Professional Documents
Culture Documents
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LESSON COVERAGE
In this Enhanced Student Self-directed Lesson and Assessment, you will examine these competences when you take the
following lessons:
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_________1. A business plan should be structured like a book with the title or cover page first, followed
by a table of contents. T
_________2. One of the foremost reasons new businesses fails is not having enough startup capital or
inadequate planning to cover all expenses and be profitable. T
_________3. The customer should continually evaluate the outcomes of decisions and practices to
determine if the goals or objectives are being met and make modifications when
needed. Owner F
_________4. Financial plan requires the most investment of time by the writer, with information gathered
from multiple sources to prevent bias or undue optimism. F
_________5. The more varied the sources, the better the evaluation of the industry and the business, and
the greater the opportunity to have an accurate plan. T
Test II. Identification: Identify the following statement with a correct answer.
_________6. This section of the business plan outlines the direction and future plans or goals of the
business, as well as the methods that will be used to achieve these goals. Executive Summary
_________7-11 Goals or objectives should follow the acronym SMART, which stands for 7. ___________,
8. _________, 9. ________, 10. __________, and 11. _________, to allow for evaluation of the entire
process and provide valuable feedback along the way.
Test III. Multiple Choice: Choose the letter that BEST corresponds with a correct answer. Write in CAPITAL
LETTER the answer of your choice.
12. According to him entrepreneurship is a dynamic process of creating incremental wealth.
A. Hozelits B. Casson (1982) C. Shapero D. Ronstadt (1984)
13. The term for an owner of a business who invests his/her resources to bring an idea to life, setting the direction that
transforms that idea into reality, thus providing and gaining value that balances effort, purpose and profit.
A. Entrepreneurship B. Intrapreneur C. Entrepreneur D. Innovator
14. A blue print of the business that the entrepreneur would like to start which aims to establish if a business idea will
bring in a fair return to one’s investment, will be beneficial to the society, and will bring no harm to the
environment when it is operated.
A. Business Plan B. Balance Sheet C. Branding D. Bookeeping
15. This section of the plan describes the current or planned business structure, the management team, and risk
management strategies.
A. Objective Statement C. Executive Summary
B. Organizational Matters D. Company Description
16. For him Entrepreneurship is a creation of new organizations.
A. Gartner B. Casson (1982) C. Shapero D. Ronstadt (1984)
17. This is literally a small country that controls a significant portion of economy in Asia.
A. Hong Kong B. China C. Singapore D. India
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TIME ALLOTMENT
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Concept of Entrepreneurship
Entrepreneurship is a catchword in this era of globalized economy. It is a foundation and catalyst for economic
growth and innovation across nation. Entrepreneurial activities thrive in societies with supportive government policies and
which give much importance to innovativeness and risk taking to turn new ideas into breakthrough solutions. Small and
medium enterprises (SMEs) are concrete manifestation of entrepreneurship.
These are some of the definitions that have been given to entrepreneurship from early on to the present time:
CONTRIBUTOR DEFINITION
Knight (1921) Having profits from bearing uncertainty and risk
Schumpeter (1934) Carrying out of new combinations of firm organization-new products,
new services, new sources of raw material, new methods of production,
new markets, new form of organization
Hoselitz (1952) Uncertainty bearing…coordination of productive resources…
introduction of innovations and provision of capital
Cole (1959) Purposeful activity to initiate and develop a profit-oriented business.
McClelland (1961) Taking moderate risk
Shapero (1975) A kind of behavior that includes:(1) initiative taking, (2) the organizing
or reorganizing of social economic mechanism to turn resources and
situations to practical account, and (30 the acceptance of risk failure.
Casson (1982) Decisions and judgments about the coordination of scarce resources.
Ronstadt (1984) Dynamic process of creating incremental wealth. This wealth is created
by individuals who assume the major risks in terms of equity, time,
and/or career commitment of providing value for some product or
service. The product or service itself may or may not be new or unique,
but value must somehow be infused by the entrepreneur by securing and
allocating the necessary skills and resources.
Drucker91985) Behavior rather than personality traits. Its foundation lies in concept and
theory rather than an intuition.
Gartner (1985) Creation of new organizations
Hisrich & Brush (1985) Process of creating something new with value by devoting the necessary
time and effort; assuming the accompanying financial, psychic, and
social risks and uncertainties; and receiving the resulting rewards of
monetary and personal satisfaction.
Stevenson & Grousebeck (1989) Pursuit of opportunity without regard to resources currently controlled.
Hart, Stevenson, and Dial (1995) Pursuit of opportunity without regard to resources currently controlled,
but constrained by the founder’s previous choices and industry related
experience.
Shane (2003) An activity that involves the discover, evaluation and exploitation of
opportunities to introduce new goods and services, ways of organizing,
markets, processes, and raw materials through organizing efforts that
previously had not existed.
Kuratko(2009) Dynamic process of vision, change, and creation that requires an
application of energy and passion toward the creation and
implementation of new ideas and creative solutions.
Dyck and Neubert (2012) Conceiving an opportunity to offer new or improved goods or services,
showing the initiative to pursue that opportunity, making plans,
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Although each of these definitions’ views entrepreneurship from a slightly different perspective, they all contain
the following common elements:
Innovation
Opportunity seeking and exploitation
Resource mobilizing
Encountering risks and uncertainties
Economic and personal rewards
There are a lot of factors that influence the friendliness of a country to entrepreneurs; among these are the employment
regulations, bankruptcy laws, and the tax policies of a country. Culled from various sources, here are examples of
entrepreneurship in these 10 countries:
1. United States
noted to be one of the friendliest countries for entrepreneurs in the world, the United States is home of thousands
of successful entrepreneurs as shown by companies like Apple, Google, Starbucks, Walmart, and Walt Disney.
2. China
this emerging country is home to budding entrepreneurs who manufacture different products that range from toys,
gadgets, electronics and cars.
3. Singapore
this is literally a small country that controls a significant portion of economy in Asia. Many of their entrepreneurs
innovate on existing services for local and international use.
4. Canada
entrepreneurs in Canada are exploring opportunities over the internet. For example, people from a region called
Sanikiluag are known for their wood carving skills and entrepreneurs are selling their products online.
5. India
entrepreneurship play a dominant role in country’s economic landscape, with the government providing a venue,
called the Delhi huts, to start up entrepreneurs which promote local handicrafts. The Cottage Industries compound
is another venue put up by the Indian government for the development of local products manufactured and retailed
by start-up entrepreneurs. In fact, India is one of the countries in the Asia Pacific rim with a strong base of
entrepreneur organizations led by the youth and women.
6. Taiwan
entrepreneurship is encouraged here through the small and medium enterprise incubation centers for the purpose
of nurturing young firms, new products and technologies. These incubators provide space, facilities, hands on
management assistance and access to technologies financing to clients, helping them to survive and grow during
the start-up period. There are hundreds of incubators that have been sponsored by the Taiwan SME Development
Fund.
7. Hong Kong
with a knowledge-based economy, Hong Kong utilizes its human resources to make its economy the best possible
through entrepreneurship. There are many entrepreneurial endeavours that flourish from the real estate enterprises,
to the retail endeavours that flourish from the real estate enterprises, to the retail and food businesses.
Entrepreneurial activities related to tourism and agricultural exports have likewise continually received strong
support both from the government and private sectors. Hong Kong is known as a “Shopping haven”
8. Thailand
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the extent of government support to entrepreneurs is very evident in, for example, in its international airport in
Bangkok, where a huge section is subsidized by the Bureau of Small and Medium enterprise for the promotion of
local products marketed by entrepreneurs. Tourism for the international markets and cultural exports are two
major sources of income generated by Thai entrepreneurs.
9. Malaysia
this country is becoming friendlier to entrepreneurs and this is apparent in the number of businesses, both
international and local, which decided to locate in Malaysia. Its current emphasis on tourism as a business venture
for entrepreneurs is gaining popularity.
10. South Korea
South Korea emerged from the Asian Financial crisis better than any other country in the region. The enterprising
spirit is quite obvious in such companies as Samsung and Kia that have now become well- known even outside the
country.
Addressing widespread poverty is the single most important policy challenge facing the Philippines. Not only is
poverty high when benchmarked against countries in Asia, but also the rate of poverty reduction has been slow. While the
Philippine economy has grown at an average of 6 percent for the last five consecutive quarters (since 2012), poverty
incidence remains above 20 percent of the population. The critical challenge is to spread the payback of this huge economic
turnaround among the people, especially the poorest of the poor. They should feel the benefits of the growing Philippine
economy.
Entrepreneurship can provide the solution by creating wealth, jobs, and social empowerment. If we are to address
the issue of poverty with some degree of success, history tells us we have no choice but to actively encourage
entrepreneurial ventures.
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 Programmed 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 production networks.
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chains is a key driver of SME international competitiveness. The study noted “the importance of network/social ties and
supply chain links in triggering an SME’s first internationalization step and extending internationalization processes.”
In the Philippines, apart from institutions like chambers of commerce and industry clubs, entrepreneurship
advocacy is mainstreamed by the creation of enterprise networks like the Philippine Center for Entrepreneurship (PCE).
PCE’s concrete goal is to spawn the creation of so-called “Go Negosyo Communities” everywhere. These are communities
where the academic, business and government sectors are drawn into a triangle of almost seamless collaboration. In such an
ecosystem, there is constant networking, mentoring and cooperation among professors, entrepreneurs, industry experts and
venture capitalists, with the government providing support through a viable policy infrastructure. Every “Go Negosyo”
community is distinguished by its ability to produce a continuous stream of start-up ventures.
PCE also seeks to embed strong entrepreneurship lessons into the school curriculum. If the goal is to develop a
culture of enterprise and cultivate tomorrow’s competitive entrepreneurs, they must start at a young age. Primary and
secondary schools can teach the values and develop the mindsets of an entrepreneur. At the college level, enterprise
networks are looking at how to assist in the area of curriculum enhancement, providing manuals, training the teachers, and
involving real entrepreneurs in the learning process.
Nurturing the entrepreneurship paradigm
Entrepreneurship is more than just an economic term — it is a way of thinking. Creating jobs, empowering people,
and giving individuals access to better lives for themselves and their children is a wonderful gift. Today, it has become a
dynamic, developing part of the economy promoting inclusive growth. Entrepreneurship is a way of inspiring creative
individuals to pursue opportunities despite its risks.
In closing, the challenge for countries like the Philippines is to accelerate both the political and economic
leadership that can muster social reforms through entrepreneurship. Entrepreneurs have the power to achieve great things.
Entrepreneurs will emerge as the well-oiled wheels that will keep the economy going and the society efficiently running.
Ryan Patrick G. Evangelista is former Executive Director of Universal Access to Competitiveness and Trade (U-ACT).
Research inputs were provided by Marlon Min and Jin Hyuk Kim of U-ACT.
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NDSC SHS
Grade XII Academic Track
Development of Entrepreneurship
Evolution of the Field of Entrepreneurship
The evolution of the field of entrepreneurship has been formulated by scholar based on theories that are rooted in
economics, psychology, sociology, anthropology, and management. The overview consists of six historical periods where
the entrepreneurship contributors or scholars are cited based on their work. The classic contributors considered are
Cantillon, say, Marshall, Schumpeter, Knight, and Kirzner. The modern contributors considered are Drucker, Hisrich,
Timons, and Shane.
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Open your book on page 2-4, read and study the relevance of Studying Entrepreneurship and
Innovation.
Entrepreneurs are frequently thought of as national assets to be cultivated, motivated, and remunerated to the
greatest possible extent. Great entrepreneurs have the ability to change the way we live and work. If successful, their
innovations may improve standards of living, and in addition to creating wealth with entrepreneurial ventures, they also
create jobs and contribute to a growing economy. Specifically, entrepreneurship has these contributions to the economy and
society:
1. Create Jobs: Entrepreneurs are by nature and definition job creators, as opposed to job seekers. The simple translation is
that when you become an entrepreneur, there is one less job seeker in the economy, and then you provide employment for
multiple other job seekers. This kind of job creation by new and existing businesses is again is one of the basic goals of
economic development. This is why the Govt. of India has launched initiatives such as Startup India to promote and
support new startups, and also others like the Make in India initiative to attract foreign companies and their FDI into the
Indian economy. All this in turn creates a lot of job opportunities, and is helping in augmenting our standards to a global
level.
2. Develop new market. Entrepreneurs are opportunity seekers, creative, and resourceful. They seek new buyers or
customers of their product or services. The go beyond the existing places where their products are sold and look other
people who will be interested.
3. Creation and Sharing. By establishing the business entity, entrepreneurs invest their own resources and attract capital
(in the form of debt, equity, etc.) from investors, lenders and the public. This mobilizes public wealth and allows people to
benefit from the success of entrepreneurs and growing businesses. This kind of pooled capital that results in wealth creation
and distribution is one of the basic imperatives and goals of economic development.
4. Creating Innovation
An entrepreneur is a person who always looks for changes. Apart from combining the factors of production, he also
introduces new ideas and new combination of factors. He always try to introduce newer and newer technique of production
of goods and services. An entrepreneur brings economic development through innovation.
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According to Meir and Baldwin, development does not occur spontaneously as a natural consequence when economic
conditions in some sense are right. A catalyst is needed which results in entrepreneurial activity to a considerable extent.
The diversity of activities that characterizes rich countries can be attributed to the supply of entrepreneurs.
5. Provides more alternatives for consumers: The stiff competition in the market for quality and cheaper products and
services requires the entrepreneur to come up with more products and services consumers can choose from. Entrepreneur
also become more concerned about the welfare of their consumer, and ethical in producing and selling their products or
services, in order that consumers will prefer them over the other enterprise selling the same.
6. Standard of Living: Increase in the standard of living of people in a community is yet another key goal of economic
development. Entrepreneurs again play a key role in increasing the standard of living in a community. They do this not just
by creating jobs, but also by developing and adopting innovations that lead to improvements in the quality of life of their
employees, customers, and other stakeholders in the community. For example, automation that reduces production costs
and enables faster production will make a business unit more productive, while also providing its customers with the same
goods at lower prices.
7. Exports: Any growing business will eventually want to get started with exports to expand their business to foreign
markets. This is an important ingredient of economic development since it provides access to bigger markets, and leads to
currency inflows and access to the latest cutting-edge technologies and processes being used in more developed foreign
markets. Another key benefit is that this expansion that leads to more stable business revenue during economic downturns
in the local economy.
8. Community Development: Economic development doesn’t always translate into community development. Community
development requires infrastructure for education and training, healthcare, and other public services. For example, you
need highly educated and skilled workers in a community to attract new businesses. If there are educational institutions,
technical training schools and internship opportunities, that will help build the pool of educated and skilled workers.
9. Serves as role models: Entrepreneurs are people to be emulated by younger generations in the community and society at
large. The attitude, behavior, and personality traits, like reactiveness, opportunity recognition, risk taking, alertness, and
creativity, are some of the characteristics that will also make them successful entrepreneurs in the future.
10. Utilizes more alternatives for consumers: The stiff competition in the market for quality and cheaper products and
services requires the entrepreneurs to come up with more products and services consumers can choose from. Entrepreneurs
also become more concerned about the welfare of their consumers, and ethical in producing and selling their products and
services, in order that consumers will prefer them over the other enterprise selling the same.
Career Opportunities
Entrepreneurship is the best means for youth to adapt to a changing and highly competitive job
market in both rural and urban areas around the world" (OECD).
One commonly cited definition of entrepreneurship comes from Harvard Business School professor
Howard Stevenson: "entrepreneurship is the pursuit of opportunity without regard to resources
currently controlled." According to Dave Valliere, professor of entrepreneurship at Ryerson
University, it means that you see an opportunity that is "so compelling," you have no other choice but to pursue it even if
you don't have the necessary resources. You simply assume that you'll find a way to get it done (Adams, 2012). Our world
today is changing rapidly like advancements in information technology, forging alliances in the international politics,
globalizing economy, and breakthroughs in science and technology. Bearing these in mind, one of the best things about
pursuing a career as an entrepreneur is the wide-open possibilities. The possibilities in entrepreneurship are limitless.
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Grade XII Academic Track
There are other career opportunities that are open to people who have entrepreneurship background and competencies.
As published (in "Entrepreneurship," n.d.), entrepreneurial careers go beyond specific job titles, career paths and industries.
While it can mean starting a new business, entrepreneurial careers can be found in just about every field, industry, and
organization. Entrepreneurs create products, services, companies, and even industries. Some work for themselves, or a
family business. Others work within traditional companies. Those with entrepreneurial aspirations typically pursue one of
the following career paths:
New Venture Creation: Launching a company, buying a business or franchise, starting a new venture in a family
enterprise, or commercializing a technology
Careers in Existing Entrepreneurial Ventures: Working for a startup, small business, corporate entrepreneur,
strategic entrepreneurial unit, or other area, such as education, research, public policy, and accelerators.
Moreover, students who pursue graduate studies in entrepreneurship can go to work in a variety of roles other than
finding opportunities and founding companies. According to the ESADE Business School in Barcelona, Spain ("Career
Options," n.d.), existing companies need "intrapreneurs" to drive innovation in product and process development. Research
centers, business incubators and local business development agencies also require people with a deep understanding of
connecting innovation and results. Other graduates go on to work in areas including:
Innovation Direction
Innovation Architecture
R&D
Business Development
Innovation Management Consulting
Policy Advice
Financial Analysis (evaluation of business propositions)
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NDSC SHS
Grade XII Academic Track
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Grade XII Academic Track
Something to Ponder
"Entrepreneurial careers transcend specific job titles, career paths, and industries.
"The possibilities in entrepreneurship are endless. The rewards can be high"
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16
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Grade XII Academic Track
A business plan is very important to various parties. Among those who need business plans are the
management team, shareholders, bankers or creditors, customers, suppliers, and employees. To gain their
confidence, these stakeholders will have to be informed about what are the purposes, directions, core business, and
financial situation of the business venture from the time it will start and in the next few years based on its forecast.
Developing a Business Plan
An important task in starting a new venture is to develop a business plan. As the phrase suggests, a business plan is a "road
map" to guide the future of the business or venture. The elements of the business plan will have an impact on daily
decisions and provide direction for expansion, diversification, and future evaluation of the business.
This publication will assist in drafting your own business plan. It includes a discussion of the makeup of the plan and the
information you need to develop a business plan. Business plans are traditionally developed and written by the owner with
input from family members and the members of the business team. Business plans are "living" documents that should be
reviewed and updated every year or if an opportunity for change presents itself. Reviews reinforce the thoughts and plans
of the owner and the business, and aid in the evaluation process. For an established venture, evaluation determines if the
business is in need of change or if it is meeting the expectations of the owners
Using the Proper Format
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The presentation of the plan should be as professional as possible to portray your business in a positive manner. When
dealing with a lender or possible investor, the plan will be reviewed for accuracy and suggestions for changes to the plan
may be offered. The decision to recommend the loan to the appropriate committee or reject the proposal will be largely
based on your business plan. Often loan officers will not know a great deal about the proposed venture, but they will know
the correct structure of a business plan. Investors will make their decision based on the plan and the integrity of the owner.
For this reason, it is necessary to use a professional format. After loan officers complete their evaluations, the loan
committee will further review the business plan and make a decision. The committee members will often spend limited
time reviewing the document, focusing on the message of the executive summary and financial statements to make their
determination. Because of this, these portions need to be the strongest parts of the plan and based on sound in-depth
research and analysis.
Sections of the Business Plan
A business plan should be structured like a book with the title or cover page first, followed by a table of contents.
Following these two pages, the main parts of the plan normally appear in this order: executive summary, business mission
statement, goals and objectives, background information, organizational matters, marketing plan, and financial plan.
I. EXECUTIVE SUMMARY
The executive summary is placed at the front of the business plan, but it should be the last part written. The summary
describes the proposed business or changes to the existing business and the sector of which the business is (or will be) a
part. Research findings and recommendations should be summarized concisely to provide the reader with the information
required to make any decisions. The summary outlines the direction and future plans or goals of the business, as well as the
methods that will be used to achieve these goals.
The summary should include adequate background information to support these recommendations. The final financial
analysis and the assumptions used are also a part of the executive summary. The analysis should show how proposed
changes will ensure the sustainability of the current or proposed business. All challenges facing the existing business or
proposed venture should also be discussed in this section. Identifying such challenges shows the reader that you have
explored and taken into account all considerations during the research process.
II.MISSION, GOALS, AND OBJECTIVES
This section has three separate portions. It begins with a brief, general description of the existing or planned business. The
overview is followed by the mission statement of the business. You should try to limit the mission statement to three
sentences if possible and include only the key ideas about why the business exists. An example of a mission statement for a
produce farm might be: "The mission of XYZ Produce is to provide fresh, healthy produce to our customers, and to provide
a safe, friendly working environment for our employees." If you have more than three sentences, be as concise as possible.
The third (and final) portion sets the business's goals and objectives. There are at least two schools of thought about goals
and objectives. One is that the goals are the means of achieving the objectives, and the other is exactly the opposite--that
the objectives are the means of achieving the goals. Whichever school you follow, this is a very important part of the
business plan. These goals and objectives should show the reader what the business wishes to accomplish and the steps
needed to obtain the desired results. Goals or objectives should follow the acronym SMART, which stands for Specific,
Measurable, Attainable, Reasonable, and Timed, to allow for evaluation of the entire process and provide valuable
feedback along the way. The business owner should continually evaluate the outcomes of decisions and practices to
determine if the goals or objectives are being met and make modifications when needed.
III. BACKGROUND INFORMATION
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Background information should come from the research conducted during the writing process. This portion should include
information regarding the history of the industry, the current state of the industry, and information from reputable sources
concerning the future of the industry. This portion of the business plan requires the most investment of time by the writer,
with information gathered from multiple sources to prevent bias or undue optimism. The writer should take all aspects of
the industry (past, present, and future) and business into account. If there are concerns or questions about the viability of
the industry or business, these must be addressed. In writing this portion of the plan, information may be obtained from
your local public library, periodicals, industry personnel, trusted sources on the Internet, and Penn State Extension.
Industry periodicals are another excellent source of up-to-date information. The more varied the sources, the better the
evaluation of the industry and the business, and the greater the opportunity to have an accurate plan.
The business owner must first choose an appropriate legal structure for the business. The business structure will have an
impact on the future, including potential expansion and exit from the business. If the proper legal structure is not chosen,
the business may be negatively impacted down the road. Only after the decision is made about the type of business can the
detailed planning begin.
IV. ORGANIZATIONAL MATTERS
This section of the plan describes the current or planned business structure, the management team, and risk management
strategies. There are several forms of business structure to choose from, including sole proprietorship, partnership,
corporations (subchapter S or subchapter C), cooperative, and limited liability corporation or partnership (LLC or LLP).
These business structures are discussed in Starting or Diversifying an Agricultural Business.
The type of business structure is an important decision and often requires the advice of an attorney (and an accountant).
The business structure should fit the management skills and style(s) of the owner (or owners) and take into account the risk
management needs (both liability and financial) of the business. For example, if there is more than one owner (or multiple
investors), a sole proprietorship is not an option because more than one person has invested time and/or money into the
business. In this case, a partnership, cooperative, corporation, LLC, or LLP would be the proper choice.
If the business is not a sole proprietorship, the management team should be described in the business plan. The
management team should consist of all parties involved in the decisions and activities of the business. The strengths and
backgrounds of management team members should be discussed to highlight the positive aspects of the team. Even if the
business is a sole proprietorship, usually more than one person (often a spouse, child, relative, or other trusted person) will
have input into the decisions and therefore should be included as team member(s).
Regardless of the business structure, all businesses should also have an external management support team. This external
management support team should consist of the business's lawyer, accountant, insurance agent or broker, and possibly a
mentor. These external members are an integral part of the management team. Many large businesses have these experts on
staff. For small businesses, the external management team replaces full-time experts; the business owner(s) should consult
with this external team on a regular basis (at least once a year) to determine if the business is complying with all rules and
regulations. Listing the management team in the business plan allows the reader to know that the business owner has
developed a network of experts to provide advice.
The risk management portion of the business plan provides a description of how the business will handle unexpected or
unusual events. For example, if the business engages in agricultural production, will the business purchase crop insurance?
Does the business have adequate liability insurance? Is the business diversified to protect against the unexpected, rather
than "putting all its eggs in one basket"? If the business has employees, does the business carry adequate workers'
compensation insurance? All of these questions should be answered in the risk management portion of the business plan.
More information how liability can affect your business and on the use of insurance as a risk management tool can be
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found in Agricultural Business Insurance and Understanding Agricultural Liability . The business structure will also
determine a portion of the risk management strategy since the way that a business is structured carries varying levels of risk
to the owner and/or owners. All marketing strategies (or objectives) carry a degree of risk and must be evaluated, and
mitigation strategies should be included in this portion of the plan.
V. MARKETING PLAN
Every purchase decision that a consumer makes is influenced by the marketing strategy or plan of the company selling the
product or service. Products are usually purchased based on consumer preferences, including brand name, price, and
perceived quality attributes. Consumer preferences develop (and change) over time, and an effective marketing plan takes
these preferences into account. This makes the marketing plan an important part of the overall business plan.
In order to be viable, the marketing plan must coincide with production activities. The marketing plan must address
consumer desires and needs. For example, if a perishable or seasonal crop (such as strawberries) will be produced, the
marketing plan should not include sales of locally grown berries in January if the business is in the northeastern United
States. If the business plans to purchase berries in the off-season from other sources to market, this information needs to be
included. In this way, the marketing plan must fit the production capabilities (or the capability to obtain products from
other sources).
A complete marketing plan should identify target customers, including where they live, work, and purchase the product or
service you are providing. Products may be sold directly to the consumer (retail) or through another business (wholesale).
Whichever marketing avenue you choose, if you are starting a new enterprise or expanding on an existing one, you will
need to decide if the market can bear more of what you plan to produce. Your industry research will assist in this
determination. The plan must also address the challenges of the marketing strategy proposed. This portion of the plan
contains a description of the characteristics and advantages of your product or service. Identifying a "niche" market will be
of great value to your business.
Other variables to consider are sales location, market location, promotion and advertising, pricing, staffing, and the costs
associated with all of these. All of these aspects of the marketing plan will take time to develop and should not be taken
lightly. Further discussion on marketing fruits and vegetables can be found in Fruit and Vegetable Marketing for Small-
scale and Part-time Growers.
An adequate way of determining the answers to business and marketing issues is to conduct a SWOT analysis. The
acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths represent internal attributes and
may include aspects like previous experience in the business. Experience in sales or marketing would be an area of strength
for a retail farm market. Weaknesses are also internal and may include aspects such as the time, cost, and effort needed to
introduce a new product or service to the marketplace. Opportunities are external aspects that will help your business take
off and be sustained. If no one is offering identical products or services in your immediate area, you may have the
opportunity to capture the market. Threats are external and may include aspects like other businesses offering the same
product in close proximity to your business or government regulations impacting business practices and costs.
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The financial plan has its basis in historical data (for an existing business) or from projections (for a proposed business).
The first issue to address is recordkeeping. You should indicate who will keep the necessary records and how these records
will be used. Internal controls, such as who will sign checks and handle any funds, should also be addressed in this section.
A good rule to follow for businesses other than sole proprietorships is having at least two people sign all checks.
The next portion of the financial plan should be assumptions concerning the source of financing. This includes if (and
when) the business will need additional capital, how much capital will be needed, and how these funds will be obtained. If
startup capital is needed, this information should be included in this portion. Personal contributions should be included
along with other funding sources. The amount of money and repayment terms should be listed. One common mistake
affecting many new businesses is underfunding at startup. Owners too often do not carefully evaluate all areas of expense
and underestimate the amount of capital needed to see a new business through the development stages (including living
expenses, if off-farm income is not available).
Typically, a balance sheet, income statement, cash flow statement, and partial budget or enterprise budgets are included in
a business plan. More information on agricultural budgets can be found in Budgeting for Agricultural Decision Making.
These documents will display the financial information in a form that lending institutions are used to seeing. If these are
not prepared by an accountant, having one review them will ensure that the proper format has been used.
Financial projections should be completed for at least two years and, ideally, for five years. In agricultural businesses, five-
year projections are sometimes difficult to make because of variability in prices, weather, and other aspects affecting
production. One way to illustrate these risks is to develop several scenarios covering a range of production assumptions.
This attention to detail will often result in a positive experience with lenders because they realize that the plan covers
several possible circumstances and provides insight into how the business plans to manage risk. More information on
financing agricultural businesses can be found in the publication Financing Small-scale and Part-time Farms.
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Clearly, a business plan serves many masters. First, it serves the entrepreneur who must set a navigational course.
Second, it serves investors and cautious financiers. And third, it serves the managers and staff of the organization so that
they will know the strategies and programs of the enterprise.
The business plan must have a specific audience in mind and what important questions do this audience want
answered. In order to aid the entrepreneur in getting his or her business plan organized, the following format may be a good
start:
I. Introduction
A. The Business Concept and the Business Model
B. The Business Goals: Vision, Mission, Objectives, and Performance Targets
C. The Business Offering and Justification
II. Executive Summary
III. The Business Proponents: Organizers with their Capabilities and Contributions
IV. The Target Customers and the Main Value Proposition to the Customer
V. The Market, Market Justification based on the Industry Dynamics and the Macro Environmental Factors
Affecting the Opportunities and Threats in the Market, the Size, Potential and Realistic Share of the
Market.
VI. The Product and Service Offerings
VII. The Enterprise Strategy and Enterprise Delivery Systems: Business Competitiveness
VIII. The Financial Forecasts and Expected Returns, Risks, and Contingencies
IX. Environmental and Regulatory Compliance
X. The Capital Structure and Financial Offering: Return and Benefits to Investors, Financiers, and Business
Partners
II. The Business Goals: vision, mission, objectives, and performance targets
The business goals show the future and long-term prospects of the enterprise. It is composed of the vision, mission,
objectives, key result areas, and performance indicators of the enterprise.
EXECUTIVE SUMMARY
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The executive summary contains everything that is relevant and important to the business audience. It is a synthesis
of the entire plan. It must contain the major argumentations of the business proponent on why the business will work and
succeed. It should provide the business plan audience all the arguments on why they should participate in the business
venture.
The executive summary should then introduce and highlight the good qualities of:
1. the business proponents and their partners;
2. the enterprise organization and its capabilities;
3. the technology provides and their expertise and experience; and
4. the suppliers and all the major service providers
It should likewise describe the products/services of the enterprise, their features and attributes, and why they are
the right ones to deliver to the customers.
The Executive Summary should then proceed to discuss and justify the Enterprise Strategy and Enterprise Delivery
System. The Enterprise Strategy builds and develops the game plan for attaining competitiveness. The Enterprise
Delivery System is the entire process of converting input (resources) into output and these output into outcomes.
The Executive Summary should also contain a section on the environment and regulatory compliance of the
proposed business, as well as the more proactive programs to become a more responsible corporate citizen.
Finally, the Executive Summary should present the capital structure of the proposed business and show how this
structure will respond to the investment programs and financial forecasts of the enterprise.
However, the Executive Summary can only be written last in order to capture the finding and insights of the other
parts, but for presentation purposes, it is placed in the first part of the business plan.
MARKET DEMAND AND SUPPLY, INDUSTRY DYNAMICS, AND MACRO ENVIRONMENTAL FACTORS
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The fifth section of the business plan is the market demand and supply, the industry dynamics, and the macro
environmental forces affecting the business of the enterprise.
It is normal for enterprises to actually expand their product offering to include the other segments of a bigger
market. The business proponent should examine all the opportunities in this bigger market in order to determine what
exactly influences this bigger market.
The business plan should estimate the total market supply and demand for the product offerings of the enterprise.
The business plan should then determine the major critics factors that influence this market demand and supply.
Once these critical factors or variables are determined, the business plan should then forecast the future and supply.
If these physical factors are expected to remain the same, then most likely, the future forecast will follow the past trends. If
not, the future estimate of demand and supply should be revised according to the new variables influencing the demand and
supply.
The market analysis and forecasting exercise should lead to a quantification of the current and prospective size of
the market. Both the current and potential consumptions should then be dissected.
The business plan should discuss the relevant industry dynamics:
Who are the competing enterprises in the industry and what are their comparative advantages and
disadvantages? What business models and strategies are they employing?
Who are the suppliers in the industry and what are their capabilities and bargaining power?
What are the channels of distribution being used by the industry? How effective are these channels?
Both the industry players and the market are affected by the macro environment, which includes the social, political,
economic, ecological, and technological (SPEET) forces. The business plan should discuss the major trends and
changing patterns in the macro-environment, which would have significant impacts on the relevant industry and the
behavior of consumers.
Social environment includes the demographics and cultural dimensions that govern the relevant
entrepreneurial behavior. The structure, social status, and dynamics of the population at large, as well as the
people’s beliefs, tastes, mores, customs, and traditions dictate the major parameters of market behavior.
Political Environment defines the governance system of the country or the local area of business. It includes
all the laws, rules, and regulations on allowable and disallowable business practices.
Economic Environment is mainly driven by supply and demand forces. It is the same factor that drives the
interest and foreign exchange rates to fluctuate with the movement of the market forces.
Technological Environment makes or breaks competing participants in any industry. New scientific and
technological discoveries often lead to the launch and commercialization of a new products with superior
attributes or to rendering the old ones obsolete.
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Customer satisfaction level, profits generated, and the performance of people from the transaction are the Outcomes of the
EDS.
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You may refer in your textbook on page 65-83 for additional inputs about developing a Business Plan.
SECTION A:
THE VALUE OF MARKET RESEARCH
“Research is formalized curiosity. It is poking and prying with a purpose.” (Zora Neale Hurston). Market
Research is the process of gathering information which will make the company more aware of how the people the
company hopes to sell to, will react to the company’s current or potential products or services. It is simply an information
gathering exercise to determine the viability or acceptability of a product or service an entrepreneur intends to offer in the
market.
Research is important for every business, and should not be just a one-off activity. Successful businesses conduct
research on a continual basis to keep up with market trends and to maintain a competitive edge. Regardless of whether an
entrepreneur is starting or expanding its business, market research is necessary to understanding its target market and
increasing sales (“The importance of market research, “n.d.). Today, business owners conduct market research for a lot of
reasons such as the following (“The importance of market research,” n.d):
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RUBRICS:
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Test IV. Short Paragraph: In five sentences evaluate the career opportunities you think are more appropriate for
you.
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Rubric:
Criteria 5 (Excellent) 3(Good) 2(fair)
Content and Organization
SCORE EARNED
Something to Ponder
"A business plan is an operating tool which, if properly prepared, will help the entrepreneur to work
effectively towards success."
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IN
ENTREPRENUERSHIP
Grade XII Academic Track
Second Semester S.Y. 2021-2022
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determine if the goals or objectives are being met and make modifications when
needed. Owner F
_________4. Financial plan requires the most investment of time by the writer, with information gathered
from multiple sources to prevent bias or undue optimism. F
_________5. The more varied the sources, the better the evaluation of the industry and the business, and
the greater the opportunity to have an accurate plan. T
Test II. Identification: Identify the following statement with a correct answer.
_________6. This section of the business plan outlines the direction and future plans or goals of the
business, as well as the methods that will be used to achieve these goals. Executive Summary
_________7-11 Goals or objectives should follow the acronym SMART, which stands for 7. ___________,
8. _________, 9. ________, 10. __________, and 11. _________, to allow for evaluation of the entire
process and provide valuable feedback along the way.
Test III. Multiple Choice: Choose the letter that BEST corresponds with a correct answer. Write in CAPITAL
LETTER the answer of your choice.
16. According to him entrepreneurship is a dynamic process of creating incremental wealth.
B. Hozelits B. Casson (1982) C. Shapero D. Ronstadt (1984)
17. The term for an owner of a business who invests his/her resources to bring an idea to life, setting the direction that
transforms that idea into reality, thus providing and gaining value that balances effort, purpose and profit.
B. Entrepreneurship B. Intrapreneur C. Entrepreneur D. Innovator
18. A blue print of the business that the entrepreneur would like to start which aims to establish if a business idea will
bring in a fair return to one’s investment, will be beneficial to the society, and will bring no harm to the
environment when it is operated.
B. Business Plan B. Balance Sheet C. Branding D. Bookeeping
19. This section of the plan describes the current or planned business structure, the management team, and risk
management strategies.
Key Concepts:
Product Price Promotion Place
MARKETING
The American Marketing Association (as cited in Kotler & Keller, 2007, p.3) defines marketing as “an
organizational function and a set of process for creating, communicating, and delivering value to customers and for
managing customer relationships in ways that benefit the organization and its stake holders.” It is the “art and science of
choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating
superior customer value” (Kotler &Keller, 2007, p.3). Moreover, marketing is also the performance of activities that seek
to accomplish an organization’s objectives by anticipating customer and client needs a directing a flow of need-satisfying
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goods and services from producer to customer or client (Canon, Perrault, and McCarthy,2008). It is not only the selling of
the product or services but more importantly to know and understand the customers very well that the product or service
meets their need so it sells itself.
In business, marketing is an integral part and a successful marketing campaign can yield massive sales. But the cost
and the time have to be factored into the business. The importance of marketing cannot be overemphasized; this is because
the tools you use are very important. Some of these tools are as follows, Radio and Television, Social media like Facebook,
LinkedIn and various social network, and Business Directories in your local area. This is where you draw a random sample
of your targeted population and how many people you need to reach in these random samples. The effectiveness of your
campaign will give a reason for your customers to contact you and become repeat customers.
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businesses may be limited when it comes to technical research-based idea generation techniques. This stage is crucial as it
lays the foundation for all the other phases, the ideas generated shall guide the overall process of product development.
Phase Two: Screening
The generated ideas have to go through a screening process to filter out the viable ones. The business seeks
opinions from workers, customers and other businesses to avoid the pursuit of costly unfeasible ideas. External industry
factors affecting small businesses, such as competition, legislation and changes in technology, influences the enterprise's
decision criteria. At the end of the screening process, the firm remains with only a few feasible ideas from the large pool
generated.
Phase Three: Concept Development
The enterprise undertakes research to find out the potential costs, revenues and profits arising from the product.
The business conducts a SWOT analysis to identify the strengths, weakness opportunities and threats existing in the
market. The market strategy is set out to identify the product's target group, which facilitates segmentation of the product’s
market. Market segmentation is important as it enables the firm to identify its niche. The identified niche influences most
of the marketing decisions.
Phase Four: Product Development
Product development entails the actual design and manufacture of the product. Development commences with the
manufacture of a prototype that facilitates market testing. Based upon the results of the tests, the business owner decides on
whether to undertake large-scale production or not.
Phase Five: Commercialization and Rollout
Favorable results in the development stage precede large-scale production and commercialization. Here, the
business launches its promotion campaign for the new product. The market research conducted during the conception stage
influences the timing and location of the product launch.
Stage 1.
Introduction Stage – This is the stage when the product is launch in the market. It is when the product is introduced and
struggles to gain brand recognition.
Stage 2.
Growth Stage – Also known as the “market acceptance “stage, this is when sales and profits grow at an increasing rate.
The advertising and word of mouth helps the product to increase sales. As sales growth, more firms are willing to stock the
product which helps the product to grow even further. During this stage, wants to sustain rapid sales growth as long as
possible.
Stage 3.
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Maturity Stage – In this stage, sales and profits start to decline. More competitors enter the market with more advanced
product development. This stage is divided into three phases
a. Growth maturity. Sales rate declines because of distribution saturation; unwillingness of middlemen to resell
manufacturers product.
b. Stable maturity. Sales become level off or at breakeven because of market saturation; unwillingness of the to
buy due to loss interest on the product.
c. Decaying maturity. Sales continue to decline; ; customers shift to other brands or available substitutes.
Stage 4
Decline Stage. In this stage, new products or brands eventually enter the industry.
Branding
It is the process of communicating a unique selling proposition for a company, product or service, which was
formed using product development, pricing and distribution strategies. The success of branding depends on effective brand
management, which is the process of consistently communicating the correct brand message to consumers with the use of
tools such as logos, mascots, jingles and slogans.
Creating a Brand
If you sell shampoo, that’s not your brand, that’s your product. If you sell a high-end, high-priced shampoo that’s
only sold in salons, that’s your brand – exclusivity and quality. If you sell a low-price shampoo in big box stores, that’s
your brand – affordability.
You can build a brand using your pricing strategy. Some companies aim to have the highest-priced product in their
space in order to create perceived value (“They could only sell it for this much if it’s the best!”). Lowering the price to
compete with bargain brands would damage the brand. If the high-price strategy isn’t working, the company might have to
pivot, changing the messaging as they change the product from a high-end item to a reliable or affordable or effective
product. This would create a new brand for the product.
Brand Management
Brand management is the process of protecting your brand. For example, if you brand your shampoo as an
exclusive, high-end product and start selling it in big box stores to increase sales; you will damage your brand as you
cheapen the image of your product. You might see a short-term rise in sales and profits as consumers, who normally
couldn’t afford your product rush to try it, but eventually, buyers will see you as a bargain shampoo and you’ll lose your
primary customers.
If you target Millennial’s with your trendy fitness clothing and add a line of apparel for senior citizens, you will
confuse the marketplace and will cause your millennial customers to view you differently.
The Role of the Four Ps
The marketing mix consists of Product, Price, Place and Promotion. Companies must address all of these in
marketing. They must develop products and features that offer the correct unique selling proposition. They must price the
product correctly to match the brand they have created. They must sell the products in ways that target their desired
customers (e.g., online for younger customers, brick and mortar for middle-aged adults, direct mail, catalogues and direct-
response TV ads for seniors).
Only after the first three Ps have been addressed do companies promote their products. Therefore, advertising,
public relations, social media and promotions are not marketing. They are examples of marketing communications
(marcom) or integrated marketing communications (IMC).
Brand management includes not only creating, pricing and using correct distribution chains to sell your products so that
these methods fit with your brand strategy, but sending your message consistently, such as a specific logotype, one slogan,
a unique jingle, or celebrity endorser.
Branding is the process of communicating a unique selling proposition for a company, product or service, which was
formed using product development, pricing and distribution strategies. The success of branding depends on effective brand
management, which is the process of consistently communicating the correct brand message to consumers with the use of
tools such as logos, mascots, jingles and slogans.
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Place
The product should be available from where your target consumer finds it easiest to shop. This may be High Street,
Mail Order or the more current option via e-commerce or an online shop. The product is not necessarily produced and
consumed in the same place. The Place of production or the plant site can be different from the place of distribution or
selling. “As mentioned, the service is produced and consumed in the same place. It cannot be owned and taken away from
the location. This is why the place at which this transaction occurs is of vital importance. The location of the service
provision is carefully analysed to allow ease of access and the desire to make the effort to reach it. Fast food restaurants
and sales and service centers may be located in busy main streets to allow walk in customers, while a fine dining restaurant
may be located in a quiet street to maintain exclusivity and privacy.”
Price
The Product should always be seen as representing good value for money. This does not necessarily mean it should
be the cheapest available; one of the main tenets of the marketing concept is that customers are usually happy to pay a little
more for something that works really well for them. With a product, the materials that go with it can be measured and its
actual tangible cost of production is also measurable. Therefore, it is not that difficult to put a price tag on it. However,
“since a service cannot be measured, it can be challenging to put a price tangible cost of production measurable, it can be
challenging to put v a price tag on it. There are some tangibles of course, such as the labor costs and overheads. But
additionally, the ambience, the experience and the brand name also factor into the final price offering.”
Pricing is Flexible. Pricing is the only single variable that is flexible and can be changed within no time. On the other
hand, the remaining elements of marketing mix like distribution channels, promotional campaigns and can increase the
cost.
Set the right Price. When setting the price keep in mind the strategic objective of the organization. For example, if a
marketer set too high or too low in both pricing decisions it can affect the sale growth.
Positioning. When setting a price, it conveys a message to your potential customers about your product and service
and creates a perceived value of marketing mix. This perceived value can affect the consumer decision-making process.
High pricing means high-quality products and services. Low pricing products and services indicate that you are a low-cost
provider
.
Different Pricing Strategies
Penetration Pricing
When companies use penetration pricing strategies, the focus is to gain market share. Goods and services are offered at
lower prices than its competitors. Marketers want to increase consumer awareness of products and services and influence
consumer to let’s give it a try. When a company sets lower prices, can damage its profitability, but in the long run they can
raise the price after successful market penetration strategy.
Cost plus pricing
It involves adding a mark-up to the cost of goods and services to arrive at a selling price. Under this approach, you add
together the direct material cost, direct labor cost, and overhead costs for a product, and add to it a mark-up percentage in
order to derive the price of the product. Cost plus pricing can also be used within a customer contract, where the customer
reimburses the seller for all costs incurred and also pays a negotiated profit in addition to the costs incurred.
Example:
VariablecCost - Php 10.00 Solution: Therefore, the manufacturer’s unit cost
Fixed cost - Php 30,000 will be:
Expected unit sales - 1,500 Unit cost/ Manufacturing cost per unit
= Variable cost + Fix cost ÷ Unit sales
= Php 10.00 +30,000.00 ÷ 1,500
= Php 10.00 + 20.00
= Php 30.00
38
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in critical reviews and certain other noncommercial uses permitted by copy right law.
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Grade XII Academic Track
Value-based pricing
This is a strategy of setting prices primarily based on a consumer's perceived value of a product or service. Value
pricing is customer-focused pricing, meaning companies base their pricing on how much the customer believes a product is
worth.
Value-based pricing is different than "cost-plus" pricing, which factors the costs of production into the pricing
calculation. Companies that offer unique or highly valuable features or services are better positioned to take advantage of
the value pricing model than companies which chiefly sell commoditized items.
Psychological Pricing
Marketers use psychological pricing that influences the buyers to buy products and services based on their emotions
rather than logic sense.
Bundle Pricing
When businesses set bundle pricing, they sell several products combined into a single package for a lower price.
Bundling strategy is a smart way to move those unsold items taking up space. It can also create value perception in
customers’ mind that they are getting value for their money.
Bundle pricing better works for those companies having complementary product lines. For example, a restaurant can
offer a complimentary salad or green tea on a full platter dish.
Promotion
Promotion is the part of marketing where you advertise and market your product, also known as a promotional
strategy. The advertising, PR, sales promotion, personal selling and, in more recent times, social media are all key
communication tools for an organisation. These tools should be used to put across the organisation’s message to the correct
audiences in the manner they would most like to hear, whether it be informative or appealing to their emotions. Promotion
is the explicit communication strategy adopted by an enterprise to elicit the patronage, loyalty, and support not only from
its customers but also from its other significant stakeholders.
Promotion encompasses all the direct communication efforts of the enterprise, such as advertising, public relation
campaigns, promotional tours, product offerings, point-of- sale displays, websites, flyers, emails, letters, telemarketing, and
others. In order to convince them to buy your product, you need to explain what it is, how to use it, and why they should
buy.
39
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any electronic or mechanical methods without the prior written permission of the writer except in the case of brief quotations embodied
in critical reviews and certain other noncommercial uses permitted by copy right law.
NDSC SHS
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The trick in promoting is letting consumers feel that their needs can be satisfied by what you are selling.
Advertising It’s a key promotional strategy and can be done through the following:
Radio
Relatively inexpensive yet very effective, radio advertisement is a great way to reach local customers and inform
them about your business and products. The best day to run a radio ad is from Wednesday to Sunday.
Television
If you want your advertisement to reach customers in regional or national levels, television is the way to go,
although it can be more costly than the other options.
Print
Print advertisement can be distributed via direct mail or printed materials which include newspapers, flyers, and
trade and consumer magazines. You can also send letters, contests, fact sheets, brochures, and coupons to current or
potential customers across the whole country. Print advertisements let people know what, where, when, and why they
should buy your product.
Electronic
You can also advertise electronically through your company website and provide important and pertinent
information to clients and customers. You can protect some parts of your website through passwords and give access to
member customers. You can also send advertisements via direct e-mail as part of your promotional strategy.
Word-of-mouth
They say the best advertisers are satisfied customers and the reverse can also be said. When customers like or
dislike your products, they tell other people about it.
Generic
This type refers to advertising that does not mention or promote a particular brand but the whole industry. You may
have seen generic advertisements for beef, pork, and milk.
Public Relations or PR
Public relations are usually focused on building a favourable image of your business. You can do this by doing
something good for the neighbourhood and the community like holding an open house or being involved in community
activities. You can engage the local media and hold press conferences as part of your promotional strategy.
In the late 70’s it was widely acknowledged by marketers that the Marketing Mix should be updated. This led to
the creation of the Extended Marketing Mix in 1981 by Booms & Bitner which added 3 new elements to the 4 Ps
Principles. This now allowed the extended Marketing Mix to include products that are services and not just physical things.
40
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any electronic or mechanical methods without the prior written permission of the writer except in the case of brief quotations embodied
in critical reviews and certain other noncommercial uses permitted by copy right law.
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People –
All companies are reliant on the people who run them from front line Sales staff to the Managing Director. Having the
right people is essential because they are as much a part of your business offering as the products/services you are offering.
Processes
The delivery of your service is usually done with the customer present so how the service is delivered is once again
part of what the consumer is paying for.
Physical Evidence
Almost all services include some physical elements even if the bulk of what the consumer is paying for is
intangible. For example a hair salon would provide their client with a completed hairdo and an insurance company would
give their customers some form of printed material. Even if the material is not physically printed (in the case of PDFs) they
are still receiving a “physical product” by this definition
41
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any electronic or mechanical methods without the prior written permission of the writer except in the case of brief quotations embodied
in critical reviews and certain other noncommercial uses permitted by copy right law.
NDSC SHS
Grade XII Academic Track
You may refer in your textbook on page 142-144 for additional inputs about 7Ps of
1. What is the most important use of the internet for marketers? Why?
2. What are reasons of some product failure in entering the market?
3. Discuss the importance of pricing the product reasonably.
Activity #2:
Instruction: Choose at least 2 milk tea store in your locality. Evaluate the business strengths and weaknesses in terms of
their advertising, prices, packaging, customer care, location and demand. Compare your findings and come up with a
summarized report. (By Group)
-Unknown
STUDENT SELF- DIRECTED LEARNING AND ASSESSMENT (SSDLA)
ENTREPRENEURSHIP (ABM, STEM & HUMMS)
Topic: The 4Ms of operations and innovation (Unit 5 Week 9-12)
42
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in critical reviews and certain other noncommercial uses permitted by copy right law.
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Grade XII Academic Track
Content Standard: The learner demonstrates understanding of environment and market in one’s locality/town.
Performance Standard: The learner independently creates a business vicinity map reflective of potential market in one’s
locality/town
Most Essential Learning Competencies:
The learners…
describe the 4Ms (Manpower, Method, Machine, Materials) of operations in relation to the business
opportunity:
develop a product description
Time Allotment: 10 one-hour sessions
INTRODUCTION
The factors of production consists of many factors such as land, labour, capital, entrepreneurship and
management in which management is a vital factor of production, an entrepreneur may establishes the organization as its
owner, but it is management that make various resources productive. They simply require the catalyst of management to
produce results because it is management that coordinates various factors of production. Therefore, management occupies a
central place among all the factors of production. There are other factors of production such as money, manpower,
materials, machinery and methods known as the five m's of management.
The actions required to create new ideas, processes or products which when implemented lead to positive effective
change. While invention requires the creation of new ideas, processes or products, innovation moves one step further and
requires implementation of the inventive act. Innovation also implies a value system which seeks to derive a positive
outcome from the inventive act.
Business innovation is when companies implement new processes, ideas, services, or products with the goal of
boosting the bottom line. It could mean launching new and improved products or services (which can lead to higher
revenue), making an existing process more efficient, or solving a current business problem (both of which cut down on
costs and save time). A business focus on brainstorming, design thinking, or the establishment of an innovation lab can
drive business innovations.
The purpose of the business innovation process is to create value for the organization. That value can come from
creating new revenue opportunities or driving more revenue through existing channels; from creating efficiencies that save
time, money or both; or from improvements to productivity or performance. In short, i nnovation should lead to higher
profits.
GENERAL INSTRUCTIONS:
Answers all activities on a long bond paper.
Parts of answering these activities are the instructions, so you must follow all of the given instructions.
Activity 1: To be submitted
Reflect Upon
Assuming that you are going to execute your business plan in the real world of business in the future. Would you apply
and use the 5M’s of operation? Why? Discuss your point.
_________________________________________________________________________________________________
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NDSC SHS
Grade XII Academic Track
KEY CONCEPTS
1. Money: It is the most critical and all-purpose resource because it is used to acquire or hire other resources. In
organization, money is employed to generate more money in the form of profits or surplus. A business firm or enterprise
requires money in the form of fixed capital and working capital. Financial capital is money used by entrepreneurs and
businesses to buy what they need to make their products or to provide their services to the sector of the economy upon
which their operation is based.
2. Manpower (staffing): manpower refers to the managerial and non-managerial personnel employed an organization
other resources cannot act by themselves and have to be utilised by human beings. Therefore, human resources mobilize,
allocate and utilize the physical and financial resources of an organization. When setting up a business, finding honest
and capable people is always a challenge. It is a rare to find someone with all the ideal qualities. So for a businessman,
they must be able to treasure their employees who are both capable and honest as they are integral to the growth of the
business.
Materials (Production): materials represent the physical raw materials and intermediate products (semi-finished
goods) which are converted and/or assembled into finished products with the help of certain processes and technology.
Without the proper equipment, you will not be able to perform the needed tasks efficiently. The sourcing raw materials
are critical in any business endeavour as the businessman would want to have the cheapest possible at the highest
44
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any electronic or mechanical methods without the prior written permission of the writer except in the case of brief quotations embodied
in critical reviews and certain other noncommercial uses permitted by copy right law.
NDSC SHS
Grade XII Academic Track
quality.
Machinery (Equipment): machines are the equipment used to process the materials into finished or semi-finished
products. Employment of modern machinery helps to reduce costs and to improve the quality of output technology has
therefore become an important ingredient in the efficient management of organizations. You may be able to use the
manpower to do it but it is usually more efficient if machines are able to automate the work.
5. Methods: PProcee)methods refer to the normal and prescribed ways of doing things various operations are
performed according to certain systems and procedures. Use of right methods helps to increase efficiency of operations
and contributes to effective management. Without a scalable process, it would be difficult to expand the business. This
means that the methods used in the main branch must be documented and must be replicated as well in other branches.
Every other factor which is a part of the five M's has its own dynamics. It is the duty of management or business
owner to understand or analyse the basic nature and the functions of each M and the source of its availability. Managers
must clearly know the purposes for which the other factors are employed and coordinate them in such a way as to
optimize their combined productivity.
INNOVATION
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Whatever form it takes, innovation is a creative process. The ideas may come from:
inside the business, from employees, managers or in-house research and development work
outside the business, e.g. suppliers, customers, media reports, market research published by another
organisation, or universities and other sources of new technologies
Success comes from filtering those ideas, identifying those that the business will focus on and applying resources
to exploit them.
Introducing innovation can help you to: Businesses that fail to innovate run the risk of:
Approaches to innovation
Innovation in your business can mean introducing new or improved products, services or processes. Analyse the
marketplace. There's no point considering innovation in a vacuum. To move your business forward, study
your marketplace and understand how innovation can add value to your customers. For more information on analysing
your marketplace, see the page in this guide on planning innovation.
Identify opportunities for innovation.
You can identify opportunities for innovation by adapting your product or service to the way your marketplace is
changing. *For example, if you're a specialist hamburger manufacturer, you might consider lowering the fat content in
your burgers to appeal to the health-conscious consumer.
You could also develop your business by identifying a completely new product. *For example, you could start producing
vegetarian as well as meat burgers.
Planning innovation
Some innovative ideas may just come to you out of the blue. However, you should ideally have:
innovation as part of your business strategy
strategic vision of how you want your business to develop - if you dedicate your time to monitoring trends in
your business sector, you can then focus your innovative efforts on the most important areas.
Innovation will not only improve the chances of your business surviving, but also help it to thrive and drive
increased profits. There are lots of practical ways of assessing whether your ideas have profit potential:
Assess the competition
Find out who your competitors are and where they operate. Use the Internet and advertising sources to find out
about their products, prices and operating culture. This can give you an overview of their selling points, as well as any
areas you might be able to exploit.
study market or industry trends
awareness of the climate in which your business is operating will help you to plan.
you can find a lot of information about your industry on the Internet. Business and trade magazines will also
feature useful articles.
46
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in critical reviews and certain other noncommercial uses permitted by copy right law.
NDSC SHS
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It's not enough simply to know who your customer base is. You need to communicate effectively with them as
well. Communication involves not only listening to their needs but also actively observing their behaviour around
current products and services and generating ideas on how you can make improvements. Involve your suppliers and
other business partners.
Incremental Innovation is the continuous improvement of existing products or services to provide more value to
an existing market. It focuses on reducing defects and incrementally improving performance with features like product
line expansions, cost reductions, and next-generation products. This type of innovation occurs in the short-term and has
low technological advancement and low market impact.
Architectural Innovation is the modification of existing solutions for an entirely new market. Architectural
innovation refers to changing the overall design of a product by putting existing components together in new ways. This
innovation occurs in the short to medium term.
Disruptive Innovation is when new technologies and products are created to serve an existing market. This type
of innovation is enabled by new technology that provides a more efficient and accessible alternative to what already
exists in the market. Businesses apply disruptive innovation to serve the evolving needs of their consumer base, creating
entirely new value streams and service offerings that did not exist before.
Radical Innovation is when an organization applies new technology to a new market. This type of innovation is
47
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any electronic or mechanical methods without the prior written permission of the writer except in the case of brief quotations embodied
in critical reviews and certain other noncommercial uses permitted by copy right law.
NDSC SHS
Grade XII Academic Track
when a new product, process, or service with high technological advancement has a high market impact and completely
replaces an existing offering. This innovation occurs in the long-term.
Incremental and architectural innovations extend the relevance and life cycle of an existing business. These
innovation processes follow a formal set of predetermined steps from concept to commercialization,
whereas disruptive and radical innovations supersede existing processes to redefine industry standards. These
innovation types are characterized by several process changes along the way due to unexpected events and discoveries.
The most successful companies diversify their approach to innovation by maintaining a portfolio of various
initiatives and techniques. To gain a competitive edge, businesses should explore all four types of innovation and align
each approach with specific company goals.
You may refer in your textbook on page 161- 205 for more learnings and inputs about the topic.
Activity 2
Instruction: Open your textbook on pages 187-206; comprehend the lesson about the production/operations management.
Then answer exercise on page 207.
Quiz
Instruction: Answer the following questions being asked.
1. Describe some guidelines on how to choose right machine and equipment for your business.
2. Explain how you will ensure quality control in the business.
48
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