BIG PICTURE IN FOCUS: ULO B.

ANALYZE THE ENTREPRENEURIAL PROCESS.

Metalanguage
The following are terms to be remembered as we go through in studying this unit.
Please refer to these definitions as supplement in case you will encounter difficulty in
understanding this unit.

1. Marketing. "The process of planning and executing conception, pricing, promotion, and
distribution of ideas, goods, and services to create exchanges that satisfy individual and
organizational objectives" (AMA, 2013).

2. Networking. "The activity of meeting people who might be useful to know, especially in your
job." (Source: https://dictionary.cambridge.org/dictionary/english/networking)

Essential Knowledge

Entrepreneurial Process

The entrepreneurial process “is a course of action that involves all functions, activities
and actions associated with identifying and evaluating perceived opportunities and the
bringing together of resources necessary for the successful formation of a new firm to pursue
and seize the said opportunities (Bygrave, 1997:2; Cornwall & Naughton, 2003:62).”

Figure 1. Model of Entrepreneurial Process. Source. Based on Carol Moore’s model, presented in “Understanding
Entrepreneurial Behavior,” in J. A. Pearce II and R. B. Robinson, Jr., eds., Academy of Management Best Papers
Proceedings, Forty sixth Annual Meeting of the Academy of Management, Chicago, 1986.

This model shows that the process starts with innovation followed by triggering event,
implementation and growth. This further shows how a person could get the idea through his
experiences or his relentless search. Pursuing the idea also depends on factors like family,
friends, career status, opinion leaders, economic conditions and resources. The triggering
event is the situation that somehow forced and led the person to pursue the idea. These
situations could include changes in job status. Many were fired and forced to do
entrepreneurial activities and eventually became successful. This triggering event could have
different forms for different people. The implementation is also influenced by several
environmental conditions like policies, competition, resources and other personal reasons.
The growth stage of the Model of Entrepreneurial Process is also influenced by personal and
organizational elements. Organizational elements could include team performance,
organizational structure and culture among others.
 Moreover, these stages required several activities and demanded a number of skills.
The table below shows the respective activities and skills from each stages.

Stages Activities Skills

Entrepreneurial 1. Getting the idea 1. Technical skills

Process - Stage 1 2. Opportunity identification
(idea/scanning the environment,
identifying the opportunity,
developing the opportunity,
evaluating the 2. Communication
opportunity and evaluating the 3. Problem solving
team) 4. Motivation (need for
3. Opportunity development achievement)
4. Opportunity evaluation
5. Adaptability to change
5. Assessment of the
entrepreneurial team 6. Time management skills
7. Financial management

8. Human resources
9. Marketing
10. Networking

Entrepreneurial 1. Motivation to become an 1. Technical skills (T/S)

Process - Stage 2 entrepreneur 2. Problem solving
2. Planning 3. Numeracy and literacy
3. Gathering resources 4. Communication skills 5.
Motivation (need for
achievement)
6. Adaptability to change
7. Learning abilities
8. Decision-making skills
9. Negotiating skill
10. Financial management
11. Human resources
12. Legal
13. Marketing
14. Networking
15. Planning
16. Role model interpretation
17. Ability to gather and
control resources
18. Calculated risk taking
 Skills required 1. improving organizational 1. Technical skills
for success in capabilities (T/S) 2. Problem
stage 3 2. implementing a management style solving
in order to grow managerial
competencies 3. Decision making
3. setting up production skills 4. Motivation
processes (need for
4. setting up structures and achievement)
systems 5. Time management

5. ensuring quality control 6. Negotiating skills

6. waste elimination and cost 7. Communication
effectiveness activities skills 8. Adaptability to
7. dealing with distributors and change 9. Learning
suppliers abilities
8. selling to customers 10. Business systems
9. collecting the finance management
10. resolving operational problems 11. General
management 12.
11. fending off competitors Financial management
12. steering the organization towards
its goals and determining the key
variables for success 13. Human resources
management skills
14. ICT skills
15. Marketing
16. Networking
17. Operational
18. Planning
19. Value chain
management
20. Creativity
21. Innovation
22. Opportunity
recognition 23. Role
model
interpretation
24. Ability to gather
and control
resources
25. Calculated risk taking

Entrepreneurial 1. Market expansion 1. Technical Skills

Process - Stage 2. Technological change (T/S) 2. Problem
4 3. Garnering resources solving
4. Operations 3. Adaptability to
change
4. Learning abilities
5. Organizational
development
5. Numeracy and
literacy
6. Motivation (need for
achievement)
7. Time management
8. Communication skills
 9. Negotiating skills
10. Decision making skills
11. Business systems
management
12. General management
13. Financial management
14. ICT skills
15. Marketing
16. Networking
17. Operational
18. Research and
development
19. Creativity
20. Innovation
21. Opportunity recognition
22. Ability to gather and
control resources
23. Calculated risk taking

From the above table, it can be noticed that only the motivation as a skill is
considered important in all of the stages in the entrepreneurship process. Moreover,
marketing is deemed important in all stage except in stage 2. The gathering of resources
started to become an important skill from stage 2 until stage 4. Opportunity identification is
considered important in stage 1 and 4. Furthermore, human resources management,
financial management and technical skills are deemed necessary in stage 3 and 4. Creativity
can be seen as an important skill for stage 1 and 3. Lastly, communication, operations and
innovation skills are considered key skills in stage 3.

The Opportunity Identification

The opportunity identification in the stage 1 of the entrepreneurial process includes

opportunity identification.

1. Idea/scanning the environment. This involves macro scanning and micro scanning. Micro
scanning is done when one is studying the micro environment which involves the environment
that has a direct impact on the business being planned. These environments could influence
the daily undertakings of your business but the effects are usually not long-lasting. The micro
environment includes customers, suppliers, intermediaries, competitors and the general
public. On the other hand, the macro-environment is composed of environments that the
company can't control but can be really easily affected by it. Business establishments are
usually encouraged to track these environments for patterns and updates. The
macro-environment of the firm includes demographic forces, economic factors, technological
factors, legal factors, political factors, geographic factors, cultural factors etc.

2. Identifying the opportunity. The entrepreneur is encouraged to understand the difference

between challenges and opportunities. Opportunities can come from personal experiences or
from observations gathered as a result of research. The goal here is to seek better ways of
surviving the existing competition.

3. Developing the opportunity. The timely adaption of opportunities fit for the target market can
be a good ticket to succeed. Kodithuwakhu & Rosa (2002:434) defined this stage as the
process of combining resources in order to pursue the identified market opportunities. A
systematic research in order to refine the ideas of an entrepreneur is necessary in this stage.
4. Evaluating the opportunity. This screening and evaluation part is critical. A professionally
evaluated product or service is essential before taking the risk. Several authors suggested
ways in order to evaluate a business idea. The table below is suggested by several authors
((Timmons, 1999:109; Rwigema & Venter, 2004:171; Gartner et al, 1999:223; Carter et al,
1996:157). It is encouraged that an entrepreneurs must answer each questions.

Business factor Questions for evaluation

Product or service • Description of the product or service, its differentiator,

purpose and the need it fills
• What competitive advantage / benefits does the product
have? • What is the required customer care support for this
product/service?
• Is the company able to produce product and supply
required aftercare support?

Market opportunity • Where is the market demand? What is the target market? Is
it generic or a niche?
• Industry characteristics (growth rates, change, entry
barriers). • What market share can the product reasonably
expect today? In 2, 5 or 10 years?
• Timing and length of the window of opportunity?
• What competition exists in this market? Substitutes? How big
is their turnover?
• How accessible are the desired distribution channels?

Costing and pricing • How much will it cost to develop the product and
commercialize it?
• Where will the funds come from?
• How do the pricing, costs and economies of scale
compare with competitors?
• How easy is it to acquire equipment, skills and other
inputs required?

Profitability • Where is the money to be made in this activity? What are

the gross margins?
• Would the return on investment be acceptable? What is
the payback period?
● What are the cash flow patterns and the source of working
capital?

Capital requirements • How much capital (people, operating expense and assets)
is required to start?
• What are the long-term capital needs?
• How much of the required capital is secured and where will
the rest come from?
• What securities are available to guarantee the required
funds? • Is there a list of potential funders? In case the funders
withdraw their capital?
 Issues and risks • What risks (real and perceived) are inherent with
the product/service?
• Industry based risks e.g. is the market on a
decline? • Are there plans for surviving the death of
the lead entrepreneur?
• Unreliable forecasts? Inadequate cash flow?
• Inability to grow with the demand or cope with shrinking
sales? • Supplier and value chain management?

5. Evaluating the team. A team with strong skills can pursue opportunities better. After
evaluating an opportunity, it is essential to check on the people who will make the idea into a
reality. Bygrave (1997) and Gartner et al (1999) suggested to evaluate the team using the
questions below.

Business Questions for evaluation

factor

Focus • Is the founder really an entrepreneur, bent on building a

company? • Does the entrepreneur (or his team) have some
experience (work or industry)?
• Do they really like this product/sector? Do they really want
this? • Can the team create products to suit that market need?
• How stressful is the opportunity for the team?

Selling • Does the team have the necessary selling and closing skills?

Management • Who will work full time? Do your managers represent

competitive advantage?
• Does the team have the necessary management and
technical skills?
• If the required skills are not available, can they be acquired
at competitive rates?
• How is their relationship with the entrepreneur, commitment
and motivation?

Ownership
• Have the critical decisions about ownership and equity splits been
resolved?
• Are the members committed to these?
• Does the owners have enough financial capital for required own
contributions?
 Self-Help: You can also refer to the sources below to help you further
understand the lesson

Universiteit van pretoria. The entrepreneurship process. Retrieved from

https://repository.up.ac.za/dspace/bitstream/handle/2263/24173/03chapter3.pdf?seq
uence=4&isAllowed=y

Let’s Check

Let us try the following activities to check your understanding in this unit.

Activity 1. Identification. In the space provided, write the term/s being asked in the following
statements: (One point each)

_________ 1. When one lost his job, he became convinced to pursue entrepreneurship. What
stage is this in the entrepreneurial process?
_________ 2. This is as a skill is considered important in all of the stages in the
entrepreneurship process.
_________ 3. This involves macro scanning and micro scanning.
_________ 4. This includes demographic forces, economic factors, technological factors,
legal factors, political factors, geographic factors, cultural factors etc.
_________ 5. This stage is the process of combining resources in order to pursue the
identified market opportunities.
_________ 6. This business factor is being considered when one is asking questions about
the competitive advantage of the product or service idea.
_________ 7. This business factor is being considered when one is asking about the list of
potential investors.
________ 8. This business factor is being considered in evaluation a team when one is asking
about the entrepreneurial background of the founder.
________ 9. In selling as a business factor for evaluating an entrepreneurial team, what are
the two skills needed?

_______ 10. When one is asking about a niche market, the business factor being considered
is called?

Activity 2. True or False. In the space provided, write T if the given statement is true and F if
false. (One point each).
_______ 1. The gathering of resources started to become an important skill from stage 2 until
stage 4.
_______ 2. Creativity can be seen as an important skill for stage 1 and 3.
_______ 3. Motivation as a skill is considered important in the 3 stages of the
entrepreneurship process.
_______ 4. Communication, operations and innovation skills are considered key skills in
stage 3.
_______ 5. Earthquakes and other geographic considerations are part of the microenvironment.
Let’s Analyze
Let us try the following activities to know how deep your understanding of the topics of
this unit is.

Activity 1. List 5 government policies that affected the implementation of a business idea. It
could be positive or negative.
Government policy/law Effect

Example : RA 9211, also known as the 1. business establishments are required

Tobacco Regulation Act of 2003, to have a designated smoking area

2. those companies manufacturing

cigarettes were instructed to change
their packaging and use images that
depicts the illnesses brought by heavy
smoking

3. the sale of cigarette to underage

Filipinos is strictly not allowed

1.

2.

3.

Activity 2. Problem solving is a necessary skill of entrepreneurs. Practice this skill by citing
three problems observed in the society and how entrepreneurs can fix it. Write in detail your
explanation.
Problem Explanation

1.
 2.

3.

Activity 3. Case Study

Instructions.

1. Download and read the Case Boosting Roots with Analytics by: Brenda Quismorio
https://wdi-publishing.com/product/boosting-roots-with-analytics/

2. Use the table below in answering the Case Study Questions.

Case study Questions and Answers Table

Questions Answers

1. Based on the case, what was

the triggering event for Josef
Singson to start his business?
Discuss using the case facts and
the entrepreneurial process of
Carol Moore’s model.
 2. Based on the case, what
opportunities for improvement
can be done by Josef Singson?

In a Nutshell

In this part you are going to jot down what you have learned in this unit. The said
statement of yours could be in a form of concluding statements, arguments, or perspective
you have drawn from this lesson. The first three items is done for you.

1. Entrepreneurs need to have a lot of skills. These skills need to be sharpened. 2.

Opportunity Identification involves scanning the macro and micro environments of the firm.

3. Microenvironment of the firm includes the environments that the business firm can’t
or can’t easily influence but the business firm can be easily affected by it. This includes the
climate, demographic, political and legal environments.

Now it’s your turn!

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2.

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7.
Q&A List
In this section you are going to list what boggles you in this unit. You may indicate
your questions but noting you have to indicate the answers after your question is being raised
and clarified. You can write your questions below.
Questions/Issues Answers

1.

2.

3.

4.

5.

Keywords Index
Idea/scanning the evironment
Entrepreneurial Process

innovation Identifying the opportunity triggering event

Developing the opportunity implementation Evaluating the
opportunity
growth Evaluating the team Opportunity
Identification