ENTREPRENEURIAL MIND

CHAPTER 1: DEFINING ENTREPERNEURSHP

 ENTREPRENEURSHIP is defined as the process of launching products or services
with value through allocating time and effort despite the unavoidable risks with
the goal of gaining both monetary and nonmonetary rewards.
- Launching something with value
- Allotting time and effort
- Assumption of risks
- Gaining rewards

 ENTREPRENUERIAL OPPORTUNITIES are those situations in which something

“new” is introduced and sold at greater than their cost of production.
- Selling Price
- Production Cost

 ENTREPRENUERIAL ACTIONS – turn these opportunities into actions.

- Existing product to a new market.
- New product in an existing market.
HOW DO ENTREPRENEURS DETERMINE WHEN TO ACT ON AN EXISTING
OPPORTUNITY?
- Assessing the uncertainty on the identified opportunity. “Is it worth pursuing?”
McMullen-Shepherd Model
- ATTENTION STAGE: radical uncertainty
 The realization an opportunity exists for someone.
- EVALUATION STAGE: action-specific uncertainty
 Determining whether it is an opportunity for themselves.
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 GETTING TO KNOW AN ENTREPRENEUR: Entrepreneur is someone who
launches and operates a business of any nature.
- Ambitious
- Risk Taker
- Creative and Innovative
- Sociable
- Opportunity Seeker
- Confident
- Decisive
- Proactive

 INSIDE THE MIND OF AN ENTREPRENEUR:

“ENTREPRENEURS think differently from non-entrepreneurs.”
A. THINKING STRUCTURALLY
- Making connections between a new product or new service, new business
model, or new technology and a target market where it can be introduced
- Individuals who can see or create structural matches between a technology and
a target market, especially in the presence of superficial mismatches are more
likely to recognize entrepreneurial opportunities.

B. BRICOLAGE: Entrepreneurs often lack resources (the reasons they engage in

bricolage)
- Entrepreneurs apply combinations of the resources they currently have to
new problems and opportunities.
- Involves taking existing resources (those at hand) and experimenting, tinkering,
repackaging, and/or reframing them so they can be used in a way for which they
were not originally designed or conceived
- From this process of “making do”, entrepreneurs can create opportunities.

C. EFFECTUATION
- Effectuation Process - A process that starts with what one has (who they are,
what they know, and whom they know) and selects among possible outcomes.
 ENTREPRENEURIAL MIND
- Involves thinking of a desired outcome and then coming up with a plan to
achieve that outcome,
Means  Desired Outcome
- Casual/Effectuation Process - A process that starts with a desired outcome
and focuses on the means to generate that outcome.
- Looks at what a person has and then selects form several possible outcomes.
Desired Outcome  Means

D. COGNITIVE ADAPTABILITY
- This describes the extent to which entrepreneurs are dynamic, flexible, self-
regulating, and engaged in the process of generating multiple decision
frameworks focused on sensing and processing changes in their
environments and then acting on them.
Identifying Changes in Environment  reacting to these changes
1. Adapt to new situations
2. Be creative
3. Communicate one’s reasoning behind a particular response

 ENTREPRENEUR BACKGROUND AND CHARACTERISTICS

- AGE :
 Most entrepreneurs start between the ages of 22 and 45.
 There are milestone ages every five years
 Male entrepreneurs (early 30s)
 Women entrepreneurs (middle 30s)
- WORK HISTORY :
 Dissatisfaction with one’s job often motivates the launching of a new venture
 Previous technical and industry experience is important
- EDUCATION :
 Entrepreneurs are not less educated than the general population

 ROLES OF ENTREPRENEURS IN THE ECONOMY

 THE MULTIPLIER EFFECT: the activity of an entrepreneur has an effect on the

other entrepreneurs.
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CHAPTER 2: TYPES OF BUSINESS
 SERVICE BUSINESS is type of business where you offer to do work for other
individuals.
- Transient House
- Barber Shops
- Repair Stations
- Banking
- Schools
- Hospitals
- Legal Services
- Accounting Services
- Tutoring Services
BENEFITS OF SERVICE PROVIDERS
- Non- Perishable products
- Minimal Capital
- Easy to Establish
- You are your own boss
- Mobility = can offer your business everywhere.

 MANUFACTURING is a type of business where the raw materials are converted

before selling them into finished goods.

Raw Materials  Direct Labor & Factory Overhead  Finished goods

MANUFACTURING COST:
1) DIRECT MATERIALS:
- Raw materials that are made into finished products. These are not materials that are
used in the production process.
2) DIRECT LABOR:
- employees responsible for producing a company's products or services
- involved in the hands-on production of goods and services
- Refers to the salaries and wages paid to workers that can be directly attributed
to specific products or services.
3) FACTORY OVERHEAD:
- costs to produce a company's products
- all indirect costs incurred during the production process
- The total cost involved in operating all production facilities of a manufacturing
business that cannot be traced directly to a product. It generally applies to
indirect labor and indirect cost.
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INDIRECT COST
1) INDIRECT MATERIALS:
- Materials that are used in the production process but that are not directly
traceable to the product. For example, glue, oil, tape, cleaning supplies, etc. are
classified as indirect materials.
2) INDIRECT LABOR:
- Refers to employees who work on tasks that contribute to the company's
performance outside of producing products and services. They work in areas
such as the administrative, accounting and engineering departments.
3) OTHER INDIRECT EXPENSES:
- Referred to as overhead expenses (for example, rent and utilities) and general
and administrative expenses (for example, officers' salaries, accounting
department costs and personnel department costs).
Why do entrepreneurs engage in manufacturing businesses despite of high
financial and operational requirements?
- Desired to earn more
- Low Manufacturing Cost
- Competitive Advantages (capacity to produce a better quality of product at a
lower price)

Two types of Manufacturing Firm

1) LABOR INTENSIVE:
- Refers to amount spent on training to labor so as to increase the efficiency of
labor which will ultimately result in the increased production.
- requires a large amount of labor to produce its goods or services
2) CAPITAL INTENSIVE:
- Business processes or industries that require large amounts of investment to
produce a good or service and thus have a high percentage of fixed assets, such
as property, plant, and equipment (PP&E).
- requires a large amount of labor to produce its goods or services

 TRADING is a type of business where the goods are bought and sold without any
changes in its form.
- Is the act of selling products directly to final consumer, who can either be an
individual or a business profit.
TWO TYPES OF TRADING
1) TRADING: small amount but large quantity
2) WHOLESALING: large quantity but small amount
 ENTREPRENEURIAL MIND
MODES OF TRADING:
1) Retail Store – department stores, supermarkets, convenience stores,
hypermarkets etc.
2) Mail – Netflix subs
3) Television
4) Telephone
5) Door to door
6) Electronic Means
EXAMPLES OF TRADING BUSINESS:
1) Department Stores
2) Convenience Stores
3) Specialty Stores
4) Supermarkets
5) Superstores
6) Direct Selling (a brand interacts with customers immediately. EX. AVON)
7) Discount Stores
8) Vending Machine
9) Factory Outlets
10)Discount Stores
11)Vending Machine
12)Factory Outlets
IMPACT OF TRADING TO BUSINESS:

BENEFITS OF TRADING:
- Fast turnover of products
- Encourages people to buy more
- Answer to small buyers
- Business strategy
- Enhances buyer-seller relationship
- Helps low budget families
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 SOURCE OF BUSINESS IDEAS:
- Suggestions
- Prior work experience
- Friends and relatives
- Focus group discussion
- Education
- Family Business
- Personal Interest
- Brainstorming
- Research
 FACTORS IN CHOOSING THE PRODUCTS OR SEVICES OFFER:
- Personal Interest
- Competence
- Competition
- Available resources
- Market Demand
- Capital
- Personal Exposure
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CHAPTER 3: ENTREPRENEURIAL OPPORTUNITIES
 HOW TO SPOT AN OPPORTUNITY?
1) MARKET NEEDS: what does the community around me need?
2) LOCATION: where am I located?
3) HOBBY: what do the people in the community enjoy doing?
4) AVAILABLE MATERIALS: what are the most common resources around me?
5) INTRESTS: what do I love doing?

 WAYS OF GOING INTO BUSINESS

1) LAUNCHING NEW BUSINESS
- Existing product to a new market
- New Product in an existing market
- Launching an improved product
2) BUSINESS ACQUISITION:
- Eliminates uncertainties faced by new business
- Already has an established name
- Relationship with customers and suppliers exist
3) FAMILY BUSINESS:
- Early exposure to the business
- Capital is not an issue
4) FRANCHISE ACQUISITION:
- Already has an established name
- Standard trainings, advertising and supplies

 ENVIRONMENTAL SCANNING
SWOT ANALYSIS
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 INTERNATIONAL ENTREPRENEURSHIP is the process of an entrepreneur
conducting business activities across national boundaries.

 WAYS TO GO GLOBAL
1) EXPORTING - selling products to other countries (outward flow of goods)
Indirect Exporting – means you appoint third parties, like agents or distributors, to
represent your company and your products abroad.
Direct Exporting - means direct sales to a customer abroad. You send your invoice
directly to the customer. You maintain close contacts with your customers and
undertake your own marketing and sales. Sales through a foreign branch of your
company are also direct exports.
2) PARTNERSHIP - entering into an agreement with other companies abroad.
3) FRANCHISING – using the name of foreign corporations in a domestic operation
4) BRANCH OPENING – head office which is abroad is still the one in charge

 WHY DO COMPANIES GO GLOBAL?

1) COMPETITION - is the current market may demand to find other markets
2) MARKET GROWTH – Market abroad continue to expand and bring exciting
challenges to entrepreneurs.
3) CUTTING COSTS- rising cost in the country may initiate desire to go global.
4) AVAILABILITY OF RESOURCES – some resources are only available in certain
countries.

 CONNECTING WITH FOREIGN PARTNERS

1) Travel
2) Trade Fair
3) Government
4) Friends
5) Internet

 OBSTACLES TO ORGANIZATION
1) Language Barrier
2) Laws
3) Currency Fluctuation
4) Political Climate
5) Tariffs or Taxes
6) Fortuitous Events
7) Peace and order
8) Regional Trade Alliances
ENTREPRENEURIAL MIND
CHAPTER 4: GOAL SETTING