CHAPTER 1

CONCEPT OF ENTREPRENEURSHIP

“Opportunity comes from one person’s idea that influences other to take action.”

LEARNING OUTCOMES

1. Define what is an Entrepreneur;

2. Describe the key concepts in the making of an entrepreneur;

3. Identify the factors that develop entrepreneurial activities and successes;

4. Give the difference between a Manager and an Entrepreneur;

5. Discuss the development of entrepreneurship;

6. Elaborate the making of a Filipino entrepreneur and their profile; and

7. Discuss the challenges in entrepreneurship.

ENTREPRENEURSHIP

It is a science of converting processed ideas into a remarkable business venture. According to

Fajardo (2009), it is also a capacity for innovation, investment and expansion in new market, products
and techniques. This definition implies that an enterprise is at work whenever an individual takes the
risks and invests resources to make something unique or something new, designs a new way of making
something that already exists, or creates new markets.

THE ENTREPRENEUR

An entrepreneur is an individual who is alert to profitable opportunities for the exchange of

goods or services. A street vendor in Divisoria takes the opportunity to make profit by selling school
supplies during the opening of the school. During Christmas, He or she takes the opportunity of selling
Christmas items and in other occasions, sell clothing apparels at different seasons. A cell-phone repair
man takes the opportunity of servicing various cellular owners who cannot afford to buy new models.

An entrepreneur is one who organizes, manages, directs and assumes the risks of a business or
enterprise. Being an entrepreneur is a lifestyle or an attitude. It is not a calling for everyone, but rather a
choice.
The fifteen (15) questions that a potential entrepreneur must ask himself or herself before setting up a
new business: a Yes or No answer is highly recommended.

1. Am I a planner, dreamer or a goal setter?

2. Do I offer a product that people want to buy?
3. Do I have enough resources to starts the business?
4. Will my business plan allow cash to flow as soon as possible?
5. Am I working around a tight budget for my expense?
6. Do I have good credit status?
7. Am I expecting too much too much from my revenues as a result of my hard work?
8. Am I ready to asses and measure everything before putting it out for the public?
9. Do I have strong people skills?
10. Do I enjoy making decisions an being in charge?
11. Am I good at short and long-range planning?
12. Am I willing to take initiative when confronted with difficult situations?
13. Am I flexible, and can adapt to changing circumstance?
14. Am I willing to take calculated risks?
15. Am I ready to learn and accept the mistakes that I might encounter along the way?

If you could answer yes to most of the questions, then you are probably ready to become an
entrepreneur. There are no correct answers for these questions regardless of your answer. These are
some of the basic realities that you must face when starting a business: demand for your product or
service, cash flow, income potential, marketability and flexibility. Be prepared to navigate the road to
entrepreneurship and hurdle the challenges and roadblocks along the way.

THE ENTREPRENEURIAL SKILLS AND COMPETENCIES

The entrepreneurial skills and competency factors are the following negotiating, planning, risk
assessment, purchasing, accounting, recruitment, training, selling, controlling and dealing with
emergencies

The entrepreneur as a Missionary

The entrepreneur is a missionary who perceives opportunities inherent in the exchange of goods
with great desir6e for profit. The entrepreneur creates an environment in which success is possible and
the possibility of failure is controllable. The entrepreneur is at work whenever he takes risk and invests
his personal talents and resources to make something new or different as costumers like to buy new and
improve products.

Entrepreneur is Goal-Driven

An entrepreneur is goal-driven and self-confident as he exercises the locus of control. He sets

high goals and strives to attain the projected target and accomplishments. He extracts compliance with
set goals and activities to avoid the risk he foresees while planning the activities and programs in the
operation of the enterprise. He accepts challenges and responsibility for results. He makes sure that
people work based on specified work programs and schedules.

The Entrepreneur is a Marketing Man

The marketing environment in identified by the entrepreneur and thus, he marshals his
resources to pursue the opportunities and makes immediate action to exploit his personal gain. The
needs and wants of costumers are properly identified and these are propelling reason for him to take
the opportunity to make profit. He takes the lead for innovation and makes modifications to make the
costumer aware that his product or service is more superior to those offered by others.

The Entrepreneur Starts Small to Become Big

Many entrepreneurs start small but with their managerial talents and persistence, they exploit
the opportunities available for their disposal. At the early stage, their growth orientation is for
expansion of their operation and they persistently pursue approaches that differentiate them from
other managers.

THE MAKING OF AN ENTREPRENUER

The making of an entrepreneur is a dynamic process and approach. As an approach, the

entrepreneur considers the business opportunity as a chance to find new ways to solve the problem
rather solving the problem. A manager of an organization is characterized as an adapter while the
character of an entrepreneur is an innovator. The manager employs discipline and precise methodical
approach in solving business problems while an innovator entrepreneur approaches the problem om a
different angle as he focuses on discovering problems and make new avenues for its solutions.
Entrepreneurship is a process that can be developed, learned and nurtured.

ENTREPRENEURSHIP AS A DYNAMIC PROCESS

Entrepreneurship is a dynamic process of innovation and the establishment of new opportunity

for the creation of new venture. The small business owner entrepreneur in the sense is self-employed
and is different from an innovator entrepreneur. The real entrepreneur is an individual with the greatest
drive for expansion and growth and has propensity to make a difference in terms of their achievements
in profit and exploitation of the resources for growth and business expansion.

The entrepreneur develops strategic plans and programs that will ascertain a definite advantage
over the others in their line of business. This is the reason why we see people in the same line of
business that others had gone miles over the others. The former is a manager of this business while the
latter is an entrepreneur.
FACTORS THAT DEVELOP ENTREPRENEURIAL ACTIVITIES

1. The Entrepreneur Takes the Initiative

With his great interest to capitalize on the opportunity at hand, the entrepreneur takes the
initiative of venturing into business. With an amount of knowledge, he knows that he can operate the
venture with minimum risk. Armed with vigour and vitality he plunges a profitable operation.

2. Organization of Capital Resources

While talents and ambition are great resources of the entrepreneur, financial and human
resources are important ingredients in the start of the organization. With his savings and other financial
resources, he starts operation on small scale together with his trusted family members or friends he
knew that could help him develop his dream enterprise.

3. The Development of Administrative Machinery

The management is developed with organizational structure based on the need of operation.
Specific duties and responsibilities are assigned to individuals with talents and skills that fit their
respective position. It is based on the individual capacity to do the job and not on personal connection
with the entrepreneur.

4. The Development of Entrepreneurial Autonomy

The entrepreneur develops autonomy in the operation of the enterprise as he takes the lead in
all the activities of the organization especially in the early stage of operation. His venture capitalized as
he knows best the direction of the enterprise as he is aware of the calculated risk involved. Locus of cost
control must be in his hands.

5. The Development of SWOT Analysis

The avoidance of risk can be taken with careful analysis of the Strength, Weaknesses,
opportunities ang Threats of the organization. The entrepreneur must see the environment of the
enterprise based on SWOT analysis so that the risk involve could be seen before it happens. Forecasting
environmental events are antidote to future business risk.

PECULIAR CHARACTERISTICS OF MANAGERS IN SOLVING PROBLEMS

1. He develops systems and procedures that are precise based on current practices in an industry.
2. The manager is interested in solving organizational problems rather than finding other avenues in the
solution of the problems.
3. The manager calibrates in the refinement of policies and procedure and tends to revise them to solve
existing problems.
4. He find ways and means to provide solutions and compliance to routine activities.
5. He is interested in details and sensitive to group cohesion and extract group cooperation as a means
to group accomplishments.

CHARACTERISTICS OF AN INNOVATOR ENTREPRENEUR IN SOLVING PROBLEMS

1. He looks at the problem on different angels and finds means to circumvent the same.
2. He discovers the roots of the problem and develops avenues to better solve the problem. He
formulates solutions and alternatives.
3. He develops basic assumptions and hypothesis related to current practices and makes innovations
based on careful analysis through SWOT.
4. The innovator entrepreneur is interested in the end results rather than the means to achieve it. He
has little tolerance for details and routine work.
5. He capitalizes on people with bright ideas and talents and gets their opinion and consensus and with
little regard for people with mediocre ideas.

THE DEVELOPMENT OF ENTREPRENEURSHIP

The making of a Filipino entrepreneur

The making of a Filipino entrepreneur is a process of trial and error. The colonization of the
Filipino for more than 300 years is a great factor in the slow development of entrepreneurial activity in
the country. Our concept of owning a small business like a sari-sari store, or a small tailoring shop, or a
repair shop or market distribution outlet already makes the person an entrepreneur. While this concept
is true to certain extent, entrepreneurship is more than being self-employed and making a living out of
the income to support family needs or a little of their wants.

The success of Filipino entrepreneur stands in a very shallow doundation. Most Filipino business
starts on a copy-cat syndrome. For example, Maria will start a sari-sari store and here comes Pedro
seeing the flourishing business of the Maria, opens store opposite the other corner. Juana starts a
barbeque stand on the corner and Petra ith another outlet offering another variety of street foods. This
is the scenery in most Philippine business condition.

The food business outlet is one of the most abused and most prominent activities of some
Filipino business entrepreneurs, including that of small outlet in the distribution of basic grocery and
other items called sari-sari store or in some cases mini—grocery stores. Some enterprising outlets
include cellular phone load that adds to their income.
THE MAKING OF JOLLIBEE FOOD’S CORPORATION

The true Filipino entrepreneur is more than of that a copycat. While we consider the success of
Jollibee Corporation in the food industry, the founder is not a true Filipino in strict sense of his origin. He
has a Chinese blood, which he inherited his business acumen from his parents who knew how business
grow and prosper.

He started with an ice cream stand and later made it into an outlet for chicken joy and other
food items that answer the Filipino taste buds especially for children. His success was based on his talent
for innovation and finding a business that make him a multi-millionaire.

THE FOUNDATION OF NATIONAL BOOKSTORE

The making of National Book Store is not a myth of fortune and honey. The founder, Socorro
Ramos, came from a poor family who sustained a living from selling various items to support their basic
needs. She was a working student while in high school but because of her persistence and perseverance,
she graduated with honors. Being a working student was not a hindrance to her education as she
painstakingly combined studies with hard work.

After high school, she worked as a sales clerk in Goodwill Bookstore owned by her brother
where she learned the rudiments of book business. Learning the hard way in not an easy task and
starting a business empire of national magnitude with more than 30 branches all throughout the country
was a product of entrepreneurial acumen coupled with determination and hard work.

Business capital for expansion and could come from savings and other sources. The Ramos
couple knew that they could expand their business with the savings that they had and bought the
present office of the store at Rizal Avenue in Santa Cruz, Manila where a 9-story was built. They built a
building complex in Pasig where printing and other services are being made.

With the help of their children, they went into vertical expansion by establishing printing press
to print local books and other office forms and supplies, they ventured on other business activities and
expand horizontally and vertically and made them of what they are today. Their children were trained
the same hard way and they are all successful, fitted to inherit the new growing business empire.

LEONARDO SARAO, THE JEEPNEY KING

The success of the jeepney business is the making of a Filipino entrepreneur. Sarao jeepneys
abound in all terminals during the early period of transport development in the country until copy-cats
made jeepneys of similar styles. Leonardo Sarao, the jeepney king, started the business by being a
helper mechanic until he established his repair shop from meagre capital.

He then started buying second hand parts and engines from Japan and built jeepneys that
abound in most streets of the Metropolitan Manila and its suburbs. He established jeepney factory with
meagre capital and made savings to expand his operations. He ventured into other business activities
and success was not based on his education but hard work and determination. All his children became
professionals and are now engaged in various business activities that made them of what they are
today.

The mentioned few successful stories of Filipino entrepreneurs will serve as a self-propelling
reason for us to think that the making of entrepreneurship is not served in silver platter. The career of
these few successful entrepreneurs were built with entrepreneurial genius founded on slow and
painstaking hard work. Their personal objective is not only to generate money to sustain basic needs or
wants but the greater drive for personal fulfilment.

THE CHALLENGES FOR ENTREPRENEURSHIP

The new generation of young entrepreneurs should look up the high standard of values and
character of entrepreneurs who got up the ladder of success. Success in entrepreneurial activity is based
on the inner compulsion to achieve the undeterred difficulties. The values and character of JUAN
TAMAD has no place in the world of entrepreneurial vocabulary.

1. The new entrepreneur must be a doer and willing to work hard until he achieves the task he wants for
himself.

He must possess the versatility for success and self-confidence that could be overcome risk with
his strong determination. The exploration of the total business environment must be put into total
perspective as it interplays with the development of new opportunities and the risk attached to it.

2. Personal attention and comprehensive awareness for the progress of the business is not trusted on
other people.

The entrepreneur must be in direct control of operation and not in indirect control. He must be
able to measure the desired results. He must personally verify the data and financial figures spent and
earned in the operation of the business.

3. The new entrepreneur must have high sense of integrity that he stands firm on his principles and
ideas.

His word of wisdom is a contract to depend on. He looks at things in different perspectives and
approaches things with varied alternatives to attain what he wants. In short, he is visionary, innovative,
and unstoppable until he achieves the goal he sets for himself.

4. Emotional stability is an important factor in the making of an entrepreneur.

While he is impatient for mediocre performance and lazy bones, his temper must remain in
control. Interpersonal relationships must be the banner in negotiations and effective personal
communication is the key factor in closing business deals.
5. The built in self- starting mechanism that drives an entrepreneur to success is his executive ability to
manage people and resources. This executive ability refers to how he plans, organizes, directs and
controls the physical and material resources under his disposal. Many entrepreneurs are describing to
have shrewd judgment in character that induced them to see things the way it should be. An
entrepreneur has a passion for excellences and mediocre performance has no place in his
entrepreneurial vocabulary.

The new entrepreneurs and those who believe in their capacity for long hours of work to get
things done, spent 75 percent in planning innovations and putting them into action. Dreams are built
around creativity as he conceived original idea out of his imagination.

The entrepreneur is like a multi-awarded artist with a handful of Trophy of accomplishment

equipped with inner drive in transforming idea into tangible reality. Sacrifice for long working hours and
abandonment of personal life pleasures make the entrepreneur achieve their target goals. They organize
and develop their idea into achievable activities and surpass the factor of risk.

THE STARTING POINT TO ENTREPRENEURIAL SUCCESS

1. Start to be on your own.

An individual can never attain success in entrepreneurial activity unless he starts his own
business and releases himself as an employee for the rest of his life. Income from employment is never
enough as it is good only until the 15 th and end of the month. Never have we found an ordinary
employee who gets rich except those who are connected with the government and amass wealth
through graft and corruption.

You may start an employee, get new ideas and develop your own entrepreneurial style from
experience and education. Start dreaming and be independent. Learn so save money and be sure to pit
it in proper investment then make it as starting capital to operate your enterprise. Make that money
work for you as you think to make it grow bigger from the dreams you have crafted out of your
imagination for success.

2. Explore the business environment.

The Philippines being a haven of opportunities is wide open for people who dream to be rich
and amass fortune as we have all the natural resources. Find the things you can do best and you must
have the talent and interest in doing it. Remember that the central objective of any business is to
produce the best goods and those that provide better service.

With the talent you acquire in conducting feasibility studies in your college days or those that
you learned from experience, apply your knowledge in SWOT analysis. Consider opportunities for
expansion as business growth is possible under good management.
3. Be in control.

The entrepreneur must be in the driver seat of his business. You cannot trust your business to
somebody who does not own the ideals and aspiration of the enterprise. Be in control of the operation
as you develop people whom you can work with dedication and with values the same as yours. Invest
your time with people who are achievers and do not lose your valuable time with losers.

Motivate people to excel and make their desire burning for success with their accomplishments.
Make them partners in decision making and develop their ego needs for proper recognition. People are
your assets that can help you propel success in your business. Think that improving efficiency and
effectiveness will create more space for growth and development.

4. Have a good accountant or a trusted financial adviser.

While you, as an entrepreneur and busy with the management of the business, a good
accountant or financial adviser is needed to help you out in the financial activities of the enterprise.
They can help you re-invest your money to other profitable operation.

While trust and confidence can be given, you must also have the knowledge of the entry in
financial statements. Develop control procedures that you are still in command in approving transaction
involving money and its disbursements. While you economize your expenditure, be sure that every peso
is spent wisely without sacrificing quality in products or service.

5. Seek the advice of professionals.

You are not a superman to know all the legal and other matters related to the operation of the
enterprise. Seek the services of a legal consultant on matters with legal implications. Have your income
tax prepared by good accountant lawyers or certified accountant on matters with legal implications.
Have your income tax prepared by good accountant lawyers or certified accountants that know how to
deal with government regulating body in terms of tax payments.

ENTREPRENEURAL MANAGEMENT DEMANDS

Many successful entrepreneurs in the Philippines and those in foreign countries are not making
of known schools of management. Most entrepreneurs came from scratch and have acquired
managerial expertise in making business empires through shared hard work and dedication. They
possess characteristics and intelligence to make things happen rather than wait for things to happen.

1. The entrepreneurs is alert to opportunities and perceptive to make things happen.

The entrepreneur looks at things much ahead of other people. He sees things in different way
and develops strategies to make things happen the way he perceived it to be.
2. The entrepreneur has the health and endurance to work long hours

The dreamer entrepreneur could not stop working until he finds solutions to his perceived idea.

3. The entrepreneur of flexibility and change.

The entrepreneur does not have a one-track mind. He finds new avenue or course of action as
he senses some danger zone with on his plans and programs.

4. The entrepreneur is self-assured.

The entrepreneur could not easily be rattled by problems or uncertainties. He has great trust in
his capability to develop new things.

5. The entrepreneur seeks others’ opinion or makes researches.

He believes that a person who asks questions could only be fool for a minute but one who asks
no question could be fool for a lifetime.

PROFILE OF A SUCCESSFUL ENTREPRENEUR

Successful people in the field of business are creators of things with difference. They are no
ordinary Juan Dela Cruz who we can be seen around the corner.

Most successful entrepreneurs are described to possess the following profiles.

1. The entrepreneurs has strong desire for independence.

An entrepreneur would not like to be attached to his employment. He seeks independence and
strives to develop his own business.

2. The entrepreneur develops strong drive to succeed.

Success is for people with the profound need to achieve their dreams and life aspiration.
Achievements are the ego of people with the inner desire for independence.

3. The entrepreneur has strong determination in decision making.

The strong personality of the entrepreneur carries with it the power to make decisions. He is
aware of developing new markets and creates new things to satisfy costumers’ needs and wants.
4. The entrepreneur develops feedback mechanism for results.

The development of feedback mechanism is important factor in the development of successful

business entrepreneur. He goes back to where he starts and finds out things the way they are.

5. The entrepreneur is a result-driven individual.

Profit is the result of accomplishment. His achievements are the driving forces that keep him
awake for more opportunities.
 CHAPTER 2
ECONOMIC DEVELOPMENT OF ENTREPRENEURSHIP AND IT’S COMPETENCIES

LEARNING OUTCOMES

1. Describe the Philippine economic landscape in the present time;

2. Explain the different factors in determining economic growth;

3. Examine the contributory determinants in the making of an economy;

4. Discuss the role of employment as a contributory factor in economic development; and

5. Explain entrepreneurship and socio-economic development.

PHILIPPINE ECONOMIC LANDSCAPE IN THE PRESENT TIME

The Philippine Economic landscape remains to be the spring board of questions when economic
development is the focus of discussion. The leaders of this nation, aim greatness for the Filipino people
especially during the time of election.

1. Poverty is the making of its people and the kind of leaders that holds the wheels of economic fortune.
2. Population explosion is another factor that contributes to the poverty of our nation.

FACTORS IN DETERMINING ECONOMIC GROWTH

The following factors are contributory determinants to our slow growth in economic
development as a nation.

1. The Filipino values and culture.

a. Love for imported products

The country’s colonization for centuries has developed in the Filipinos a culture of dependence
and love for foreign products. We still feel that imported products are superior in quality and we look
upon our own products as inferior.
b. Our values of BAHALA NA

A true Filipino entrepreneur will not put his destiny in the hands of the BAHALA. He must act
with strong determination and push for development of his ideas. Innovation and the creation of more
goods and services are in the hands of an entrepreneur who has the ability to make new and innovative
products or create a new channel of their distribution.

c. Our crab mentality

Crab mentality is the action of people to pull down others who are about to get out of the verge
of poverty and reach for their success. Enviousness is the making of people who could not think better
for himself. There are many of us who destroy others yet when we look at the mirror we are not better
than them.

d. The MAÑANA HABIT

MAMAYA NA or BUKAS NA is a culture that is brought to us by the colonizers who were fond of
SIESTA after lunch time. We take time in stride wasting time. The real entrepreneurs do not believe in
siesta as they keep working until things are done according to their plans.

e. The value of time

Relative to above discussion, is our lack of value to the precious time given to us, 24 hours a day
and 364 days in a year. We are always late in the starts of the program, coming to our classes, attending
to office work and even in important meetings and appointment. WE take all the time in our hands, not
thinking that the meaning of progress rest in our value of this precious of time.

f. Our values of HIYA

HIYA could be a positive value in dealing with business condition. It could be a propelling reason
for us to create better service and proper dealings in business transaction. There are still many of us who
make shortcuts in business dealings. Good in its face value but with hidden agenda of fraud and
deception.

g. Fiesta and social occasions

The celebration of Fiestas and Saints that we inherited from the Spanish colonizers could be
another factor in the slow development of our economy. People especially in the country side would
have all their savings spent in a day of the fiesta, entertaining guest, only to find out the next day that
there is no more rice to feed their children.
2. Job opportunities/Employment

Employment opportunities remain to be elusive among Filipinos. The industries in the economic
zones and other urban centers could not accommodate the growing employable people. Most still
receive minimum wages that barely support the needs of five members of the family.

a. Employment is one great factor in economic development

The entrepreneur provides the necessary work for people that propel the economic
development of the nation. The money in circulation for wages and salaries will help local industries to
develop new products and services that generate more small and medium enterprises.

b. Income opportunity in the countryside is still subsistence in nature

Most people are still dependent on cold farming and fishing system. We have not introduced
modern farming technology and the proper culture of our fishery resources. Our corals and fish
sanctuary are damaged by destructive methods of fishing. Our vast shoreline could be developed into
haven for fishery development if new methods and technologies could have been put in place to supply
the food of the nation.

3. Availability of Needed Capital

The banks are sources for limited capital for small and medium enterprises. These resources are
available in the banking institutions. The poor people are not aware of these great opportunities and
they do not know how to go about it to avail of the funds.

a. Republic Act 6977, Known as the Magna Carta for Small Enterprises provided the necessary funds for
the development of entrepreneurs in the countryside.

The Law of SMALL AND MEDIUM ENTERPRISES DEVELOPMENT COUNCIL has some of the
important powers that could develop the countryside and those of the local enterprises described
below:

1. To recommend to the President of the Philippines and Congress on policy matters affecting small and
medium enterprises;
2. To coordinate and integrate various government and private sector activities relating to small and
medium scale enterprises;
3. To monitor and determine the progress of various agencies geared towards the development of the
sector;
4. To provide appropriate policy guidelines and coordinate frame work in assisting relevant government
agencies in tapping of local and foreign funds or small and medium enterprises;
5. To assist in the establishment of modern industrial estates outside the urban centers.
6. To promote the viability of small and medium enterprises by way of directing or assisting relevant
government agencies in the national, regional and provincial levels towards the following:
a. Technical training courses and those related to business operation, like simple accounting and
bookkeeping;

b. Labour and management relation and improve working condition. Product development and quality
assurance and product diversification.

c. Improve production techniques and use of technology in production and the utilization of indigenous
community resources and raw materials;

d. Provision and assistance in the marketing and distribution of products;

e. Provide for concessional interest lower rates financing fees, and incentive for prompt credit
payments, as well as arrangement trying amortization to business cash flows, effective substitution of
government guarantee cover on loans for barrower’s lack of collateral;

f. It provides for the setting of a RELIEF SYSTEM for distress enterprises as preventive bankruptcy
measures and the setting up of insurance against extraordinary disasters;

g. It provided for INTENSIVE INFORMATION CAMPAIGN and ENTREPRENEURAL EDUCATION (the

intention of which is to give opportunity for all those with entrepreneurial talent and interest);

h. The law provides easier access and uses of tax credits and other tax and duty incentives as provided
for in OMNIBUS investment code and other laws;

I. Provision for product research and development and system of experimentation and access to
information on commercial technologies;

B. Republic Act No. 6810 is the establishing the Magna Carta for Countryside and Barangay Business
Enterprises, grating exemptions from any and ALL government rules and regulations and other
incentives and benefits and for other purposes.

The important provisions of this ACT are the following:

1. To achieve development of countryside business enterprises in the BARANGAY level through the
absence of BUREITICAL RESTRICTIONS and granting of incentives and other benefits;

2. The number of employees should not be more than twenty (20) at any time for the purpose of
undertaking a productive business enterprise that will help the economy in the area;

3. The productive enterprises shall be principally engaged in the following activities:

a. Professional Service
b. Retailing
c. Wholesaling or Trading of Commodities, Products, or Merchandise.
Based on the above discussions and the important provisions of the laws mentioned, entrepreneurial
activities in the local levels and the countryside have not developed when all the opportunities were
provided by the government for local entrepreneurs. We remain to be poor and budding entrepreneurs
continue to search for available funds to finance their enterprises.

Analysis of prevailing conditions and the business laws that grant these incentives points to
following failures in the implementation program:

1. An honest political will to implement the program to develop the countryside and the local
entrepreneur.

2. Vested interest groups take advantage of the program by establishing NONGOVERNMENT AGENCIES
in the disguise of helping the lowly business sector but it turned out that it is for their benefit.

3. Banks the lending institutions required so many Paper works beyond the comprehension of small
businessmen who don’t have formal training as provided for the law.

Entrepreneurial and Socio-Economic Development

The development of the nation economic activity is the making of small and medium enterprises
mostly located in the countryside.

The following are the contributions of the Entrepreneur in our Socio-Economic Development:

1. The entrepreneur provides employment.

Employments generates income and those employed pay taxes to the government which in turn
gives benefits to the social and educational needs of the greater population.

2. The entrepreneur pays taxes.

Entrepreneur pays taxes in the form of real state tax, sales tax, import and export tax, and
permits from the local and national government.

3. The entrepreneur provides new lifestyle and pleasures.

Product innovation and development is the making entrepreneurs. Mobile phone is the newest
contribution of the entrepreneur to make a new lifestyle for more Filipinos.

4. The entrepreneur improves the capital base of the economy.

The entrepreneur mobilizes economic activity as the circulation of money which pumps up the
economic development of the community. Capital investment generates profit. Profit, in return, is
growth in investment base that will propel more business activities.
5. The entrepreneur creates people empowerment and social mobility.

Entrepreneurs accumulate financial resources that give them social power in the community.
They can afford to buy some personal luxuries of life. They acquire new life style of travel and pleasure.
They make new houses and invest in real properties that make them respected in the community.

6. The entrepreneur provides healthy competition.

Healthy competition provides people with choices of new products or better services.
Entrepreneur seeks better products and develops new ones that will satisfy their target costumer.

MANAGERIAL SKILLS THAT MAKES A SUCCESSFUL ENTREPRENEUR

Being hardworking and industrious are no guarantee in the making of business activities while
they play an important role in the success of the enterprise.

The entrepreneur has the following managerial skills.

1. The ability to plan and conceptualize.

Conceptualization and planning go together. Good concepts need to be put in the planning table
to avoid the risk factor. The entrepreneur is able to forecast the future by seeing to it has the risk
involve are properly controlled.

2. The ability to organize the resources of the enterprise

A good business organization is based on around people and resources. An entrepreneur works
with others and needs people with the same values and working ability. Efficiency and effectiveness in
the work arena are the working of people with dedication and talent to do the job properly.

3. The ability to direct and motivate people in his organization.

People are like machines that need oil that will make them work smoothly and efficiently and
effectively. Machines will bug down if no oil is put into its chamber while in operation.

4. The ability to control.

Controlling the whole operation is a difficult task for the entrepreneur. Safeguards and control
mechanism could put in place with carefully crafted policies and procedures. Such policies and
procedures must be carefully disseminated and understood by all who will implement them.
5. The ability to manage time.

Time management is very essential ingredient to the success of an entrepreneur. Because of the
numerous activities to attend to the entrepreneur must be able to log on his time schedule so that
important activities could be attended on time.

6. The ability to adapt to the changing environment of business.

Business today is fact changing with the advent of technology and innovation. The new
entrepreneur must be able to adapt to his changes in the business landscape for him to go with the time
of progress and expansion.

CHARACTERISTICS OF AN ENTREPRENEUR

1. Leadership and management abilities

Managerial Leadership is the ability to plan, organize, direct and control the organization
towards the goals and objective of the organization. It requires conceptual skills in defining the direction
of the business and the development of plans and programs that will work effectively.

2. Positive risk takers

The entrepreneur as a positive risk take, enjoys the challenges of putting his money and time
into a test. He calculates the various alternatives open to him and careful in the choice of actions. The
entrepreneur Gather complete data and makes careful analysis before making decisions.

3. Self-confidence and positive outlook

The entrepreneur has strong belief in his capacity to make a difference in their chosen field.
They believe that achievements are guiding principles in man’s success as faith drives them to do better.
The entrepreneur believes in the Lord Almighty and that his talents are God given gift that he must use
for the well-being of mankind.

4. Innovativeness and forward looking.

The blazing path to entrepreneurial success is the courage to make innovations in products or
service. The entrepreneur refuses to stop at his achievements.

5. Natural intelligence and decision making skills

The entrepreneur’s natural intelligence is an important requirement in making effective

decisions. The entrepreneur has to make decisions as he cannot make things happen without making a
wise choice of alternatives.
The Decision Making Process:

1. identify the problem.

The risk involved in the management of the business has to be identified and analyzed before
solutions could be made. Relevant data and information must be organized.

2. Gather the data that brought the plan.

Good and intelligent entrepreneur must be able to get the data that brought about the problem.
The solution to the problem is dependent on the data available at hand. Correct information would give
better solution. False are irrelevant data would not give the best solution.

3. Analyze the data.

Not all information is relevant to the solution of the problem. Some data must be discarded. The
data must focus on the problem at hand.

4. formulating alternative solutions.

The entrepreneur makes various alternative solutions to the problem at hand. These solutions
are subject to a series of analysis and he may need outside opinion.

5. Selecting the best alternative course of action.

After all the alternative courses of action hand been analyzed, the entrepreneur makes the
decision. The decision has to be implemented with the less possible risks in terms of money, time and
effort.

6. Implementing the best alternative.

The modern entrepreneur utilizes group efforts in solving business problems. Problems and
Solutions are best arrived when people who will be implementing the decisions are properly consulted
and their opinions and ideas are taken into account before the final decision is implemented.

ORGANIZING THE BUSINESS ENTERPRISE

The prospective entrepreneurs before going into the intricate filed of the business world should
first go into deep analysis of their personal and social attitudes. It is not only material assets but
personal values and characteristics. Before venturing into the field of business, it is wise to develop
entrepreneurial studied that will help determine the feasibility of the project.

Some entrepreneurs failed because they are “plain copy cats” in putting the business because the
neighbor Juan makes money going into a Mini-grocery. The entrepreneur must first evaluate his
personal interest, experience in the chosen field, the technical skills as well as his human skills are these
are the vital component in the success of business.

Business forecasting the planning skill is another vital component that must be addressed before
making investments. Careful preparation is an essential factor in setting the enterprise into motion.
Investment in money and effort may go to waste without adequate preparation and careful planning.
The loss of money and time must be prevented.

ENTREPRENEURIAL STUDIES

The entrepreneur must see for himself the kind of management control and how the business
will be able to generate his projected profitable investment. He sees the wide open market of
opportunities and the possible problems before he plunges into the intricate operation of the
enterprise. Wise investment through a careful analysis of the business environment would minimize
business failures.

The following steps in the business formation have been done by entrepreneurs that applied a
more specific study of the business conditions. A business project either new or an expansion, undertake
a careful planning of the project which will serve as a guide in the implementation.
 CHAPTER 3
DEVELOPING A BUSINESS PLAN

LEARNING OUTCOMES

1. Discuss the factors that should studied before venturing a new business;

2. Explain the importance of environmental scanning;

3. Explain the importance of selecting the proper business location;

4. Discuss the important role of SWOT analysis before starting the business;

5. Discuss the importance of a business formation;

6. Give the different phases of a business plan; and

7. Prepare a comprehensive business plan.

The entrepreneurs are not discouraged with the constraints along the causes of our economic
malady. It should be turned into positive not and new solutions must be made to make them different
from other individuals. There are lots of opportunities entrepreneurs who are hardworking, creative and
resourceful. Business opportunities are wide open for people who would like to invest their money into
gainful business activities. They need to find out this new venture that interests them and how they can
harness their technical knowledge of the trade.

The search for business opportunity should start with the individual entrepreneur. He has to find
out the skills and talent for that particular type of business activity. His talent and skills are beginning of
his great investment in the trade. He must have the passion for independence and willingness to work
hard and long to keep up with his dream of being an entrepreneur.

Before venturing into the field of business, they new entrepreneur should look into the
following factors:

1. Know your product or service.

First, one must believe on the product or service that one will offer to the costumer. If it is a new
idea or concept, then one must be able to convince that have a unique product that would satisfy
costumers’ needs and wants.
2. Analyze the market potentials.

The costumer base will determine the success of one business venture. The wider the market
potential, the more changes of growth and success.

3. determine the marketing strategy.

A unique product or service needs effective distribution strategy to get costumer into the basket
of demand potential. Continues supply determines product growth. Costumers must have access to the
product when they need it.

4. Know the competitors.

In launching a product existing competitors, one must know their strengths and weaknesses.
Develop new product and marketing strategy and turn their weaknesses as new opportunity for the
product.

5. Do not set your laurels.

The landscape of business is continuously changing. Your initial success in your business
activities needs more proactive analysis for expansion and growth and overcome possible competitors.
Develop advertising and promotion strategy to penetrate the wider market.

ENVIRONMENTAL SCANNING

The environmental of business is vast with opportunities and the entrepreneur must have a
greater look into this potential as well as the conditions prevailing in the community. The entrepreneurs’
ultimate objective in diving into the business world is to make profit. Investment in money and effort
should generate financial gain for the entrepreneur. To generate income for his product of service he
must be able to deliver customer satisfaction.

The following factors are contributory to the development of customer satisfaction:

1. Business Location for Small Entrepreneurs

A retail outlet would need a site that is convenient to prospective costumer in terms of parking
space or availability and transportation. A restaurant or an entertainment center would need ample
parking area where costumers would not worry on where to leave their cars while enjoying their stay.
The same could be true with a grocery store.
 In choosing the location, the following factors must be looked into by the entrepreneur:

a. Rent and Space – the cost of rent is a regular monthly expense and it must be sustained with the
possible income that will be generated. It is the operating cost that will be added to the price to the
product or service. The price input must be competitive enough with those in the same location.

b. Terms of Lease of Merchandise – The term of lease must be studied carefully as some owners of
space might take advantage of lessee. The owners increase the rent of the space when the business
condition becomes favorable and then take over the business.

c. Type of Goods or Merchandise – A convenient store is located where there are pedestrians passing
by. They need quick and easy access to the store and would not spend a lot of time to purchase their
goods.

d. Income Level of Prospective Customer – The type of pedestrians and the income level of costumer
must be taken in to account. A good barber shop or a beauty salon with facilities of air conditioning units
and other amenities need to be located in the community with higher income bracket.

e. Prospective Sales Volume – High density sales volume need to be located in shopping areas where
customers converse to buy essential goods. Lower sales volume could be located in the community or
secondary areas like subdivisions or the BARANGAY.

f. Municipal or City Ordinances including taxes and fees – The location must not violate city or
municipal ordinances and the taxes and fees must be reasonable for the owners of business. Excessive
taxation will not encourage the growth of business in the area.

g. Location of the Areas – The area must be free from floods and other calamities that will endanger the
business. It must be free from fire hazards or other environmental factors that will disturb the operation
of the business.

2. Location for Small industrial Plant or Manufacturing Facilities

Environmental factors in locating a manufacturing plant or industrial facilities need to be studied

carefully as plant location is a great factor in the investment of funds and its profitability in the long run.
The industrial facility must be suitable to the kind of operation. It must comply with government zoning
regulation related to population and environmental laws.

The following are important factors to consider:

a. Land Area – The contour of the land, its size, and shape must be suitable to the plant site. It must be
free from floods or other environmental hazards that will disturb operation.

b. Facilities and Expansion – The land area must have ample space for plant expansion and provisions
for parking facilities for customers and employees.
c. Power and utilities – availability of power supply and the cost of electricity involve in the operation
are great factors in the production of goods. Continuous power supply is needed to keep the plant in
operation for its target production. Water supply is also needed and the proper disposal of waste must
be put in place to comply with environmental law.

d. Building and Other Utilities – The building must be within the restrictions code of the municipality or
city. The utilities like canteens and other employees’ facilities must be put in place in compliance with
the labor code. Sidewalks and gutters are important component in employees’ safety while in the plant
site. Fire safety and hazards signs are mandatory requirements.

e. Plant Site Accessibility – The plant site must be accessible to public or service transport for its
employees and valued customers. It must be near highways or expressways to provide ease in travel
time and reduce cost in he transport of raw materials and finish product. Delay in transport systems and
added cost that must be avoided.

STRENGHTS, WEAKNESSES, OPPORTUMITIES, AND THREATS (SWOT)

SWOT ANALYSIS is an entrepreneurial tool in the profitability of the business operation.

Opportunities carries with it some risk involved and this should be looked into carefully. The strengths
and weaknesses are internal factors to the entrepreneur while the opportunities and threats are
external factor.

The product must be evaluated along the following areas:

1. Product strength in the market must have the following:

a. Available technology in product processing – Technology is an important component in

producing the product as the economies of scale determines the price index. The more products
are produced, the lower the price it can be offered to the market.

b. The Source of Raw Materials must be Abundant and at Lower Price – The constant supply of
raw materials is an important factor in the production of the product. Cheap raw materials that
are processed into good products would be able to penetrate the market as its price could be
competitive.

c. Skilled Workers must be Available- Technology must have the component of skilled workers
that shall operate the machineries and other equipment. They may need training in machine
operation as quality products also come from skilled workers.

d. Capital Investment in Machinery and Operating Expenditures – A starting venture may have
little investment in terms of machinery and equipment but starting with small capital should
generate profitable operation.
 e. Expertise and technical Skills of the Management Team – A good product is the making of
well-conceive idea of the management team. Improvements in products quality is a continuing
process and it must be the management objective to get customers patronage.

2. Characteristics of Weak products and Weak Management

a. Poor quality and High Price – the entrepreneur should not launch a poor product in
the market as it will surely fail to advance in the sales and profit. It is not wise to invest
in the production of poor products.

b. Product design and Appeal – Product design should appeal to customers demand.
Poor design of the product is making of people with no technical expertise in handling
the customer wants in terms of features. Artistic designs are conceptualized and
approved by the possible users.

c. Product Cost – Production costs is the price determinant. Entrepreneurs cannot make
maximum profitability on products whose production cost cannot survive market
competition.

d. Supply and Demand – Intermittent supply to the market will make customers shift to
other products. The supply chain management must be put in place to make products
available to valued customers.

e. Weak product Management – weak management is created when people at the top
of the organization fail to sustain a vigorous effort for expansion and growth when
management sets on his initial laurels and ventured on vices and other extra activities
that will lose his total investment.

3. Sustainable Product opportunities in the Market:

a. Product Demand – Product demand is the greatest opportunity of an entrepreneur. Demand

is the essence of profit and this must be sustained by the entrepreneur before wide competition
appeared in the market place.

b. Presence of Poor Quality in the Market – The presence of poor quality product in the market
place is an opportunity for the entrepreneur. The alternative is on the side of the entrepreneur
to supply the market with quality product and sustain patronage.

c. Government Policies and Support – The government support to local entrepreneur is an

opportunity for grater expansion. The government should support the local entrepreneur in
terms of taxes and government activities.
 d. Liberal Credit terms and Interest Rates – Liberal credit terms by banks and other government
institutions will generate expansion for the local entrepreneurs. Banks and financing institutions
serve as conduit of business in their expansion program.

4. Treats to product and Market expansion:

a. Entrance of competition – The entrance of many competitors in the market place will
definitely give problem to entrepreneurs. Competition will reduce profitability as the price has
to be competitive with those in the market place.

b. the supply of raw materials will be limited as other competitors will be getting the same
supplier – As demand for raw materials become competitive in prices, production inputs go
higher and this will affect product pricing. Increased production cost means changes in product
price.

c. The Emergence of Leftwing Labour Unions – Many companies close shops with the advent of
labour unions with leftist philosophy as they want more wages and benefits that the company
could give.

d. The Presence of Double Taxation – The government already imposed a lot of taxes to the
entrepreneur. Honest businessmen could not profit in their operations as there are lots of taxes
that government would like to collect.

e. Peace and Order in the Area of Business Operation – Peace and order are components of
business growth. Criminality and killings would drive away investors. Killing competitors by
those ridding in tandem syndrome scares people to go into business. Hold up gangs and robbery
syndicates are not good to business growth.

f. The cost of Power Supply – Cost of production increases with the cost of utilities like current
and water. The government private partnership in the operation of power and water utilities has
increased the cost of power by about 400 percent.

The Entrepreneurs should look deeper into the following areas:

1. The management Team

Management must be able to set the direction of the enterprise with a clear MISSION and
VISION as the guiding tool for its plans and programs. Plans and programs are tentative activities that
will make a definite step towards the accomplishments of target objectives. Objectives set into motion
and goals of the enterprise to profitability.

The technical and manpower complements are important factors in the success of the business.
The entrepreneur cannot do the task alone as he needs people with the same outlook and perseverance
as he has, especially at the early stage of the business. They must work hard, persistent and must focus
on the vision and mission of the business.

2. The Production Process

Product specification must be maintained according to product standards that are acceptable to
costumer. Product quality is now the name of the game in business. Customers are now aware of
product quality and they must be able to get their money’s worth. The physical properties must be
attractive and mechanical or electronic component must appeal to customers demand.

The management must look up into cheap available raw materials in the production of goods.
Good quality materials should not be sacrificed in terms of price as poor quality will affect the
production of quality products. Quality and price must be looked into carefully by the management.

3. The Marketing Program

The marketing program needs demand analysis for the last 5 years as to the major users of the
product. A new product would need customer view point before it is launched into the market. Product
samples may be necessary at the initial stage so that customers’ tastes and preferences could be
considered before mass production.

The demographic profile of the target customer must be taken into accounts as the success of
the product depends on the target customer. The target market must be specified accordingly and their
needs and wants must be satisfied. Customers would like to have a lot of choices yet when they like
product we turn them into regular customer.

4. The Financial Management

Venturing into a business needs financial resources. Money is needed to finance the activities of
business. Whatever capital is available determines the kind of business operation. Many small
entrepreneurs start with limited capital but they were able to make business empire as they knew how
to invest their money in profitable operation. Savings and wise investments are characteristics of
successful business entrepreneur.

The internal source of capital will come from the savings and assets of the starting
entrepreneur. Liquid assets in cash or banks are the usual starting point. Real properties and personal
properties may be put in as guarantee for loans that may be used for operating expenses.

THE IDENTIFICATION OF BUSINESS OPPORTUNITY

The entrepreneur’s desire to establish his business is visible idea yet it must come into a test
whether it is a visible business option. It needs a careful analysis of opportunity evaluation. The
entrepreneur who fails to evaluate his noble idea because of his eagerness to plunge into the business
world often discovers later that he has more problems to solve and at times abandons the idea after
spending his time and money.

The following steps will help the prospective entrepreneur evaluate the idea before going into
business.

1. The Starting Point of Conceiving the Idea of the type of Business

Conceiving a new product is a process of innovation and when this come into a reality, the
product must different from an existing product. New product needs customer evaluation and his
process needs exposure to the target market as to its economic value. This new product must satisfy
customers’ needs and wants. It needs market exposure and public acceptance before it could take off
the ground.

2. The Technical Feasibility and Time Frame

An idea is not only concentrated on one entrepreneur. The entrepreneur might have conceived
an idea that is also in the mind of other person. The case of cellular phone is a concrete example. Many
companies tried the venture but the leader in the industry is till NOKIA. Others begin to follow the
strong completion emerged in the process but the leading brand has taken off the ground before others
followed tailing behind.

TIPS IN CHOOSING THE BUSINESS NAME

1. Easy to recall or remember – The business name must be understandable so it is easily stored in the
memory.
2. Pleasant meaning creates pleasant feelings – It produces positive or favorable feeling upon saying or
mentioning to the public.
3. Easy to pronounce – the business name must be cited as freely as it can be.
4. Easy to spell – The business name must be simple. Words that are used in everyday communication
will be an advantage.
5. Related to the product – The business name must describe the product. It represents the features of
the product.

ORGANIZING THE BUSINESS ENTERPRISE

The prospective entrepreneurs before going into the intricate field of the business world should
first go into deep analysis of their personal and social attitudes. It is not enough that you have the
capital and resources to go into business as it involves not only material assets but personal values and
characteristics. Before venturing into the field of business, It is wise to develop entrepreneurial studies
that will help determine the feasibility of the project.
THE EVENT FORMATION PROCESS FOR ENTREPRENEURS

The analysis of the following steps will benefit the entrepreneur before going into the field of
business:

1. The Change in Life Path

The entrepreneurs must conceive the idea that going into business would mean a great change
in his lifestyle and working hours. He must be able to take responsibility and lead others. He must be
able to take the driver’s seat of the business in planning, organizing, directing and controlling not only
the people but also the resources under his disposal.

2. The Desirability of the Business Concept

The desirability of the business concept is usually born by the experience of the entrepreneur
from his previous employment or exposure. The take-off the business comes from the idea generated
for the prospected income.

3. The Feasibility of Implementation

The business project must be feasible whether it is an entirely new venture or an expansion. It
must be able to produce or sell products or services for an attractive rate of return of investments to the
entrepreneur. It requires intensive planning and analysis of the market conditions prevailing in the
community.

4. Forming the Business Enterprise

The business form has to be studied accordingly to the availability of capital investment that will
go into the operation of the enterprise. The entrepreneur should also look into his personal capability or
running the business either alone or with a partner.

5. Stability of Business Income and Profit

Profit and Business Income are two important factors that encourage an entrepreneur to make
the stability of the business become possible. An aggressive entrepreneur would like to expand his
business operation to generate more profit.

Money is the greatest factor in the operation of the enterprise that without it business operation could
not take off. The important savings of the entrepreneur must be put in wise investments free from
excessive risk. Business risk can be prevented or avoided if properly planned and conceptualized.
BUSINESS PLAN

An entrepreneur must see for himself the kind of management control and how the business
will be able to generate his projected profitable investment. He sees the wide open market of
opportunities and the possible problems before he plunges into the intricate operation of the
enterprise. Wise investment through a careful analysis of the business environment would minimize
business failure.

The following steps in the business formation have been done by entrepreneurs that applied a
more scientific study of the business conditions. A business project either new or an expansion must
undertake a careful planning of the project which will serve as guide in the implementation.

In creating or searching to business opportunities, one must consider the following factors:

1. The needs of the society

2. Availability of capital resources
3. Business inclination
4. Clientele
5. Availability of raw materials
6. Human resources
7. Nature of product or service

BASIC PHASES OF BUSINESS PLAN

1. Management Structure and Component

It is designing form of ownership of the business which at the outset is known to the investors. It
shall also define the organizational structure of the organization and the operational system that must
be put in place. It shall define the duties and responsibilities of the people in the organizational
structure. Management should organize different operating departments and delegate corresponding
authority.

2. Marketing and Distribution System

The marketing and Distribution Study shall deal with product demand analysis. It should show
the competitive product advantage over existing product or service and designing the marketing
program of the enterprise. It should analyze market share and system of promotion, distribution,
advertising media and other marketing mix strategies to ascertain product market acceptance and
patronage.
3. Production and Technology

Production and technology Studies refer to the need in making product or service. This refers to
the machineries, plan location, and other technical aspect in the making of the product. It shall describe
the physical layout of the building and the equipment that will be used in production. For services, it
shall specify the equipment that will be used and the manpower needed to render the activity.

4. Financial Management

The Financial Management aspect refers to the capital investment and sources of funding the
operation of the business. It shall show financial projections over a period of one year and five years
program and shall determine the rate of return on investments. It must be able to show the return on
equity and break even sales as well as pricing sensitivity test.

GENERAL FORMAT OD A COMPREHENSIVE BUSINESS PLAN

I. INTRODUCTION

The introduction contains the rationale and the background of the study undertaken. It should
include the importance of the project and the proponent’s background and their desire to establish the
business.

II. PROJECT SUMMARY

A. Name of the Firm

B. Business Location
C. Brief Description of the Business
1. Brief history or how the business was organized.
2. Highlights of the findings in every phase of the business study.

III. MANAGEMENT AND PERSONNEL COMPONENTS

IV. MARKETING STUDIES

A. Market Profile – This refers to the market segmentation for the distribution of the product or service.
The study must cover the possible users of the product and how to reach the particular market
segments.

B. Demand Analysis
1. Projected consumption in the first year of operation, then Five years and ten years operation.
2. Major segment users of the product and their location.
C. Supply Analysis
1. Source of Product Supply.
a. Foreign Suppliers
b. Local Suppliers
2. Factor Analysis of the past and Future Supply Chain.

D. competitive Analysis

1. Selling Price – This refers to the selling price of the product.

2. Competitions – It refers to the competing product in the markets as to its quality and market
acceptability.
3. Distribution and Cost of Transportation – It refers to the transfer or movements of products
from the producer to the ultimate user. The usage of different vehicles and ways to transport
the product should be easily defined.
4. Channel of Production Distributions – A mean of reaching the target market or it is the
method or strategy to penetrate a particular market segments.
5. General Competitive Practice – It is the analysis of how competitors distribute the product to
existing users.

E. Program Analysis of Marketing Strategies

1. Geographic Segmentation Strategy – This refers to the place of target market and the
approaches to penetrate the market niche.
2. Psychographic Strategy – The educational background and the lifestyle of target market.
3. Demographic Segmentation Strategy – It means the target market as sex, age, Income and the
other personal factors of the target market.
4. Pricing Strategy – This has something to do with the price index of any pricing strategy that
will attract customers.
5. Channel of Distribution – The choices could be retailers, wholesalers, dealership, franchise, or
direct marketing.
6. Promotion and Advertising – Media network, personal selling, billboard, or any media
penetration strategy.

V. PRODUCTION

A. Product Specification – It tells about the product or service that the entrepreneur will offer to its
target market. It is an elaborate presentation of the properties of the products and the benefits related
therein. It is the service that will be offered to the target consumer.

B. Production of Process – It is the detailed layout of the production process as the products hoes into
the production line indicating the flow process, materials and equipment to be used and normal time
table that the product will be finished.
C. Plant Related Capacity – This refers to the volume of production per shift per day or a monthly basis
considering target market consumption. It must also make projections for five years forecast and the
technical factors involved.

D. Machinery and Equipment – It involves the kind of machine to be used, its sources, spare parts,
working guarantees, rated capacity per day, and the cost estimates involved in its purchase.

E. Plant Location – A drawing or plant location and the vicinity map as to its accessibility to supply or
raw materials, and the transport of finished product to the market. It must show advantages and other
plus factors for employees and other services.

F. Building and Facilities – It must describe the type of building that will be constructed or sketch of the
building plan, electrical plants, drainage, and other utilities. It must contain the cost estimates involved
and the total floor plan.

G. Raw Materials – It deals with the raw material requirements and its specification, its source, cost and
terms of payment, availability and the possible long term supply. It must also show alternative suppliers
of other sources.

H. Power Supply and Utilities – Utilities refer to the supply of electricity, water, and its availability in the
processing of the product. It also has to do with environmental disposal of waste and compliance with
government requirements. Drainage system has to comply with sanitary requirements imposed by
municipal and national laws.

I. Product Cost – This refers to the direct labor and administrative cost in the processing the products.
Unit cost must be computed as basis for pricing the marketing strategies.

VI. FINANCIAL STUDIES

A. For New Business Venture

1. Total Project Cost – This has to do with the entrepreneur fixed cost and the working capital in
the operation of the business.
2. Capital Investments Required.
3. Pre-operating cash flow and its relation to time-table – financial projections for the first year
of operation, for the five year operation in projected balance sheets and income statements.
4. Supporting Schedules in the Financial Statements and Income.
a. Collection Period for Projected Sales or Revenue
b. Inventory Levels
c. Payments for Purchases and Expenses
d. Production Costing, Administrative Expense and Cost of Sales and other Projected
Financial Expenses.
5. Projected Financial Estimates showing return on investments, return on equity, break-even
analysis, price analysis.
B. For Existing Project

1. Audited Financial Statement – last 3 years

a. Balance Sheet
b. Income Statement
c. Cash Flow
2. Fixed Assets, Capital Investments, Depreciation used in Capital Assets.
3. Tax Assessment, Liabilities, and other Payables.
4. Financial Trends and Ration Analysis.
5. Financial Cost for Administrative Expenses, Production and Selling Expense.
6. Financial Projection for the Next Five Years.
7. Financial Analysis for Return of Investment, Return of Equity, Break even Analysis, Production
Volume and Price Analysis.

MICRO BUSINESS PLAN

The major objective of business plan is to assess, examine and analyze the viability or feasibility
of the study. Business plans is the ticket to success. It is also a blueprint to success and document details
what you plan to do with your business, according to Elizabeth Manuel, Chief of the Trade Business
Management Division of the government run Philippine Trade Training Center.

A. Executive Summary

Synopsis of your business plan so ideally, this part should be written last in order to include all
the necessary information and target points of the document. You must possess the ability to predict
the financial path or your venture in correlation to the present economy. If your external analysis tells
you what you can and cannot do, your internal analysis tells you are able or not able to do.

B. Marketing Plan

Push or pull, you must be able to tell how fast or slow tour product will move in the market,
whether it would make use of a push or pull strategy or both. The push strategy tells how I will move my
products to the marketplace, while the pull strategy tells how I will make customers ask for my product.
The pull strategy promises, the push strategy outlines what makes the business stay.

C. Operations Plan

Ernesto Pineda, director of the UP, Institute of Small Scale Industries, Defines the operations
plan as the company’s expected sales for the coming year and the costs of running the business in
general. It keeps track of the business performance for its conception down to its purchase. Determining
the number of people to hire to keep your perspective business running smoothly is also a must.
Managing your inventory and computing the production costs ate crucial at this point so you can project
possible profits.
D. Financial Plan

According to Dr. Ferreria, “you financial plan must show much money is needed to generate
sales; how much is going to be spent on a particular item; and how much will be borrowed and paid” The
income statement describes your company’s ability to generate cash by computing for sales and
expenses. The balance sheet shows your financial condition by accounting for your assets (cash,
receivables, inventory, equipment, property, investments) and liabilities (accounts payable, salaries,
taxes, and bonds, notes and mortgage payables).
 CHAPTER 4
IDENTIFICATION OF TARGET MARKET

LEARNING OUTCOMES

1. Identify the target market;

2. Determine the types of product; goods or services, consumer or industrial;

3. Relate the tips on identifying market problem;

4. Solve research problem; and

5. Analyze market needs and barriers to entry.

Target market is the buyer of the product. According to Philip Kotler (p.d),a target market is a well-
defined set of customers whose needs the organization plans to satisfy. Business sectors identify and
describe them as the ultimate and final user of the product. Here, it describes the potential customers as
well as where, how, and why they are likely to be found. The topic on how large the potential market
can possibly grow as also discussed here, including how to share of that local market can help in the
expansion of this study/business proposal.

The objective of this part is to determine which part of the total potential market will be served
by the firm. Considering that the market must be defined in terms of size, demographics, growth
prospects, trends and sales potential market and the total aggregate sales of the competitors must be
presented.

DESCRIPTION OF THE TARGET MARKET

1. Distinguish or determine the consumer from the customer.

2. Explore the benefits of the proposed product to the target market
3. How and why would the target market buy the product or service?
4. Is there a potential to increase the target market?

Business-to-business markets include:

1. Target market
2. Frequency of product purchase
3. Tendency for replacement needs versus expansion purchasing process
4. Estimates of market size, initial targeted geographic area, enterprise’s targeted market share.

Business-to-consumer markets include:

1. Demographic factors, such as income level, age range, gender, educational level, ethnicity of the
target market;
2. Psychographic factors of the target market;
3. Behavioral factors such as frequency of product purchase and shopping behavior of the target market.

Categories of Consumer

1. Price Shoppers – This group is interested in the best deal for a product. They are commonly called as
PRAKTIKAL and price conscious.
2. Brand-Loyal Customers – This group believes that their present brands are superior to others and are
willing to pay fair prices for products just to acquire it.
3. Status Seekers – People who are interested in prestigious or called (signature) brands or known
product categories and willing to pay at any price.
4. Service or Feature Shoppers - This group seeks high value on customer service and product features
and will pay for them.
5. Convenience Shoppers – People who value nearby locations, long store hours and are willing to pay
for easier shopping.

NEW CONSUMER REALITIES IN 2016

(Source: ADOBO Magazine Issue 61 Jan-Feb 2016)

According to the survey, 72% of consumers say they will respond to call-to-action in marketing
messages they receive within sight of the retailer and 23% of retail marketers use some type of geo
location marketing in their mobile marketing.

Seamless Sensation – The online and offline experiences are intertwined as consumers navigate
their daily lives seamlessly, resonating with both physical and the digital realm.

IDENTIFY THE MARKET PROBLEM

In building product, entrepreneurs can meet customers’ needs. In identifying market problem,
the following can be considered:

1. Existing customers are the people who have already purchased the product you are selling.
2. Target market users are the people in your target market who are not currently looking for a solution.
3. Prospects are the people who have not yet purchased your product but have n intention to B.

TIPS IN IDENTIFYING MARKET PROBLEM

1. Focusing only on innovation and competition

2. Focusing only on customer
3. Focusing only on revenue
HOW TO EVELUATE MARKET PROBLEMS?
1. Consider if the market problem is urgent, if yes, consider necessary actions by identifying alternative
courses of action (ACA) then enumerating their advantages and disadvantages.
2. Evaluate if the market problem is pervasive or easily diffused, if yes think for a temporary solution.]
3. Determine if the buyers will pay to have this problem solved.

PROBLEM-IDENTIFICATION RESEARCH

By conducting new market research projects, learner can discover problem or opportunity. One
could discover any of the following factors through problem-identification research:

1. Brand image is the impression on the consumers’ mind of a brand’s total personality. It developed
over time through advertising campaigns with a consistent ideas, this authenticated through the
consumers’ direct experience.
2. Market characteristics describe attributes of the buyers in making decision related in purchasing a
certain product.
3. Market potential is the estimated maximum total sales revenue of all supplier of a product in a market
during a certain period.
4. Market share is a percentage of total sales volume in a market captured by a brand, product or
company.

PROBLEM-SOLVING RESEARCH

1. Distribution Research: It determines on how to transfer the product from the manufacturer to
ultimate user
2. Market Segmentation: They are group customers by similar characteristics or similar purchase
behaviors.
3. Pricing Research: It determines the ideal price for the product. Setting the price for the product is one
of the most important marketing steps.
4. Product Research: It tests the new or revised products or completing test marketing.
5. Promotional Research: It determines the best research in the area of disseminating information.\

MARKET NEED ANALYSIS

Define the Market Need for New Business

In analyzing the market need, the following questions should be asked?

1. Who will get interested in my product?

2. Who does the market need or want?
3. Who is buying the product? What and how much? Or how, where and why are they6 buying those
goods or services?
 Determining the Marketability of the business is typically done in the context of creating a
business plan and performing an analysis of the competition. It requires research in the area for
marketability Consider whether the business offers a new solution to an old problem or complements an
emerging trend. Untapped markets that are profitable are few. Understand the benefits that the
product or service offers compare to others. Focus on ‘benefits’ of what your product or service does.

MARKET ANALYSIS

A market analysis is a quantitative and qualitative assessment of a market ability to respond

positively. It looks into the size of the market both in volume and in value, the various customer
segments and buying patterns, the competition, and the economic environment in terms of barriers to
entry and regulation in the industry.

HOW TO DO A MARKET ANALYSIS?

This is to show the investors that company knows their target market. It is large enough to build a
sustainable business.

The following activity can be recommended:

1. Demographics and Segmentation

Demographics is the statistical characteristics of human population (As age or income) used
especially to identify markets; a market or segment of the population identified by demographic.

Segmentation is the process of dividing into segments with similar characteristics. Markets are
needed to slice it into different segments.

2. Target Market

This is the type of customers that are focused within the market. It focused on the more
qualitative side of the market analysis by looking at what drives the demand.

3. Market Need

Investors must determine the needs of the market through analysis based from research
conducted focusing on their needs. Identify what the customer wants to classify their needs.

4. Competition

Determining the competitor’s positioning and describe their strengths and weaknesses. Analyze
competitors’ angle to the market In order to find a weaknesses that company will be able to use in its
own market positioning.
BARRIERS TO ENTRY

These are the hindrances or something material that block or intend to block passage. It is a
natural formation or structure that prevents or hinders movement or action or even separates the new
businesses.

Here are a few examples of barriers to entry:

1. Investment (project that requires a huge investment)

2. Technology (application of the combination of scientific and engineering knowledge)
3. Brand (the huge marketing costs required to get to a certain level of appreciation)
4. Regulation (licenses and permits in particular)
5. Access to resources (exclusivity with suppliers, accessibility of suppliers)
6. Access to distribution channels (exclusively with distributors, availability of intermediaries)
7. Location (place, venue where the business is located)
 CHAPTER 5
BRANDING STRATEGIES

LEARNING OUTCOMES

1. Define the meaning of brand name and product branding

2. Determine the appropriate strategies in branding and reasons for the existence of brands

3. Discuss the structure of product, its prototype and patenting

4. Evaluate the prototype using qualitative evaluation technique

BRAND NAME

Based from Dr. Pereda from his book Principles of Marketing, a brand is name or mark that is
intended to identify the seller’s product and differentiate it from the product of the competitors. A
brand name consists of letters, words or numbers that can be read or verbalized. A brand mark is the
part of the brand that appears in the form of symbols designed in distinctive lettering or colours.

A brand mark is recognized by sight but cannot be expressed. A trade mark is a brand that have
been adopted by the seller and given legal protection. The trade mark is protected by protection of law
under the DTI. Branding protects the company from imitations and fake products.

PRODUCT BRANDING

A brand is a name or mark that is intended to identify the seller’s product and differentiate it
from the product of the competitors. A brand name consists of letters, words or numbers that can be
read or verbalized. A brand mark is the part of the brand that appears in the form of symbols designed
in distinctive lettering or colours.

Advantages of Branding

1. Brands make it easy to identify the product or service.

2. It assures the buyer that they get the same quality of products.
3. It reduces price comparison.
4. It adds prestige to the product of the seller.
5. It helps in product market segmentation.
Selecting a Good Brand Name

1. It should suggest about the product or service

2. It must be easy to pronounce and remember
3. It must be simple and short
4. It must be distinct or different from others
5. It must be adaptable to new company product that may be added
6. It must be capable of registration and legal protection

BRANDING STRATEGIES

The producers and middlemen are partners in the distribution of the products to their target
consumers. Their partnership is a long-life process of mutual concern and cooperation for the
development of customer satisfaction. Producers and middlemen alike must choose strategies with
respect to branding their product mixes and branding for product saturation.

Link Online Sources

https://link.springer.com/article/10.1007/s41959-019-00021-4

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