Preliminary Activities of

Entrepreneurial Venture
Creation
3.5
Learning Packet Concept Map
THE ENVIRONMENT OF THE ENTREPRENEURIAL VENTURE

An entrepreneurial venture is created out of the business opportunities which the

entrepreneur should seek to exploit. These business opportunities emerge from
the entrepreneurial ideas that arise from the changes in the environment,
government policy, or technological advancements.

The entrepreneur needs to possess the necessary entrepreneurial

character traits, skills, and competencies before exploiting the business
opportunities. Remember that the business does not operate in a test tube or a
cylinder but in an environment that consists of three (3) layers:

1. Physical environment
2. Societal environment
3. Industry environment
Physical Environment

The first layer of the environment is the physical or natural environment. It is composed of the
natural elements that are inherent in the Earth. It is divided into climate, physical resources, and
wildlife. These three natural elements of the physical environment have significant contributions and
effects to the business venture. Prospective entrepreneurs should critically evaluate them before
opening their business.

To further discuss the parts of the Physical environment mentioned above, kindly refer to our textbook on pages 86-87.
Societal Environment

The societal environment is generally composed of social, political, cultural, economic, legal, and
technological forces. Studies reveal that there is a positive relationship between the evaluation of the
societal environmental and the favorable operating performance of the entrepreneurial venture. That is why,
it is highly advised that the entrepreneur should critically evaluate the effects of changes in all the forces of
the societal environment, the critical evaluation and thorough study of the environment where the business
operates is technically called environmental scanning.
 The Societal Environment Surrounding the Business

Social Forces are elements in society resulting from human interactions that can influence the thoughts, behavior, attitude, actions, and even
the beliefs and customs of the people. Social forces include the following: 1. values; 2. traditions; 3. literacy level; and 4. consumer
psychology.

Political Forces are the various elements usually comprising the of the political parties, political systems, and other related political
groups that substantially influence the political stability of a country. In the Philippines, the political forces of the macro-environment have
major and essential influence on business. Even foreign investors are very watchful of the political atmosphere in the country and the
moves of the Philippine government.

Cultural Forces basically refers to the integrated characteristics of a group of people or ethnic group in a particular society.
Cultural forces include the following: 1. Religion; 2. Language; 3. Beliefs; 4. Customs; and 5. Education.

Economic Forces are factors which are primarily caused by changes or movements in the Philippine economy that have direct or
indirect effects on the entrepreneurial venture. Economic forces include the following: 1. Interest rates; 2. Inflation rates; 3. Fiscal
policies; 4. Monetary policies; 5. Income; 6. Exchange rates; 7. Employment; and 8. Consumer confidence.

Legal Forces are the elements and bodies that are directly involved in the legislation and interpretation of laws and ordinances
directly affecting the business.

Technological forces basically refer to the trends and developments in computer and information technology that have impact on
business. These occur almost every day.

To further discuss the different forces of the Societal Environment and Environmental Scanning mentioned above, kindly refer to our
textbook on pages 90-96.
Industry Environment

The industry environment is the external environment layer where the trends and changes are easily and immediately felt by the
business. The industry environment is considered the immediate environment of the business where it conducts its various operational
activities. Industry forces include the following: 1. Government; 2. Suppliers; 3. Customers; 4. Competitors; 5. Employees; 6. Creditors.

The Industry Environment and Its Forces

To further discuss the different forces in the Industry

Environment mentioned above including the Industry
Analysis Scanning Tools, kindly refer to our textbook on
pages 100-107.
NATURE AND TYPE OF ENTREPRENEURIAL VENTURE

Forms of Entrepreneurial Venture

The classification of entrepreneurial venture according to form refers to the category of the business according to the number of
owners. The classification of business ventures according to form are as follows:

1. Sole proprietorship
2. Partnership
3. Corporation

A sole proprietorship is a business venture owned by one person only. Most of the small businesses operating in the Philippines
are sole proprietorship, which is highly encouraged among entrepreneurs.

The characteristics of sole proprietorship are as follows:

1. It is easy to form and manage.

2. It is a simple business operation.
3. It has a limited pool of resources.
4. Its growth is limited.
5. The owner has unlimited liability.
A partnership is a business venture that is owned by two or more persons. The
owners are usually called partners. Whatever profit or loss that results from the
entrepreneurial operation is divided between or among the partners. All the partners
may contribute money, property, or industry, their contributions become a common fund
of the partnership.

A corporation is an entrepreneurial venture formed by at least five (5) but not

more than fifteen (15) persons. A corporation can either be stock or non-stock, profit or
non-profit, and domestic or foreign. The persons originally forming the corporation are
called incorporators.
Nature of Entrepreneurial Venture
The classification of entrepreneurial venture according to its nature are as follows:

1. Merchandising – engaged in the buying and selling of products or goods.

2. Service – provide services to customers.
3. Manufacturing – engaged in producing goods or products.
4. Agriculture – engaged in the production of agricultural goods and animals.
5. Hybrid business – possesses the characteristics and nature of combined types of
business entities.
6. Special corporation – may include cooperatives, joint ventures, and non-profit
organizations.

To further discuss the Nature and Types of Entrepreneurial Venture mentioned above, kindly
refer to our textbook on pages 122-131.
MARKET IDENTIFICATION

Market identification is a strategic marketing approach and process that is intended to define the
specific customer of the product. There are three (3) strategic marketing approaches that will
assist the entrepreneur in defining the specific market of the product. These are:

1. Market segmentation
2. Market targeting
3. Market positioning

Market segmentation is an entrepreneurial marketing strategy designed primarily to

divide the market into small segments with distinct needs, characteristics, or behavior. The
commonly used methods for segmenting the market are: 1. Geographic segmentation; 2.
Demographic segmentation; 3. Psychological segmentation; and 4. Behavioral segmentation.

To further discuss Market Segmentation and its different methods mentioned above, kindly refer to our
textbook on pages 141-144.
Market targeting is a stage in market identification process that aims to determine the set
of buyers with common needs and characteristics. They are the market segment that the
entrepreneurial venture intends to serve. In this phase, the entrepreneur has already divided
the total market and is now in the process of: 1. Evaluating each market segment, and 2.
Selecting the target market segment or segments to serve.
Market Positioning refers to the process of arranging a product to occupy a clear,
distinct, and desirable place in relation to other competing products in the mindset of target
customers. It is considered the last stage in the product identification process after the
entrepreneur has conducted market segmentation and has already identified the particular
segment to serve.

The process of determining the market position of the product includes the following
steps:

1. The entrepreneur determines if the market position is distinct from others.

2. The entrepreneur evaluates the advantages or benefits of every possible market
position.
3. The entrepreneur decides on the market position.

To further discuss Market Positioning, kindly refer to our textbook on pages 156-159.
CONSUMER MARKETING STRATEGIES

Consumer Buying Behavior

The term behavior refers to the reaction of the consumers to changes happening in the environment that
influence their buying decision. The consumer buying behavior is simply the reaction of the consumers to various
events or forces that are happening in the business community which contribute to the decision process.

Determining the buying behavior of the consumers is not easy. It may take several wild guesses to predict
their reactions and responses to the stimuli. Some relevant questions on consumer buying behavior are as
follows:

1. What are the taste and preferences of the consumers?

2. What makes the consumers buy or not buy the product?
3. What factors influence the consumer buying behavior?
4. How does the consumer decide in buying the product?

Various studies have determined some degree of relationship between the environmental factors and the
buying behavior of the consumers. The most common of these are the environmental factors, buying decision
process, and marketing mix. In addition, the buying decision process may also contribute in determining the
buying behavior of the consumers.

To further discuss Consumer Buying Behavior, kindly refer to our textbook on pages 164-169.
Entrepreneurial Research on Consumer Buying Behavior

Types of Entrepreneurial Research

There are several dichotomies in the classification of the types of research endeavor. They can be
classified as exploratory, descriptive, and casual research.

Exploratory research is considered the preliminary research work conducted by an entrepreneur that
is primarily designed to gather baseline information to be used in solving a problem or forming a hypothesis.

Descriptive research is conducted by the entrepreneur when the foremost objective is to describe the
present buying behavior of the consumers in terms of environmental factors, buying decision process, and
marketing mix.

Casual research or correlational study is conducted by an entrepreneur when the objective is to

determine whether the buying behavior of the consumer is caused by some environmental factors. In this study
the entrepreneur must test whether the hypothesis is true or not by determining the relationships between the
buying behavior and other variables of the study. In casual or correlational study, there is a cause-and-effect
relationship between or among the variables.
Research Data

Research data refers to the kind of the necessary information to be gathered in answering the objective of
the research work. They can be classified either as quantitative or qualitative data and primary or secondary
data.

Quantitative data can be counted and mathematically computed. They are expressed in numerical
values. Examples are as follows:

1. Income of the consumers

2. Sales volume of the product
3. Age of consumers
4. Number of units produced

Qualitative data are generally descriptive data and hence most cannot be counted. Some examples
of qualitative data are the following:

1. Ethnic or tribal group of where the consumers belong

2. Perception of the consumers
3. Gender of the consumer
4. Dominant culture of the segment market
Primary data are research data sourced by the entrepreneur directly from the consumers belonging in
the market segment. The subject being studied by the entrepreneur is the consumers and their buying
behavior. Hence the date that come directly from the subject are considered primary data. Commonly
used research methods of gathering primary data are survey, experimentation, and observation.

Secondary data are data previously gathered by another researcher for other purposes and now
exist on other sources. Examples include the following:

1. Data gathered by marketing associations and included in their publications

2. Data collected from the survey conducted by the National Statistics Office (NSO) and published in its
website
3. Data gathered by the Bangko Sentral ng Pilipinas (BSP) and included in the BSP annual report.
Research Instrument

The entrepreneur does not simply gather data based on his/her whims and
caprices but through the so-called research instrument. Commonly used
research instruments to collect data are the survey questionnaire, personal
interview, and focus group discussion.

Types of Buying Behavior

The buying behavior of Filipino consumers may differ significantly from that
of foreign consumers. This is largely due to the different ethnic or racial groups with
different cultures, traditions, beliefs, religions, and customs. The buying behavior of
Filipino consumers may be classified as follows: 1. Complex; 2. Simple; 3.
Brand-sensitive; and 4. Price-sensitive.
THE MARKETING MIX The 7Ps in Marketing
The marketing mix refers to a mode,
means, or tool used by the entrepreneur to position
the product in the target market segment to
efficiently and effectively deliver it to the consumers
and to convince them about the benefits that they
will derive from buying the product. It is also
known as the “Ps” in marketing.

The marketing mix basically addresses the

following questions:

1. How can the target consumers be influenced

to buy the product or service?
2. What marketing survey must be adopted to
convince the consumers that the product or
service being offered satisfies their needs?

To further discuss the 7Ps in Marketing, kindly refer to our textbook on pages 185-195.
 THE CONCEPT OF NEEDS, WANTS AND BRANDING

Needs and Wants

The term needs refer to the things that a person must have in order to survive. These include food, clothing,
and shelter among others. On the other hand, the term wants refer to the things that a person must have in order to
be happy, comfortable, and satisfied. Therefore, as an entrepreneur, you must produce and sell a product that will
satisfy both the needs and wants of the consumers.

Branding

Brand names play a significant role in the positioning of the product. Brand refers to the name, design, color,
symbol, quality, features, or a combination of these elements that make the product separate and distinct from similar
products of the competitors.

Branding has been considered by experts in the field of marketing and entrepreneurship to be another
marketing strategy of product positioning. The brand carries the attributes, benefits, and even values of the product. It
communicates to the consumers the relevant information about the product. It provides the specific perspective of the
product to the consumers. Because of the significant role of brand name in the minds and buying behavior of the
consumers, companies are printing their brand names, logos, and colors on their products.