UNIT 3.

CREATING AN ENTERPRISES

Desired Learning Outcomes

At the end of the Unit, the students must have:

1. discussed the four basic forms of business ownerships;
2. explained the advantages and disadvantages of each of the four patterns of business
ownerships;
3. identified business opportunities in the environment;
4. learned the different global opportunities; and
5. named common mistakes to avoid in business planning.

PRE ACTIVITY: CREATING AN ENTERPRISES

Name: __________________________________________ Score: ___________

Course/Section: ___________________________________ Date: ___________

Part I. Multiple Choice

Direction: Write the letter of the letter of your choice provided.
____1. Which of these is not an advantage of sole-proprietorship?
a. It is easy to organize c. The owner acquires all profit
b. It has unlimited liability d. Financial operations are not complicated

____2. This serves as the fuel that keeps the business operating. The availability of funds should
fit the type of business to organize?
a. Capital c. Production
b. Skill d. Product

___3. The success of any business also depends on the efficiency of its employees?
a. Manpower c. Leadership
b. Profit d. Technology

___4. This is where an independent entrepreneur, company, or individual enters into an agreement
or contract to offer, sell, or distribute a particular product?
a. Wholesaler c. Resellers
b. Distributorship d. Management
___5. Which does not belong to the group?
a. Higher income tax rate c. It is complicated and not easy to organize
b. It has limited powers d. It has legal capacity

___6. An association of at least two person who agree to place their money, property or industry in
a common fund, with the aim of sharing among themselves?
a. Cooperative c. Corporation
b. Sole proprietorship d. Partnership

___7. A business organization in which the owners are called stockholder?

a. Partnership c. Corporation
b. Sole proprietorship d. Cooperative

___8. Why international entrepreneurship is important except?

a. Multinational corporations are accused of social injustice, unfair working conditions
b. Globalization is also leading to the incursion of communicable diseases.
c. Globalization has led to lower manufacturing costs, increased international shipping options
and easier growth opportunities
d. Multinational corporations, which were previously restricted to commercial activities, are
increasingly influencing political decisions

___9. What is the main purpose of business?

a. To create customers c. To create services
b. To create profit d. All of the choices

___10. Business creates ______ in the economy?

a. Investments c. Income
b. Employment d. All of the choices

How well did you do?

How do you feel about the test? Did it make you feel confident or insecure? Your
feelings will be your guide to go slow or breeze through this module.
Here is the answer key and category to your pre-test.

Answers:

1. C 2. A 3. A 4. B 5. D 6. D 7. C 8. C 9. C 10. D
 A perfect 10 makes you well-known entrepreneur someday. Please continue to study this
module as a review. If you go lower than 7, studying this module is a must.
7-9 Great Entrepreneur
6-5 Average Entrepreneur
0-5 Novice Entrepreneur

Now let us begin the exploration of this Module.

Lesson 1. Forms of Business Organizations

”Huwug umutang para lang sabihin na naka angat na sa buhay
Dahil ang pagiging masinop sa pera ang totoong sikreto sa buhay”

B usiness organizations are important in the economy. Their main goal is to attract
customers, and to consequently earn profit. Businesses provide for their needs,
wants, and demand of the economy. The business sector is also the largest
contributor of revenue to an economy.

It is important that the business owner seriously considers the

different forms of business organization types such as sole
proprietorship, partnership, and corporation. Which organizational
form is most appropriate can be influenced by tax issues, legal
issues, financial concerns, and personal concerns. For the purpose
of this overview, basic information is presented to establish a
general impression of the business organization.
Business and government work together for progress and development. Businesses pay the
necessary taxes to the government, and in return the government provides the proper
infrastructure, such as electricity, water, roads and highways, communication, railways, and etc.
These factors are essential in improving the efficiency of operations in business sector.

FORMS OF BUSINESS ENTERPRISES

Single or Sole Proprietorship

Single or Sole Proprietorship is a form of business owned
by a single person, known as the proprietor. Because one
person can organize it, it is the easiest enterprise to set
up. Most of the country’s businesses belong to single
proprietorship. The bulk of self-employed people are
single proprietors, and these include informal or
unorganized sector.
Organizing a Sole Proprietorship
 Register the business name (Department of Trade & Industry)
 Pay the municipal licenses to the local government.
 Apply for VAT or non-VAT number
 Register with the BIR the books of accounts (simplified bookkeeping records or journals and
ledger) and the business forms to be used (sales invoices, cash sales invoices, official receipts,
etc.)
Advantages
1. Ease of formation and dissolution. Establishing a sole proprietorship can be as simple as
printing up business cards or hanging a sign announcing the business. Taking work as a
contract carpenter or freelance photographer, for example, can establish a sole
proprietorship. Likewise, a sole proprietorship is equally easy to dissolve.
2. Typically, there are low start-up costs and low operational overhead.
3. Ownership of all profits.
4. Sole Proprietorships are typically subject to fewer regulations.
5. No corporate income taxes. Any income realized by a sole proprietorship is declared on the
owner’s individual income tax return.
Disadvantages
1) Unlimited liability. Owners who organize their business as a sole proprietorship are
personally responsible for the obligations of the business, including actions of any employee
representing the business.
2) Limited life. In most cases, if a business owner dies, the business dies as well.
3) It may be difficult for an individual to raise capital . It’s common for funding to be in the form
of personal savings or personal loans.
4) Limited ability to expand. This is due to the business 'limited capital. In be most cases,
operations are limited only to areas in which the sole proprietor has expertise. Not all
proprietors are flexible, this is what is required in business expansion.

Example of Sole Proprietorship

o Side walk vendor Owner of Sari-sari store
o Offer Tutoring Services Shoe Cleaner

Partnership
Partnership is a business organization that is an association of at
least two or more persons who agree to place money, property or
of Industry in a common fund with the aim of sharing the profits
among themselves. In addition, a partnership agreement can be
oral or written, although Philippine law requires a written
agreement when real property is involved, or when a limited
partnership is being established.
Organizing a Partnership
 Register the business name (Department of Trade Industry).
 Have the partnership agreement (Articles of Co-partnership) notarized and registered with
the SEC.
 Obtain a tax identification number for the partnership from the BIR.
 Obtain pertinent municipal licenses from the local government.
 。Obtain the VAT or non-VAT number from the BIR.
 Register books of accounts (simplified bookkeeping records or journals and ledger) and the
business forms to be used (sales invoices. Cash sales invoices, official receipts, etc.)With the
BIR.

Advantages of a partnership
The following are the advantages of partnership:
1. Easy to form. The requirements are technically the same with sole proprietorship. The only
additional in the requirement is the partnership agreement. Unlike a corporation. There are lesser
requirements to accomplish in forming and maintaining a partnership business.
2. Flexibility of operations. There are only few owners in a partnership business. That is why if
there are certain concerns that need to be addressed, there is no delay in decision making because
it can easily be solved by the partners. Agreements and resolutions as to business matters are
immediately decided by the partners.
3. Efficiency in operations. Simply put. “Two heads are better than one. There is better
management because of the presence of more participants in the operation of business. With the
presence of the partners, more ideas will are also applied in the operation of the business.
4. Partners are expected to have great interest in the operation of the partnership. Partners have
their own areas of interest and responsibility, which helps in the smooth operation of the business.
The unlimited liability of the partners also encourages their interest in participating in the venture.
5. Possibility of bigger resources. Financial institutions may extend bigger loans to partnerships
considering the combined resources of the partners. Thus, more capital can be used in production.

The following are the disadvantages of partnership:

1. Partners have unlimited liability for partnership debts. This is one of the
identical disadvantages of single proprietorship and partnership. Partners
face unlimited liability for partnership debts. Partners may not only put
their combined money and property at risk, but also their individual assets
as well.
2. It has a limited life or it lacks stability. Partnership is unstable. Being a contract between the
partners, it is dissolved based on their agreement, or upon the withdrawal, incapacity or death of a
partner, or for other causes which terminates a contract.
3. Limited ability to raise capital. The amount of capital depends on how much can be contributed
by the partners. Thus, there is also limitation to raise funds for the business.
4. Conflicts and quarrels between among partners. Conflicts or quarrels are the main reason why
partnership is unstable. Rules, regulations policies, number of hours in the area, responsibility,
decision making agreements and profit distribution are just some cause of conflicts and quarrel
between the partners.

ACTIVITY PROPER 1: SOLE PROPRIETORSHIP

& PARTNERSHIP
Your friend Bobby, is an expert computer engineer. He currently works for a large computer
manufacturer. He thinks that he could run his own successful business. He has no experience of
running business. He has very few savings to invest into business.
Bobby has a rich uncle who knows nothings about computers! He is
retired businessman. He is friendly but rather bossy as he always thinks he
knows best!
Bobby asks for your advice about whether he should set up his own
business and what form of organization he should choose. He asks for your
help on three questions that are worrying him.
A. What would be the advantages and disadvantages of running his own business rather than
working for the computer manufacturer?
B. Should he set up a sole entrepreneurship business?
C. His uncle would like to become his partner in the business if Bobby decides to go ahead.
What would be the advantages and disadvantages of forming a partnership with his uncle?
Kindly write your answers inside the box as provided.
Corporation
Section 2 of the Corporation Code defines a corporation as follows:
＂A corporation is an artificial being created by operation of law having the right of
succession and the powers, attributes and properties expressly authorized by aw or incident
to its existence"(private corporations are governed by the Corporation Code of the
Philippines, per Batas Pambansa Blg.68).

A corporation is a form of business organization in which the owners (known as:

stockholders) have an undivided ownership share in the assets of the corporation upon its
dissolution; and a share in its profits corresponding to the amount of shares of stock which they
own.
A corporation has specific objectives in carrying out the business, in accordance with a
charter or articles of incorporation. This charter is a written document containing the names of the
original incorporators, their initial share in stockownership, and the objectives and activities of the
corporation. Below are some examples.

Organizing a Corporation
 Verification of corporate name with SEC.
 Drafting and execution of the Articles of Incorporation
 Deposit of cash received for subscribed shares of stocks in a banking institution in the name
of the temporary treasurer.in trust for an
 Credit of the corporation.
 Filling of the Articles of Incorporation together with the following:
o Treasurer's affidavit
o Statement of assets and liabilities of the proposed corporation.
o Authority to verify bank deposits
o Certificate of deposit of cash paid for subscription
o Personal information sheet of the incorporators
o Commitment to change corporate name if it is found similar to another corporate
name
 Payment of filing and publication fees
 Issuance by SEC of the certificate of incorporation
 Registration of the corporate name with the DTI.
 Obtaining municipal licenses from the local government
  Obtaining the VAT or Non-VAT account number from the BIR
 Registration with BIR of books of accounts and accountable forms.

Contents of Articles of Incorporation (Section 14 of the Corporation Code)

The following are the contents of Articles of Incorporation as provided under
Section 14 of the Corporation Code:
 Name of the corporation
 The specific purpose or purposes for which the corporation is being incorporated.
 The place where the principal office of the corporation is to be located.
 The term for which the corporation is to exist
 The names, nationalities and residences of the incorporators.
 The number of directors or trustees, which shall not be less than five（5) nor more than
fifteen (15).
 The names, nationalities and residences of the directors or trustees.
 If it is a stock corporation, the amount of its authorized capital stock in
 Lawful money of the Philippines, the number of shares into which it is divided. Together
with its values on par.
 If it is a non-stock corporation, the amount of its capital, the names,
 Nationalities and residences of the contributors and the amount contributed by each.
 Such other matters as are not inconsistent with law and which the incorporators may deem
necessary and convenient.

Advantages of corporation:
The following are the advantages of a corporation:
1. It has a legal capacity. The presence of articles of
incorporation granting the corporation a separate juridical
personality.
2 It has Continued and more or less permanent
existence. The life span of a corporation is 50 years, and
subject to renewal for another 500 years. The death or
withdrawal of some officers, stockholders or members
does not affect the life of the corporation.
3. Management is centralized. The corporation's management is centralized, and lodged with the
board of directors or trustees. The board is the decision-making body of the corporation. It is also
centralized because the corporation is always guided by the provisions contained in the articles of
incorporation.
4. It has the most efficient management. The creation, organization, management and dissolution
processes of a corporation are standardized, in spite of its huge resources and large-Scale
operation. All these are primarily governed by the Corporation Code of the Philippines, and
secondarily provided for under the articles of incorporation.
5. Shareholders have limited liability. In case the corporation becomes bankrupt, only capital
contribution of the shareholders/members are affected. The personal properties of the stockholders
of a corporation are excluded from financial claims of creditors of the corporation.
6. Shareholders' freedom. Shareholders are not general agents of the corporation and can transfer
their shareholdings without the consent of other shareholders.
7. Ability to raise more capital. Corporation has the ability to raise more capital, allowing it to
undertake more expansive financial ventures. It has the most effective means of raising money
capital for its operations-selling stocks and bonds. Stocks are certificates of ownership while bonds
are certificates of indebtedness.

Disadvantages of corporation
The following are the disadvantages of a corporation:
1. Complicated to maintain and not easy to organize. Aside from complying with capital
requirements, there are many paper works involved in securing a charter. It also takes a longer
time to have an approval from the SEC.
2. Governmental intervention. It is subject to a greater degree of governmental control and
supervision. The government is keen in all the operations of a corporation like tax dues, creation of
commodities and employment. It is also subject to annual and/or quarterly reportorial
requirements.
3. Subject to higher tax. It is subject to higher income tax rate. Corporate income tax is fixed at
309%, whereas for individuals, the rates range from 0% to 32%. With the progressive tax system
by the government, given the huge revenue of the corporation, they are required to pay higher
percentage of tax.
4. It has limited powers. A corporation is guided by the articles of incorporation. Thus, its
operations can only revolve within the activities expressly or impliedly allowed by its articles.
5. Abuses of corporation officials. Corporate directors and officials may abuse their powers,
especially because of the minimum supervision of stockholders.
6. Some corporation are engaged in questionable activities . Some corporations engaged in
questionable activities just only to pursue their own interest which is to earn profit, regardless of
hurting others in the process. For example, they sell worthless securities, sell substandard goods or
pollute the environment. In short, they do not comply with their social responsibility.
7. There is a very impersonal or formal relationship between the officers and employees of a
corporation. In sole proprietorship and partnership, everybody knows everybody; while in a
corporation, it is possible that stockholders, as well as officers and directors, are not familiar with
each other.

Classifications of Corporation

Based on nature of its capital

 Based on purpose

Based on relation to another corporation.

Based on situs of incorporation

Based on whether they want to open in

public or not

Voting in a Corporation
In a stock corporation, the manner of voting is called
cumulative voting-where a stockholder is entitled to
cast votes equal to the number of shares he owns
multiplied by the number of directors or trustees to be
elected.
In a non-stock corporation, every member may cast as
many votes as there are trustees to be elected but may
not cast more than one vote for one candidate, unless
cumulative voting is authorized under the articles of incorporation.

Categories of Shares of Stocks

1. Common stock
Common stock represents the basic issue of shares, and has all
the basic rights of a share of stock so that it is often referred to
as the basic ownership in a corporation.

2. Preferred stock
Preferred stock is a type of stock having certain preferences over common stock. These preferences
may be in the distribution of dividends and/or corporate assets, upon dissolution of the corporation.
If dividends have been declared by the company, the preferred stockholders are prioritized to
receive it first.

3. Class A shares
These are the available stocks offered to Filipino shareholders.
4. Class B shares
These are the available stocks offered to foreign investors.

5. Par Value shares.

This refers to shares of capital stock that have been assigned a definite or fixed value in the
articles of incorporation. So as to fix its minimum subscription or original issue price.

6. No par value shares

No par values are shares which have not been assigned a definite or fixed value.

7. Founders' shares
Founder's shares are those classified, as such in the articles of incorporation and may be given
certain rights and privileges not enjoy by other stockholders. It is usually given to incorporators-
the formators of the corporation

Dividends
It is also called as the distributed profits of the corporation. It
represents the corporation's profit, which are distributed to
stockholders according to the proportionate interest of their
shareholding.

Kinds of Dividends
1. Cash - This is paid in cash to the stockholders.
2. Property - This is in the form of non-cash assets of corporation.
3. Stock - This is the dividend in the form of stocks of the issuing corporation.
4. Scrip - The dividend in the form of promissory notes indicating the kind of benefits the
stockholders shall be entitled to receive in the future (cash, non-cash, stock or some other
form of dividend).
5. Bond - This is in the form of bonds of the company
6. Liquidating - This refers to return of capital by a corporation

Cooperatives
Under the Presidential Decrees No. 175, a cooperative is defined
as follows:
“Only organizations composed primarily of small producers and
consumers who voluntarily join together to form business
enterprises which they themselves own, control and patronize.”
The government in its effort to promote the organization of more
cooperatives throughout the country has extended several
powers and privileges (like tax exemptions) to cooperatives.
The Cooperative Code of the Philippines was created in 1990. By virtue of Republic Act No.
6938, which serves as the legal basis for the operation of all cooperatives in the country.

Principles of Cooperatives
Every cooperative shall conduct its affairs in accordance with Filipino culture and experience and
the universally accepted principles of cooperation. Which include the following
1. Open and voluntary membership. Membership in a cooperative shall be voluntary and available
to all individuals regardless of their social, political, racial or religious background or beliefs.
2. Democratic control. Cooperatives are democratic organizations. Their affairs shall be
administered by persons elected or appointed in a manner agreed upon by the members.
Members of primary cooperatives shall have equal voting rights on a one-member-one-vote.
3. Limited interest on capital. The share capital shall receive a strictly limited rate of interest.
4. Division of net surplus. Net surplus arising out of the operation of a cooperative belongs to its
members and shall be equitably distributed for cooperative development, common services,
indivisible reserve fund, and for limited interest on capital and/or patronage refund, in the
manner provided in the Code and in the articles of cooperation and by-laws.
5. Cooperative education. All cooperatives shall make provision for the education of their members,
officers and employees and of the general public based on the principles of cooperation.
6. Cooperation among cooperatives. All cooperatives, in order to best serve the interest of their
members and communities, shall actively cooperate with other cooperatives at local, national,
and international levels.

Objectives of a Cooperative
The primary objective of every cooperative is to provide goods
and services to its members, and thus enable them to attain
increased income and savings, investments, productivity, and
purchasing power and promote among them equitable
distribution of net surplus through maximum utilization of
economies of scale, cost- sharing and risk-sharing without,
however, conducting the affairs of the cooperative for
eleemosynary or charitable purposes. As provided under the Cooperative Code, a cooperative shall
provide maximum economic benefits to its members; teach members efficient ways of doing things
in a cooperative manner; propagate cooperative practices and new ideas in business and
management; and allow the lower income groups to increase their ownership in the wealth of this
nation.

Similarities between a cooperative and a corporation

Factors of production are privately owned and managed. They both depend on business
efficiency to survive in a competitive market. Also, their activities and operations are regulated and
supervised by the government. Lastly, they both enjoy a reasonable degree of economic freedom .
Differences between a cooperative and a corporation
A cooperative is primarily organized for service while a corporation's purpose is mainly for
profit. Membership in a cooperative is open and voluntary while in a corporation, membership is
restricted. Management of a cooperative is more democratic. It is one man one vote, with no proxy
voting. In the case of a corporation, it is one share, one vote and more shares, more votes.
Moreover, savings or net profits are refunded to the members of a cooperative on the basis of their
individual patronage, while in a corporation; profits are distributed to stockholders on the basis of
the number of shares.

Activity No. 2 Cooperative and Corporation

Direction: Using the Venn Diagram below describe the Corporation and
Cooperative and determine their commonalities.

Cooperative Commonalities Corporation

 Lesson 2. Identifying Business Opportunities
In the Environment
“Hindi lahat ng oportunidad ay nakikita
minsan kailangan mismo and dapat lumikha nito”

Introduction

T
here are many business opportunities for an individual with a creative mind. All business
starts with an idea, and it is said that creativity, through innovativeness and the capacity of
bringing something new in the market, spells the difference between a traditional
businessman and an entrepreneur.
A smart entrepreneur may decide to have a small or large business, but it is important to follow the
process of identifying and evaluating the various options in generating ideas that can be
transformed into a profitable business endeavour.

Entrepreneurial Activities
Business activities are concentrated in cities and other
urban communities. The primary reasons are that more buyers,
more incomes more facilities are located in the said heavily
populated areas. Apparently, there are more business
competitors in the cities. This means it would be very difficult for
a newcomer to penetrate the markets .But for real entrepreneurs
such difficult situation provides a challenge. Hence, they are
encouraged to explore marker opportunities.
It is natural for buyers to look for goods and services which offer better quality, lower price
and more conveniences. Precisely, these are the basic features of consumer satisfaction which
entrepreneurs can develop. In our country. There are several marketing innovations of goods and
services. Like the express teller of banks, 24-hour service of some grocery stores. And home
delivery service of food items.

The Sears story

In the United States, Sears, Roebuck Corporation.
Introduced mail-order selling. The farmers comprised its
first market. Julius Rosenwald studied the specific needs of
the farmers in 1895.At that time, the American farmers
were isolated from the channels of distribution of goods and
services. Since individual farmers had low purchasing
power, and were very far from trading centers, they were
neglected by businessmen. And Sears, Roebuck rose to the occasion.
 To Sears, Roebuck, the untapped buying potential of the farmers as a group was a rich
market. To reach the farmers, Sears, Roebuck used the mail-order selling. It produced the goods
that satisfied the needs of the farmers. These were delivered to them in large quantities at low
prices, and with a guarantee or regular supply. And Sears made a policy of. “Your money back and
no question asked “if farmers were not satisfied.
Gradually Sears, Roebuck became successful. From a retail store, it expanded to other
industries until it has acquired international reputation and customers all over the world.

Business Opportunities in Rural Communities

Our rural areas are abundant with ‘cheap raw materials and labor force. Yet these are
underdeveloped and have greatly contributed to poverty in the rural communities. Many rural folks
are unemployed or underemployed. This results to low level income among the people.
The productive resources in the rural sector are sleeping business potentials. Our raw farm
products can be a good source of agribusiness. Other raw materials. Can be transformed into toys,
hats, bags, ‘slippers, decors, etc.
Senate President Neptali Gonzales has learned
during his political campaigns throughout the country
that entrepreneurs in Davao are exporting cut flowers
to Singapore; artisans in Cebu have. elevated local
stone craft to world-class status; piña-cloth weavers
in Aklan have attracted the attention of international
fashion designers; the goldsmiths of Bulacan have created jewellery that are admired even in a
place as far as Dubai; and the automotive tinsmiths of Pampanga get job orders from California.
There are other small entrepreneurs who have succeeded in selling their products to foreign
markets. In a graduation speech before college students in Pampanga, Senate President Gonzalez
cited the importance of entrepreneurship.
＂

THE SEARCH FOR BUSINESS OPPORTUNITY

In selecting a business, option should not be based on luck and
immature thinking, but on a thorough evaluation and systematic process. Start
by developing long and short lists of potential business opportunities. Likewise,
the resources, skills, and technology available in the community are to be
evaluated if these are not fully or efficiently utilized. In discovering business
opportunities, the following factors on resources have to be evaluated:
1. Markets. This refers to the number of prospective buyer’s competitors, the price, and the quality
of goods and services that have to be analyzed. Business opportunities exist in areas where
consumer satisfaction is weak or incomplete.
2. Individual Interests. Business interest of individuals should match business opportunities. For
example, if one is a good cook, he could venture in the food business.
3. Capital. This serves as the fuel that keeps the business operating. The availability of funds
should fit the type of business to organize.
4. Skills. The entrepreneur should have the proper skills in the business he is going to undertake
5. Suppliers of inputs. It is important that there are steady suppliers of raw material and other
inputs to the business.
6. Manpower. The success of any business also depends on the efficiency of its employees.
7. Technology. Entrepreneurs should be aware of the
presence of technology to improve their products or services,
or introduce new innovations in the market.
Among the productive resources, people are the most
important because they are the ones who organize and
manage the other productive resources such as money,
materials, machine, and manpower.
Other opportunity-seeking processes that can guide a prospective entrepreneur as to what
kind of business to establish are as follows:
1. Look at other successful businesses/entrepreneurs. Looking up at other entrepreneurs as a role
model that could be an inspiration, by doing what they have done or do it even better.
2. Respond to a problem area. The solution to a problem might be transformed into a business
venture.
3. Home-Based Business Option. These must not be taken for granted, for there are some big
businesses that started as a small business at home.
4. Linkage of Resources. The entrepreneur can produce his own input instead of buying them.

The Steps in Market Research are:

Making a preliminary
Defining the problem Planning' the research
investigation

Gathering the data Analyzing the data Reaching a conclusion

Implementation and
evaluating decision
 Through Market Research, the entrepreneur can be
guided in identifying the profitable markets, saleable
products, the strengths and weaknesses of competitors,
available resources, business risks, trends in consumer
tastes and preferences, better marketing strategies,
proper business location, new market opportunities, and
realistic objectives.
Location of the business is a key factor in business
success. In selecting a location, the population, income, competitor, government policies, peace and
order, and others are being considered. This requires a market survey.

To be able to translate business opportunities into profits, the SWOT (Strength, Weakness,
Opportunity, and Threat) Analysis is applied. These are tools for evaluating the strengths,
weaknesses, opportunities, and threats associated with a particular product or service. In knowing
this, the entrepreneur must be able to have an idea or a precautionary measure even before the
start of the business. Excellent knowledge about the life cycle of the products provides the
entrepreneur business opportunities to continuously start in business. The following are the
description of the various stages of a product life cycle. According to Fajardo, products have their
own life cycle. It is composed four stages: Introduction, Growth, Maturity, and Decline. Some
products have long product life cycle, while others have short. Here are the descriptions of various
stages of product life cycle, particularly as sales volume and profit.
 Introduction. If consumer awareness and acceptance of product are low, launch through the
use of marketing activities, which make the profit low due to cost of development and
marketing activities.
 Growth. To meet the growing demand, product distribution is expanded. Sales rise rapidly as
product becomes popular.
 Maturity. Sales are still rising, but rate of increase has declined. At the latter part, a sale
reaches its peak, while profit begins to fall.
 Decline. There is a sharp fall in sales volume, while profit curve becomes almost flat or
horizontal. There is also decline in the number of competitors. The only survivors are those who
specialize in marketing the product. Once product is no longer profitable, it is eliminated from
the market.
Entrepreneurs should be aware of the duration of each stage of the product life cycle. Fajardo
had emphasized in his book, Entrepreneurship, that excellent knowledge about product life cycle
provides entrepreneurs business opportunities to continuously stay in business.
Venturing into a business project demands a timely and clear decision as to which area or
business concern to deal with. In the selection process, one has to
begin with choosing or focusing on a particular business by
category or sector.
1. The service-based business. Common examples of service- based
businesses are consultancy, barber shops, repair shops, beauty
parlors, care giving, designing works, rendering professional services, such as engineers, dentistry,
medical doctor, and others where there is no need to manufacture something.
2. Trading Or product-based business. This is a buy-and-sell transaction that can happen in your
storehouse, showroom, or any other structure less environment. Selling involves a lot or customer
contact and requires a great deal of persistence on the entrepreneurs 'part. An example of this is
putting up a grocery store, bakery products, or general construction materials.
3. Manufacturing business. This is a manufacturing or production- based business by creating a
product. Manufacturing can be as simple as creating hand-painted T-shirts or ceramic vases and
now, the most popular is candle making, which can be done in your home.
4. Licensed business opportunities. If you find some difficulties in launching a product or service, it
is a good idea to look for licensed business opportunities. Franchising is a business format
somehow very similar to licensed business operations.
5. Distributorship. This is where an independent entrepreneur,
company, or individual enters into an agreement or contract to
offer, sell, or distribute a particular product, but is not entitled to
use the manufacturer's trade name as part of its own trade name.
In our country, distributor represents foreign companies who can
sell products to dealers strategically located all over the country.
6. Rack Jobber. This involves an agent or buyer entering an
agreement with a parent company to market its goods to various stores by means of strategically
located store racks.
7. Wholesalers. These sell the product of manufacturers or producers to retailers and other
distributors who have direct dealings with the end users or customers.
8. Subcontracting. This is a familiar form of business format in the garments sector, as well as the
shoe industry. This involves signing up an arrangement with a major producer to complete a set of
product components on a pre-agreed price.

ACTIVITY PROPER 3: Identifying Business Opportunities in the

Environment

Assume that you are already a graduate of your degree and you will put a business. Come
up with a business name and make a SWOT analysis of your business. Fill out the template
below.
 S:_____________________________
______________________________
______________________________
______________________________
_______________
W:____________________________
______________________________
______________________________
______________________________
_______________
O:____________________________
______________________________
______________________________
______________________________
_______________
T:_____________________________
______________________________
______________________________
______________________________
______________________________
Name of Business:
____________

Lesson 3. Global Opportunities

“Hindi ka dapat malungkot pag ikaw ay tinawag na kuripot
Tandaan na pinapahalagahan mo lang ang pera mo
dahil hindi mo ito pinupulot”

E
ntrepreneurship is a common word nowadays but with the
rise of globalization, global entrepreneurship has also
become a well-known word. Global entrepreneurship is the
term used for the entrepreneurs who operate on global level and
businesses worldwide. Global entrepreneurship plays a key role in
businesses today as many entrepreneurs look for multinational
corporations to assess their leadership skills. Global
entrepreneurship may have many challenges and opportunities
that are discussed in this paper along with the ways to face those challenges. It is essential for the
entrepreneurs to understand the global nature of the business and the environment they are
operating in, in order to be successful. Global entrepreneurship is advantageous as it can also be
taken by the corporate know-how and expertise which is available in other countries.
As different companies have different labor markets and different set of ideas are present,
there can be more variations and more innovative ideas for business products and marketing. By
entering the field of global entrepreneurship, an entrepreneur enters the foreign lands to operate
their businesses there. This gives them the opportunity to have a good know-how of all the local
trends and demands that are present in that country’s consumer market. Moreover, it also gives the
chance to the entrepreneurs to be able to learn the systems of the foreign markets and learn the
tactics and strategies to compete in these markets.

THE NATURE OF INTERNATIONAL ENTREPRENEURSHIP

As more countries become market oriented and developed, the distinction between foreign
and domestic markets is becoming less pronounced. International entrepreneurship is the process
of an entrepreneur conducting business activities across national boundaries. It is exporting,
licensing, or opening a sales office in another country. When an entrepreneur executes his or her
business in more than one country, international entrepreneurship occurs.

THE IMPORTANCE OF INTERNATIONAL BUSINESS TO THE FIRM

International business has become increasingly important to firms of all sizes. The
successful entrepreneur will be someone who understands how international business differs from
domestic business and is able to act accordingly.

INTERNATIONAL VERSUS DOMESTIC

ENTREPRENEURSHIP
Whether international or domestic, an
entrepreneur is concerned about the same basic
issues-sales, costs, and profits. What varies is the
relative importance of the factors being
considered. International entrepreneurial decisions
are more complex due to uncontrollable factors
such as the following.

Economics
A domestic business strategy is designed under a single economic system. Creating a
business strategy for multiple countries means dealing with different levels of economic
development and different distribution systems.

Balance of Payments
A country's balance of payments affects the valuation of its currency. This economic
variable will affect how companies do business in other countries.
Political-Legal Environment Multiple
Political and legal environments create different business problems. Each element of the
international business strategy can potentially be affected by multiple legal environments. Laws
governing business arrangements also vary greatly in the 150 different legal systems and sets of
national laws.

Cultural Environment
The impact of culture on entrepreneurs and
strategies is significant. Understanding the local culture is
necessary when developing worldwide plans.

Technological Environment
Technology varies significantly across countries. New
products in a country are created based on the conditions
and infrastructure of that country. The first step in
identifying markets is to analyze data in the following areas:
1. Market characteristics.
2. Marketing institutions.
3. Industry conditions
.4. Legal environment.
5. Resources.
6. Political environment.

ENTREPRENEURIAL ENTRY INTO INTERNATIONAL BUSINESS

The choice of entry method depends on the goals of the entrepreneur and the company's
strengths and weaknesses.
Exporting
As a general rule, an entrepreneur starts doing international business through exporting.
Indirect exporting
Involves a foreign purchaser in the local market or using an export
management firm. For certain commodities, foreign buyers seek out
sources of supply. Export management firms, another indirect method, are
located in many commercial centers.

Direct exporting
Through independent distributors or through one's own overseas sales office is another
entry method. An independent foreign distributor directly contacts foreign customers and takes care
of all technicalities. Entrepreneurs who do not wish to give up control over marketing can open
overseas sales offices and hire their own salespeople.
Enterprise development and competitiveness
Enterprise development in the context of competitiveness
not only entails the ability to produce products that can be
accepted globally but also the level of support given to enterprises
to help them produce, innovate, and gain market access.
While relatively mature and free, enterprise development in the
Philippines is beset with critical challenges. These challenges are
found within the context of pillars identified by the United Nations
Development Programme in its report Unleashing
Entrepreneurship: rule of law, physical and social infrastructure, domestic macro environment, and
global macro environment; a level playing field, access to financing, and access to skill development
and knowledge.
If the challenges remain unresolved, gaps in enterprise development have the potential to thwart
the country’s competitiveness and ability to effectively function within global product.

ACTIVITY PROPER 4: Identifying Business Opportunities

in the Environment

Cite three (3) reasons why most of the entrepreneurs became succesful when they put up
businesses abroad? Explain comprehensively.
 Post-Activity No. 1: Four Business Organization

Name: _____________________________________ Score: ____________

Course/Section: ______________________________ Date: ___________

Part II. Name at least three businesses falling under each of the four business organization types,
and provide a brief background and explanation as to why you choose it.
Sole-proprietorship
1.
2.
3.
Explanation:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________.

Partnership
1.
2.
3.

Explanation:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________.
Corporation
1.
2.
3.
Explanation:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
Cooperative
1.
2.
3.
Explanation:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.

Note: Five (5) point rubric will be used in rating your answers
Level Description Value
Outstanding Well written and very organized. Excellent grammar mechanics. Clear 5
and concise statements. Excellent effort and presentation with detail.
Demonstrates a thorough understanding of the topic.

Good Writes fairly clear. Good grammar mechanics. Good presentation and 4
organization. Sufficient effort and detail.
Fair Minimal effort. Minimal grammar mechanics. Fair presentation. Few 3
supporting details.
Poor Somewhat unclear. Shows little effort. Poor grammar mechanics. 2
Confusing and choppy, incomplete sentences. No organization of
thoughts
Very Poor Lacking effort. Very poor grammar mechanics. Very unclear. Does not 1
address topic. Limited attempt.

Post-Activity No. 2: Identifying Business Opportunities in

the Environment and Global Opportunities
Modified True or False: Write True if the statement is true and if other change the underline words
to make it correct.
____1. Serves as the fuel that keeps the business operating is called skills.
____2. Common examples of service based businesses are consultancy, barber shop, repair shops,
beauty parlor, care giving, and designing works.
____3. Political and legal environments create different business problems.
____4. Global entrepreneurship is the process of an entrepreneur conducting business activities
across national boundaries. It is exporting, licensing, or opening a sales office in another
country
____ 5.The productive resources in the rural sector are sleeping business potentials.
_____6. In selecting a business, option should not be based on luck and immature thinking.
____7. Business market of individuals should match business opportunities. For example, if one is a
good cook, he could venture in the food business.
____8. These are tools for evaluating the strengths, weaknesses, opportunities, and technology
associated with a particular product or service.
____9. Trading Or product-based business is a buy-and-sell transaction that can happen in your
storehouse, showroom, or any other structure less environment
____10. National entrepreneurship is the term used for the entrepreneurs who operate on global
level and businesses worldwide.

References

Marcelino, V.,et al.(2011) .Principles of economics with taxation and agrarian

reform. Cacho Hermanos. Inc.
Medina, Robert G. (2010), Entrepreneurship in the small business
Management. Rex Book Store Inc.

Winefreda B.Asor, (2009) .Entrepreneurship in the Philippine setting.Rex Book

Store Inc.

Internet Sources:
http://www.strategicthinking.eu/10-common-business-plan-mistakes-and-how-to-avoid-them/
https://articles.bplans.com/common-business-plan-mistakes/

https://businessfirstfamily.com/globalization-benefits-small-
business/#:~:text=Globalization%20has%20led%20to%20lower,funds%20they%20require%20to
%20succeed.

https://www.google.com/search?q=competition+icon&tbm=isch&ved=2ahUKEwjz_4GY9pXrAhWSG
6YKHeVaBzQQ2-

https://www.ipl.org/essay/Challenges-Of-Global-Entrepreneurship-PKQ7G74SJFR

https://www.coursehero.com/file/64846221/130187674-International-Entrepreneurshippdf/

https://www.cipe.org/resources/entrepreneurship-philippines-opportunities-challenges-inclusive-
growth/