Week 3

CONVERTING IDEAS TO REALITY

Importance of Business Idea Assessment

To narrow down the many ideas we can come up as our business venture.
To evaluate our idea with what is already established in the marketplace.

It will give us a bird’s eye view on the ideas we generate.

Questions to consider for business idea:
Is there a market for your idea?
Does the market have money?

Key Points on Business Idea Assessment

What is the best way to get it started?

What is the income possibility for the idea?
Are there additional needs and costs related to the idea?
Deciding factors should be based on:

Level of commitment

Family’s support
Zoning restrictions
Seek “outside” help
Compatibility of business with personal lifestyle
Level of personal satisfaction

Value Proposition

What is “Value:?
Worth in usefulness or importance to the possessor, utility or merit.
A fair return or equivalent in goods, services or money for something exchanged
Relative worth, utility or importance

What is “Proposition”?
The act of offering
That which is proposed or offered
Something offered for consideration or acceptance
Value Proposition
It is a statement that summarizes why a customer should buy the product or use the service.

In summary, a value proposition is an offer to some entity or target in which they (the possessor)
get more than they give up (merit/utility).

Components of an “actionable” value proposition:

Customer objective – what specific objective(s) are they trying to solve – in their language?
Your offer – what is your offer that will assist them in achieving that objective.
Differentiators – how does your offer stand out from other options?

CREATIVITY, OPPORTUNITY, AND INTEGRITY OF THE ENTREPRENEUR

What is Creativity?
A mental and social process involving the generation of new ideas or concepts, or new
associations of the creative mind between.

A creative person is:

Attitudes of a creative person:
Curiosity
Seeing problems as interesting and acceptable

Synergy of Creativity and Entrepreneurship

Common Attributes (6’P)

Person
Process
Product
Press (Situation)
Persuasion
Potential

Differences
Creativity is input-process while entrepreneurship is process-output
Level of analysis
In the level of person, not much entrepreneurship is talked about unlike in creativity when
grouping is involved.

Understanding Competitive Advantage

Defining competitive advantage:
A status in which one company is able to receive profits above that of the industry average, or
even another firm.
In simple terms: the company’s position in the market should be higher or greater than their
competitors.

Integrity and Entrepreneurship

What Is Integrity?
An uncompromising adherence to doing what is right and proper
Honesty, reliability, and fairness in business practices
Integrity is as much about what to do and it is who to be.

Ethical issues—questions of right and wrong

Legal and ethical considerations
Conflicts of self-interest

Different Ethical Issues Faced by Entrepreneurs

Customer Relationships
Human Resource Decision
Employee Obligation

Social Responsibilities and the Entrepreneur

Environmental Protection
Consumerism
Support of Education

The Challenges and Benefits of Acting Ethically

The Vulnerability of Entrepreneurs

üThe limited resources of entrepreneurs tempt them to cut ethical corners if an issue directly
affects profits.

The Integrity Edge

Exhibiting integrity in business may actually boost a firm’s performance.
The greatest benefit of integrity is the trust it generates.
The Three Os (Opportunity Seeking, Opportunity Screening, and Opportunity Seizing)

A.Opportunity Seeking- Is the ongoing process of considering, evaluating, and pursuing

market-based activities that are believed to be advantageous for the enterprise.
B.Opportunity Screening- It is the process by which entrepreneurs evaluate innovative product
ideas, strategies, and marketing trends.
C.Opportunity Seizing- It is about taking the opportunity in a business activity as it presents
itself and while it is still available.

Idea vs. Opportunity

Opportunity – a favorable set of circumstances that creates the need for a new product, service,
or business idea.

Idea – a thought, impression, or notion. It may or may not meet the criteria of an opportunity.

Difference of an Idea and an Opportunity:

Many businesses fail, not because the entrepreneurs that started the businesses didn’t work hard
– they fail because there was no real opportunity to begin with.
Before getting excited about a business idea, it is important to understand whether the idea fills a
need and meets the criteria for an opportunity.

Characteristics of a Good Opportunity

It should result in a product or service that creates value for the customer.
It should be attractive.
It should be well-timed.

Interpersonal Competencies

Interpersonal skills are qualities, behaviors, and soft skills that are exhibited when interacting
and communicating with others.

For an entrepreneur, these skills are major factors determining organizational cohesion, a way
to effectively communicate with co-workers in resolving concerns and enhance general
workplace mood.

Important interpersonal skills that worth giving attention:

Verbal and non- verbal communication
Listening skills
Negotiation
Intellectual Property (IP)
is an umbrella term for various legal entitlements which attach to certain types of information,
ideas.

Patents
Patent prevents anyone else from making, using or selling the defined invention.

The Patent Application

Introduction
This section contain the background and advantages of the invention and the nature of problems
that it overcomes.
Description of Invention
This section contain a brief description of the drawing that accompany it.
Claims
Claims are the criteria by which any infringements will be determined.

Trademarks
This pertains to the identifiable sign, word or symbol that indicates the identity of a product or
service.

Copyright
It is the ownership of an intellectual property within the limits prescribed by a particular nation's
or international law.

Trade Secret
It is any information that allows you to make money because it is not generally known.

Licensing

It as an arrangement between two parties, where one party has proprietary rights over some
information, process or technology protected by a patent, trademark or copyright.
 Week 4

Fred David, the definition of Strategic Management is the art and science of formulating,
implementing, and evaluating cross-functional decisions that enable an organization to achieve
its objectives.

Identifying the Competitive Advantage

Strategic management can increase a company’s effectiveness, but owners first must have a
procedure designed to meet their needs and their business unique characteristics.

Strategic management plan should include the following features:

1.Use a relatively short planning horizon fit for small companies.
2.Be informal and not overly structured.
3.Encourage the participation of employees and external parties to discuss the improvement of
the reliability and creativity of the resulting plan.

Strategic Management – the process of developing a game plan to guide a company as it strives
to accomplish its vision, mission, goals, and objectives and to keep it from staying off course.

Strategic Management Process

Step 1: Establish a clear vision and convert it into a meaningful mission statement.
-A vision statement should answer the basic question: “what do we want to become in the
future?’.
A clear definition helps the company in several ways:

Vision can give directions to the organization- Entrepreneurs who spell out a clear vision for the
organization can get everyone’s attention to concentrate on the goal they wanted to achieve.
Vision influence decisions- It affects the decision of the company whether it is big thing or just
a trivial matter.
Vision inspires people- It excites and helps the employees to work with vigor.

Example of Vision Statement

1.Cebu Pacific envisions stronger nations where culture and communities are connected,
meaningful relationships are built, and lives by opportunities and experiences we make possible.
2.Resorts World’s vision is to thrill the world every chance they get.

The vision of the company is derived from the entrepreneur’s values.

Tips on Crafting a Vision Statement

Conciseness
Future orientation
Use the present tense

The mission statement is used by an organization to explain in simple and concise terms its
purpose of existence.

Elements of a Mission Statement

-A mission statement is a marketing tool for the business. It should not be lengthy to be effective.

Key issues an entrepreneur should address as we develops a sound mission statement for
the company that includes the ff:
1.What are the beliefs and values of the organization?
2.Who is the company’s target market?
3.What are the products and services?

Components of a Mission Statement

1.Customers- who will be the firms customers?
2.Products or services- what are the firm’s basic products or services?
3.Markets- Geographically, where does the firm compete?
4.Technology- is the firm technologically updated?
5.Survival, growth, and profitability- is the firm committed to growth and financial soundness?
6.Philosophy- what are the basic beliefs, values, aspirations, and ethical priorities of the firm?
7.Self-concept- What is the firm’s major competitive advantage?
8.Public image- is the firm responsive to social, community, and environmental concerns?
9.Employees- are employees a valuable asset of the firm?

Tips of Writing a Powerful Mission Statement:

Simplify
Get everyone involved and use it
Keep it updated

Example of Mission Statement

1.Jollibee Foods Corporation- To serve great-tasting food, bringing the joy of eating to
everyone.
2.Department of Tourism- Formulate tourism plans and programs to promote, develop and
regulate the country’s tourism industry as a major socio-economic activity that generates foreign
currency and local employment, and to spread the benefits of tourism to a wider segment of the
population with the support, assistance, and cooperation of both the private and public sectors.

Step 2: Evaluate Company’s Strengths and Weaknesses

Strengths – positive internal factors
Weaknesses – negative internal factors

Step 3: Scan the Environment for Significant Opportunities & Threats facing the business
Opportunities – positive external factors
Threats – negative external factors

Step 4: Determine the Key Factors for Success in the Business

Key Success Factors – the factors that determine a company’s ability to compete
successfully in an industry.

Step 5: Scrutinize the Competition

Avoiding surprises from existing competitors’ new strategies & tactics

Step 6: Start making Company Goals & Objectives

Specific
Measurable
Assignable
Realistic, yet challenging
Timely
Written down

Step 7: Formulate Strategic Options & Select the Appropriate Strategies

Strategic Options:
1. Cost Leadership Strategy- Establishing a competitive advanatge by having the lowest cost of
operation in the industry.
2. Differentiation Strategy- It is an approach providing customers with something unique,
different, and distinct from competitors in the marketplace.
3. Focus Strategy- It involves targeting your products to a niche market or targeted audience.

Step 8: Convert Strategic Plans into Action Plans- all strategic plans must be put into
action.

To make the plan workable, the manages should divide the plan into projects with a certain goal
and accomplishment date, carefully defining each one of them by the following:
A.Purpose
B.Scope
C.Contribution
D.Resources requirements
E.Timing

Step 9: Set up and monitor accurate controls- entrepreneur must control the projects and
keep them on schedule.

Industry Analysis
The best way to start gathering information for the industry analysis is to visualize the process as
an inverted pyramid.
2. Assessment of trends in the national industry.
3. Consider trends in the local market where the business will be located.
4. Analysis of the local competitive market

Market Segmentation and Positioning

Market segmentation
It is a strategy of dividing a target market into smaller, more defined categories.

Positioning
It is a technique that involves influencing customer's perceptions to create the desired image for a
business and its good and services.

Forms of Tourism and Hospitality Business Ownership and Franchising

Tourism is one of the world’s fastest-growing industries that include accommodations,

transportations, entertainment, recreation and food and beverage services.

The tourism and hospitality business operates under one of the four broad legal structures such
as sole proprietorship, partnership, corporation and franchising.

A.Sole proprietorship
-It is a business owned and operated by one person only.

B. Partnership
-It is a union or association of two or more persons to manage a business to earn profit.
Different kind of partnership:
1.General partnership- kind of partnership where the general partners are liable for the
contracts and obligations of the partnership pro-rata with their individual private or personal
property after exhaustion of partnership assets.
2. Limited partnership- is composed of one or more general partners and one or more limited
partners.
3.Partnership at will- a term of existence is indefinite. It may be dissolved at will by any
partner at any time he/she pleases and at a moment’s notice.
4.General professional partnership – it is a partnership formed for the exercise of a profession,
like law, accounting, engineering, and architecture.

C. Corporation
It is a legal entity that is separated and distinct from its owner.

D. Franchising
-It is another form of business that exists in the tourism and hospitality sector.
-It enables a business to grow quickly into several geographic markets at once with a proven and
tested strategy.

Types of Franchising:
1.Dealership- it enable the manufacturer to distribute products without having to do the
day-to-day work of retailing.
2.Service franchises- it provides tax preparation, temporary employees, payroll preparation, and
real estate services to customers.
3.Product franchises- the most popular tyoe of franchise is the one that offers product, brand
name, and an operating model.