknesses as
new opportunity for your product.
5. Do not set on your Laurels.
 Develop advertising and promotion strategy to penetrate the wider market. Develop
budget for expansion and diversification either horizontally or vertically. Get new
resources and develop new materials.
ENVIRONMENTAL SCANNING
To generate income for his product or service, he must be able to deliver customer
satisfaction. The following factors are contributory to the development of customer satisfaction:
1. Business location for small entrepreneurs.
A retail outlet would need a site that is convenient to prospective customers in terms of
parking space or availability of transportation. In choosing the location, the following
factors must be looked into by the entrepreneur:
a. Rent and space – the cost of rent is a regular monthly expense and it must be
sustained with the possible income that will be generated. It is the operating cost that
will be added to price of the product or service.
b. Terms of lease agreement – the term of lease must be studied carefully as some
owners of space might take advantage of lessee.
c. Type of goods or merchandise – a convenient store is located where there are
pedestrians passing by. They need quick and easy access to the store and would not
spend a lot of time to purchase their goods.
d. Income level of prospective customer – the type of pedestrians and the income level
of customer must be taken into account. A good barber shop or a beauty salon with
facilities of air conditioning units and other amenities need to be located in the
community with higher income bracket.
e. Prospective sales volume – high density sales volume need to be located in shopping
area where customers conversed to buy essential goods. Lower sales volume could be
located in the community or secondary areas like subdivisions or the BARANGAY.
f. Municipal or city ordinances including taxes and fees – the location must not violate
city or municipal ordinances and the taxes and fees must be reasonable for the owners
of business. Excessive taxation will not encourage the growth of business in the area.
g. Location of the areas – the area must be free from flood and other calamities that will
endanger the business. It must be free from fire hazards or other environmental
factors that will disturb the operation of the business.
2. Location for small industrial plant or manufacturing facilities.
Environmental factors in locating a manufacturing plant or industrial facilities need to be
studied carefully as plant location is a great factor in the investment of funds and its
profitability in the long run. The following are important factors to consider:
a. Land area – the contour of the land, its size, and shape must be suitable to the plant
site. The assess value of the property must be reasonable as expenses to start-up of
operation requires a lot of money.
b. Facilities for expansion – the land area must have ample space for plant expansion
and provisions for parking facilities for customers and employees.
 c. Power and utilities – availability of power supply and the cost of electricity involved
in the operation are great factors in the production of goods. Continuous power
supply is needed to keep the plant in operation for its target production. Water is also
needed and the proper disposal of waste must be put in place to comply with
environmental law.
d. Building and other utilities – the building must be within the restrictions code of the
municipality or city. The utilities like canteens and other employees’ facilities must
be put in place in compliance with the labor code.
e. Plant site accessibility – the plant site must be accessible to public or service
transport for its employees and valued customers. It must be near highways or
expressway to provide ease in travel time and reduce cost in the transport of raw
materials and finished products.

STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS (SWOT)

SWOT ANALYSIS is an entrepreneurial tool in determining the profitability of the
business operation. Opportunities carries with it some risk involved and this should be looked
into carefully. The strengths and weaknesses are internal factors to the entrepreneur while the
opportunities and threats are external factors.
The entrepreneur must look at how strong he is to combat the weaknesses on his side and
this needs strong determination to succeed with caution.
The product must be evaluated along the following areas:
1. Product strength in the market must have the following:
a. Available technology in product processing – the more products is produced, the
lower the price it can be offered to the market. Technology, on the other hand,
improves product quality and customers want those items with technical standards.
b. The source of raw materials must be abundant and at lower price – Cheap raw
materials that are processed into good products would be able to penetrate the market
as its price could be competitive. Continuous production will eliminate distribution
disruption hence maximum supply to the target market.
c. Skilled workers must be available – technology must have the component of skilled
workers that shall operate the machineries and other equipment. They may need
training in machine operation as quality products also come from skilled workers.
Workers efficiency and productivity must be looked into as they are lifeblood of any
production line.
d. Capital investment in machinery and operating expenditures – a starting venture may
have little investment in terms of machinery and equipment but starting with small
capital should generate profitable operation.
e. Expertise and technical skills of the management team – a good product is the making
of a well-conceived idea of management team. Improvements in product quality is a
 continuing process and it must be the management objective to get customers
patronage.
2. Characteristics of weak products and weak management:
a. Poor quality and high price – the entrepreneur should not launch a poor product in
the market as it will surely fail to advance in the sales and profit. It is not wise to
invest in the production of poor products.
b. Product design and appeal – poor design of the product is the making of people with
no technical expertise in handling customer wants in terms of features.
c. Production cost – production cost is the price determinants. Entrepreneur cannot
make maximum profitability on products whose production cost cannot survive
market competition. Production cost may be attributed to high labor cost and the
availability of cheap raw materials.
d. Supply and demand – the supply chain management must be put in place to make the
products available to valued customers.
e. Weak product management – weak management is created when people at the top of
the organization fail to sustain a vigorous effort for expansion and growth when
management sets on his initial laurels and ventured of vices and other extra activities
that will lose his total investment.
3. Sustainable product opportunities in the market:
a. Product demand – demand is the essence of profit and this must be sustained by the
entrepreneur before wide competition appeared in the market place. The absence of
other products will expand production operation and thereby generate opportunities to
expand into other ventures of vertical and horizontal expansion.
b. Presence of poor quality in the market – the presence of poor quality product in the
market place is an opportunity for the entrepreneur. The alternative is on the side of
the entrepreneur to supply the market with quality product and sustain patronage.
c. Government policies and support – the government should support the local
entrepreneur in terms of taxes and government incentives. Regulating on the
important foreign products where local products are available is one important
government program that will sustain economic growth of the local enterprise.
d. Liberal credit terms and interest rates – liberal credit terms by banks and other
government institutions will generate expansion for the local entrepreneurs.
4. Treats to product profitability and market expansions:
a. Entrance of competition – the entrance of many competitors in the market place will
definitely give problem to the entrepreneur. Competition will reduce profitability as
the price has to be competitive with those in the market place. When profit drops,
expansion will be limited and innovation will drain the opportunity for growth.
b. The supply of raw materials will be limited as other competitors will be getting the
same suppliers. As demand for raw materials become competitive in prices,
production inputs go higher and this will affect product pricing. Increased production
cost means changes in product price.
c. The emergence of leftwing labor unions – company strikes and lockouts are deterrent
to the expansion and company’s growth. Most entrepreneurs would try to avoid
 unions if possible, as leftist elements usually come into the picture that will affect the
opportunities of business growth and expansion.
d. The presence of double taxation – honest businessmen could not profit in their
operations as there are lots of taxes that the government would like to collect. Still
related are the unfavorable treatment given by the tax collector to businessmen that
they have to put in grease money for a little favor. Taxes are collected by the
government and another tax by unofficial tax collectors.
e. Peace and order in the area of business operation – peace and order are components
of business growth. Criminality and killings could drive away investors. Coupled
with this problem is the revolutionary tax collected by the leftist elements. If you do
not pay the revolutionary tax, surely your business will go into flames.
f. The cost of power supply – cost of production increases with the cost of utilities like
current and water. Power and water utilities should be regulated by the government in
order to sustain growth in our industries.

The entrepreneur should look deeper into the following areas:

1. The management team.
Management must be able to set the direction of the enterprise with clear
MISSION and VISION as the guiding tool for its plans and programs.
The technical and manpower complements are important factors in the success of
the business. They must work hard, persistent, and must focus on the vision and mission
of the business.
The management must introduce new technology to make work easier for the
working team.
2. The production process.
Product specifications must be maintained according to product standards that are
acceptable to customers. Customers are now aware of product quality and they must be
able to get their money’s worth.
3. The marketing program.
The marketing program needs demand analysis for the last 5 years as to the major
users of the product. The demographic profile of the target customer must be taken into
account as the success of the product depends on the target customer.
4. The financial management.
Money is needed to finance the activities of business. Whatever capital is
available determines the kind of business operation. The internal source of capital will
come from the savings and assets of the starting entrepreneur. Liquid assets in cash or in
banks are the usual starting point.
 Banks are eternal sources of funds. Other sources of funds are partnership and
stock options.

THE IDENTIFICATION OF BUSINESS OPPORTUNITY

The entrepreneur’s desire to establish his business is a visible idea yet it must come into a
test whether it is a viable business option. It needs a careful analysis of opportunity evaluation.
The following steps will help the prospective entrepreneur evaluate the idea before going
into business:
1. The starting point of conceiving the idea of the type of business:
Conceiving a new product is a process of innovation and when this come into reality,
the product must be different from an existing product.
New product needs customer evaluation and this process needs exposure to the target
market as to its economic value. This new product must satisfy customers’ needs and
wants.
The entrepreneur must find a new approach to win customers on his side if the
product or service is similar to what is existing in the community. He must know the
strengths and weaknesses of his competitor and thereby devise a new system of
promotion and advertising.
2. The technical feasibility and time frame:
The new product must have its technical feasibility and the time to launch the
product must be immediately done to take ahead before others take the idea. He must
analyze the market demand and how he will be able to meet this demand on time.

The purpose of strategic planning is to position the organization to create the future it
hopes to achieve. In doing so, strategic planning must be designed to surface and address any
factor or issue which is key to the organizations success. Most often, strategic plans focus on
both internal and external issues.

ASSESSMENT QUESTION:
1. Shortly after starting your small business, the COVID-19 pandemic happened. What
is your strategic plan towards your business?
ANN G. DRAGUIN
Instructor