Re s ear ch

Sweet Check In
Today’s Serving:
Concept of Entrepreneurship
Learning Objectives:
:These units on the Concept of Entrepreneurship shall help
the student to:

• define entrepreneurship in the context of small and

medium -scale industries
• discuss theories that explain how countries grow
economically
• discuss the relatioship between entrepreneurship and
economic growth in the community
• explain the socio-economic benefits from
entrepreneurship

2
Learning Objectives:

• identify entrepreneurial competencies

• name the clusters of Personal Entrepreneurial
Characteristics (PECs)
• assess the personal entrepreneurial characteristics of
successful entrepreneurs vis-a-vis PECs.

3
Concept of Entrepreneurship
• Entrepreneurship
– process of creating something new with
value by devoting necessary time and
effort assuming the accompanying
financial, psychic, and social risk, and
receiving the resulting rewards of
monetary and personal satisfaction and
independence.
Concept of Entrepreneurship
• Four basic aspects of being an
entrepreneur
1. Creation of something of value
2. Devotion of necessary time and effort
3. Assumption of necessary risks
4. Getting rewards
Concept of Entrepreneurship
• Who is an entrepreneur?
– A person who starts and/or operates a
business.
– creative and innovative
– Willing to take risk
– Usually, his kind of business is single
proprietorship, because he does everything
from production to selling.
Role of Entrepreneurs in the Economy
• Employment
and Income

Entrepreneurs
Investment

Savings
and Taxes

Figure 1-1 Vicious Cycle of Development

Concept of Entrepreneurship
mobilizers of
capital

Service providers tax payers

suppliers of
employers products

Figure 1-2. The Entrepreneur

Role of Entrepreneurship in Economic Growth

• Micro, small and medium enterprises (SMEs) are a vital

component of the economy.
• Microbusiness, small and medium enterprises provide
employment for 70 percent of the Philippine labor force.
• According to the 2001 NSO of the total business
enterprises of 811,589, the MSME's provide jobs to 69.1
percent of the employed Filipinos with their economic
output of 32 percent.
• It is important for the economy to increase the output of
the MSMEs to help the economy move and grow.
Concept of Entrepreneurship
• To attain this, the MSMEs, should have
more access to:
(1) credit,
(2) better sources of raw materials,
(3) modern technology and
(4) more marketing information.
Concept of Entrepreneurship
• The government has three strategies to
help MSMEs.
1. Provide credit, technology, and marketing support to new
enterprises from P24 billion in 2004 to P309.98billion in
2010.
2. Tap overseas Filipino workers to invest their earnings in
MSMEs.
3. Promote greater involvement of local government units
(LGUs) in promoting small business activities by providing
them information on business opportunities, available
sources of funds and the latest product design.
Concept of Entrepreneurship
• Ratification of RA 9178
1. Exempt BMBEs from income tax and encourages LGUs to exempt
or reduce local taxes imposed on BMBEs;

2. Exempt Barangay Micro Business Enterprise (BMBEs) from

coverage of the minimum wage law;

3. Improve credit dellivery to BMBEs;

4. Provide for technology transfer, production and management

training, and marketing assistance to BMBEs

5. Provide trade and investment promotion to BMBEs

Entrepreneurs in Small and Medium Industries

• Small and medium scale businesses are

important because of the following reason.
1. They help provide the supply of products to customer.
2. They help provide personal service
3. Small and medium scale business serves as a means of
earning to an unemployed individual.
4. The small and medium scale businesses also provide
employment to other people.
5. Small and medium scale entrepreneurs also pay taxes to
the government and such payment allows the government
to provide services to the people.
• Thank YOU for your kind listening!
• God Bless!
 Entrepreneurship
Unit 2.

Entrepreneurial Competencies
 n e u ria l
Entrepre e s
t e nc i
mpe have strong desire to succeed
C• oThey
• They are risk takers
• They are creative
• They take responsibilities for their
activities
• They have high level of confidence
Rewards of Entrepreneurship

1. Money or material return or profit

– Profit generally comes in the form of money or
cash
– Profit is what is left after deducting the cost
and expenses from the selling price of
products and services
Selling price – cost and expenses = profit
Rewards of Entrepreneurship

2. Freedom
- the entrepreneur has freedom to do what
he feels fit in his business
- The products may be those he bought for
sale, those that are converted to other
products, or services rendered to others
- Freedom includes what product to sell,
where to sell and when to sell
Rewards of Entrepreneurship

3. Psychological rewards
a. Good feeling of being of service to others
-the entrepreneur is able to satisfy customer’s needs
-to give work or employment to others
-to pay taxes to government
-to support the community
b. Prestige
- There is sense of power, not dependent on someone
else for income
- It improve self-esteem and self-confidence
Problems of Entrepreneurship

• Entrepreneurship demands hard work

• Entrepreneurship demands long working
hours
• Entrepreneurship may cause emotional
stress
Self evaluation
• Strengths and Weaknesses
– What are your strengths?
– What are your weaknesses?
• Weaknesses like lack of self-confidence, inability to
speak well and to convince people are temporary
and can be reversed.
Entrepreneurship
• Real Life Situations where Entrepreneurial
competencies are applied
Examples:
1. The Entrepreneurial Mechanist
2. The Entrepreneurial CPAs
3. The Entrepreneurial Doctors
4. The Entrepreneurial Dermatologist
(more examples)
Reminders to the Entrepreneur
• As a starting business entrepreneur, bear
in mind that you would start business by
yourself or with a small group of people.
Reminders to the Entrepreneur

• It is important to stick to the basics of running a business

such as:
1. Make sure you get things done.
2. Be close to the customers.
3. Innovative, be open to new ideas
4. Produce through people. Trust them
5. Be hands-on in running your business.
6. Be clear with your values
7. Know your expertise. Continue doing it. Stick to what
you know best.
Reminders to the Entrepreneur

Continuation…
8. keep things simple
9. keep a lean staff.
10. keep firm on directions but at the
same time give your people
autonomy. Be good at balancing the
two.
Entrepreneurship

Learning “Pinoy” Values Can Make you a

Good Businessman…
According to Phil. Daily Inquirer (April 15,2015), these
are the 3 important aspects of leading Filipino employees:
1. Social Acceptance
2. Business and Pleasure
3. Professionalism and Personalism
Entrepreneurship
• Social Acceptance
– it is important to have genuine regard for workers.
Filipinos look for caring leaders, who will give time to
interact with subordinates, listen and understand
employees concerns, and value their contribution to
the organization
– Giving critical or corrective feedback to subordinate is
best done in private. Public loss of face is considered
a major indignity, but praises for performance should
be targeted at groups
• Business and Pleasure
– Social scientist have noted that Filipino do not see
work as separate from fun. Work is closely tied up
with other social practices and the climatic conditions
in the country.
– Managers can enhance their leadership effectiveness
by tapping with filipino penchant for a festive
atmosphere
– New members in the work group can be welcomed
with some ritual fanfare by volutere or assigned group
of old members
Thank YOU for your kind listening!
GOD Bless!
 Entrepreneurship
Unit 3.

Entrepreneurial Qualities and

Self-Assessment
 r e n e u r i a l
l E n t r e p
Persona i c s
r ac t e r is t
Ch• aResearch done by Small Enterprise
Research and Development Foundation
and the Department of Trade and industry
reveals 10 Personal Entrepreneurial
Characteristics
• These are grouped into 3 clusters
1. Achievement
2. Planning
3. Power
 ne u r i al
n t r ep r e
s on a l E
Pe r ic s
c te ri s t
C1.ha ra
Achievement Cluster
- This pertains to desire of the individual to
fulfill or to realize something.
- This desire is strong to an entrepreneur who
will not stop at any obstacle but take such
obstacles as challenges
 ne u r i al
n t r ep r e
rs on a l E
Pe i s tic s
•ha ra
The c te r
following are the characteristics
C
dominant under achievement:
1. Opportunity-Seeker
a. Perceives and acts on new business
opportunities
b. Seizes unusual opportunities to obtain
financing, equipment, land, work, space
or assistance
Personal Entrepreneurial
Characteristics
Achievement
2. Persistent
a. Takes repeated or different actions to
overcome obstacles
b. Makes sacrifices or expends
extraordinary effort to complete a task
c. Sticks to own judgment in the face of
opposition or disappointments
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
Achievement
3. Committed
a. Accepts full responsibility for problems
encountered
b. Helps own employees to get the job done
c. Seeks to satisfy the customers
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
Achievement
4. Risk-taker
a. Takes moderate risks
b. Prefer situations involving moderate risks
5. Values Efficiency and Quality-Oriented
a. Always strive to raise standards and aims for
excellence
b. Strives to do things better, faster and at a lower
cost
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
2. Planning Cluster
- An entrepreneur is clear on what he wants to
achieve
- He plans his every move because he knows that
limited resources will be used.
- To make that resources (money, materials,
machinery, etc) are efficiently used, he makes
his move tentatively on paper, hence the plan.
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
ha
•CA plan is a blue print of the project that an
entrepreneur wants to establish.
Characteristics under Planning Cluster
1. Goal Seeker
a. Sets clear and specific short-term objectives
b. Sets clear and long-term goals
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
Planning
2. Information Seeker
a. Personally seeks information on clients,
suppliers, and competitors
b. Seeks experts to render business or
technical advise
c. Uses contacts or information networks to
obtain information
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
Planning
3. Systematic in Planning and Monitoring
a. Develop logical, step-by-step plans to reach
goals
b. Looks into alternatives
c. Monitors progress and switches to alternative
strategies when necessary to achieve goals
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
ha Cluster
•CPower
- Power does not meet bossing around. This is
the power to lead, to convince people of your
ideas, to make people believe in you, or to
persuade others especially those with negative
perceptions.
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
Characteristics under Power
1. Be persuasive and good in networking
a.Uses deliberate strategies to influence or persuade
others
b.Uses business and personal contacts to accomplish
objectives
2. Posses Strong Self-confidence
c.Believes in self
d.Expresses confidence in own ability to complete a
difficult task or to meet a challenge
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
Other Factors to consider
• Characteristics and environmental factors
where improvements are necessary:
1. Personal interest (the interest of the individual
is the deciding factor in getting into business)
2. Knowledge/Talents (the skills and talents or
knowledge of an individual serve as his best
asset in venturing into something that will earn
income)
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
Cont..
3. Training/Work Experience
- the kind of training or experience of an
individual influences his desire to go into
business
Ex: Children entrepreneurs eventually
become entrepreneurs
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
Cont..
4. Government Support/Assistance
programs
- the goal of every government is economic
development. This is done through: Investment,
Business and employment
- thus support should be available in terms of:
technology, marketing or training
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
C h a
cont…
5. Rate of growth of business
– There is no profit in venturing into business
where the rate of growth is negative (need to
check some government reports to have a
glimpse of the future of the business you have
in mind.
 ne u r ial
nt r e p r e
r s on a l E
P e ti c s
ra c t e r is
ha considerations
•COther
- Consider the rate of return on the capital you will put
into the business
a. Would you earn higher returns by putting your money in
the money market compared to the potential profit in
you put in the business?
b. Would you earn more in terms of salary as employee
compared to operating a business.
Answers to these questions will determine your next move
Entrepreneurial Personality

Three (3) Entrepreneurial Personality

1. High Need for Achievement
- The strong desire of an individual to pursue his
dream (long-range or immediate)
2. Strong belief that they can control their
destiny
- According to William Jennings Bryan “ Destiny is not a
matter of change, it is a matter of choice; it is not a
thing to be waited for, it is a thing to be achieved”
Cont..
3. Risk-taker
- Risk is present in every activity, but it can be
lessened.
- Business risk can be learned or avoided by
careful planning, insurance, and being alert of
what is happening around.
- Ex. Poultry farm pest can be avoided by
vaccination, etc.
Thank YOU for your kind
listening!
GOD Bless!
Class Activity:

Entrepreneurial Self Test

Entrepreneurial Activities

Chapter 2
Unit 4, Trading
Learning OBJECTIVES
• These units on Entrepreneurial Activities, shall help the
students to:
– Describe trading, manufacturing and service as entrepreneurial
activities
– Distinguish the different types of trading, manufacturing and
services
– Discuss specific examples of trading, manufacturing, and service
activities
– Explain how the activities related to trading, manufacturing, and
service in the economy
– Appreciate the value of creativity in manufacturing
– Form sound judgment in selecting the products to trade, products
to manufacture and services to render.
– Appreciate the value of service business
Unit 4. types of business
• 3 types of entrepreneurial businesses.
– Trading
– Manufacturing
– service
Trading
• Trading or merchandising
– The buying of goods and selling the same
without change in form.
– When goods are sold in small quantities it is
called retailing.
– When goods are sold in big quantities or in
volume, it is called wholesaling.
– The process of buying and selling is also
called trading or merchandizing.
– The common example of retailing is the
“sari-sari store”
Trading
• Examples of retail store
– Self service retailer – supermarket
– Limited service retailer – dress store
– Full service retailer- cellphone store
– Specialty store- National Book sTore
– Department store- robinsons
– Supermarket –waltermart
– Convenience store- 7 eleven
– Superstore – sm
– Combination store – mercury drug
– Hypermart- sm hypermart
Trading

Cont…. retailing
• Discount store – P99 store
• Factory outlet- surplus shop
• Price clubs – Makro
• Door-to-door seller or direct marketer –
Avon
• Vending machine – Coca Cola
• Seller by mail or telephone of TV
TRADING
• Direct Marketing is the most popular non-store trading.
• Many individuals start their taste of businesses by direct selling.
• The seller builds a personal and continuous relationship with
buyers.
• Many times, buyers are friends or relatives of the seller.
• The buyers find it difficult to refuse the offer of a friend or relative
• The seller knows the needs, capacity and the temperament f the
buyer
• The seller knows to whom, when, and where to make the offer
• Direct selling activies usually start as a side line which may
eventually mature to full time jobs and open up other
opportunities
Manufacturing
• Manufacturing is the process of converting raw
materials into finished products
• The manufacturers buys the raw materials
• He makes the raw materials to finished products by
applying direct labor and factory overhead
– Raw materials – are what you see in the completed product
– Direct labor – is the work on the raw materials as it is
converted into finished product
– Factory overhead is the resources needed or cost that
need to be paid for in making products other than raw
materials and direct labor
– Service business is doing work for others.
terminologies
• Profit – this is what is left after subtracting costs and
expenses from the selling price.
• Loss – when cost or expenses are higher than the
selling price
• Mark-up- it is what is paid for the product purchased
which is intended for resale or manufacturing into
another product.
• Direct cost – for retailing, it is the cost of the product
purchases, for manufacturing, they are the cost of
direct materials and direct labor, and in service,
they are the direct cost of rendering services.
Retailing

• Retailing is the selling of goods and services

directly to the final consumers or users.
• The final consumer may be an individual person or
a business unit.
• The trading may be done through retail stores or
through mail, tv, telephone, door-to-door, vending
machines, or electronic means.
• Store retailing is the more common form of retailing.
• The store retailing may be self-service like in a
department store or supermarket, or limited service
like cellphone shop.
 Specialty
store

Departme supermarket
nt store

Others:
-stall
Convenie retailers owners
nce store -vendors
-etc

superstor Direct
e Selling
Factory
outlets

KINDS OF RETAILERS
KINDS OF RETAILERS
• Department Store
– It carries a wide variety of product line, usually clothing,
shoes, bags, beauty products, home furnishings and
household goods

• Supermarkets
– Sell a variety of food and household products
• Specialty stores
– Carry a variety of models for one kind or limited product
line. For example, a cellphone store carries brands like
Nokia, Motorola, Samsung with different models and
brand
KINDS OF RETAILERS
• Convenience store
– Stores that carry high turn-over goods, 24/7
– Example: 7-Eleven and Mini Stop
– The retail prices of convenience stores are
usually higher than those of supermarkets

Superstores
– Larger than supermarkets and depsfores
– Ex: Uniwide, Makro, PriceSmart
KINDS OF RETAILERS
• Factory outlets
– Goods are grouped together in one factory outlet mall
– The outlets are located in places far from cities
– The customer have varied choices

• Direct selling
– One-on-one selling.
– One seller approaches the buyer
– Many times the buyers are friends or relatives of the seller

In addition to the list given, there are also market vendors who
sell in clusters (tumpok), the ice cream vendor, the taho vendor,
the market stall sellers, the carinderia, and many others.
Different types of trading business
• Store trading is classified by:
A. Amount of service
1. Self-service
2. Limited service
3. Full service

B. Product line
4. Specialty store
5. Department store
6. Supermarket
7. Convenience store
8. Superstore
9. Combination store
10.Hypermart
11.Service business
Different types of trading business
C. Retail Prices
1. Discount store
2. Off-price retailer
3. Factory outlet
4. Independent off-price retailer
5. Warehouse club
6. Catalogue showroom

D. Control outlets
7. Chain store
8. Retailer cooperative
9. Franchise
10.Merchandizing conglomerate

E. Type of store cluster

11.Central business center
12.Shopping center
Different types of trading business

• Non-store retailing
A. Direct marketing
1. Door to door retailing
2. Automatic vending
B. Direct mail marketing
C. Catalogue marketing
D. Telemarketing
E. Television marketing
F. Electronic marketing
Effects of Trading in Business
• Retailing cannot be avoided, even in rich
countries, people buy in retail
• In retail business, turn-over of goods is
fast, thus money inflow is also fast
Impact of trading to business

• Trading is the path where inflow of cash

from the buyers to the company passes.

Production Sales

-procurement of ne
materials
-retail
-wholesale
-investment on tools and
equipment

Production and Sales Relationship

Impact of trading to business
• The products produced are sold by either
retail or wholesale
• From the sales revenue, the business man
procures raw materials again for his next
production cycle and perhaps buy additional
tool and equipment for the expansion. Thus
more product are produced and sold.
• If the products cannot be absorbed by one
store, then this product is offered to other
stores, thus operations expand and grow
Benefits of retailing
• Retailing allows the fast movement of products. Product
price is discounted if the buyer will buy several or in
combination with other products to encourage customers to
buy

• It encourages people to buy more by giving preferential

benefit to customers and by increasing the number of
quantities at the same price with such customers or
promotions like “buy one take one”.

• Enhances buyer-owner relationship. This is because

some sellers are very friendly, thus encouraging people to
buy from them every time.
Benefits of retailing
• Low budget families would be able to buy products in
small quantities. For example: ½ kilo of sugar instead of 1
kilo.

• Retailing is the answer to small buyers whose need is

only for a couple of days for a small family. For example: a
family of four will not buy 5 kilos of bananas for their 1 week
consumption.

• Retailing is a business strategy. In grocery stores, slow

moving products are packed with a toy to make the product
saleable. Another strategy is the offering of credit cards to
be able to move/sell more goods or services.
IMPORTANCE OF SELLING IN THE ECONOMY

• Selling is the transfer of goods and

services from the producer from the
customers and the transfer of money from
the customers to the producer.
money

PRODUCER/ CUSTOMER/
SELLER BUYER

Goods and services

Producer and Customer Relationship

Producer and customer relationship

• Without the process of exchange of goods and services,

the economy will not move.
• Labor means, “selling” one’s services to the business
firms. Your parents or relatives for example work for a
company or operate their own business.
• In return the business firms pay salaries, wages or
profits to their employees.
• From the money the employee receive, they buy goods
and services from firms and pay by cash or credit cards.
• Some income received the household members are
deposited in the banks. These money are invested by
the banks in business activities to earn interest.
Producer and customer relationship

• The government is the regulatory body of

the economy. Government funds spent for
the services come from taxes paid by
households and business firms.
• Thus selling is the primary factor that
moves the economy.
• If the business firm will not have an
income from sales, then no business tax,
thus no government service,, and so on.
Thank you for
listening!!!
ENTREPRENEURIAL
ACTIVITIES
Chapter 2
Unit 5: Manufacturing
Manufacturing
• Manufacturing is the process of converting raw materials into
finished products.
• The manufacturer buys the raw materials and makes the raw
materials into finished products by applying direct labor and
factory overhead.

Examples: there are many manufacturers like:

shoes/footwear (in Liliw and Marikina)
canned goods (can be classified into sardines, canned fruits)
soap and toiletries
food products
garments or RTW
office supplies
Manufacturing Business
• Factors to consider before going into business:
1. Capital- how much capital is available for tools,
equipment, machines, aw materials, payment for
wages, overhead and other expenses.
2. Production space – how big/small is the space?
Where is it? It is owned or leased? If leased, how
much is the rent? What are the terms for leasing the
property?
3. Storage for materials and finished goods- is there a
space for storing materials and finished goods?
Manufacturing Business
4. Labor cost and labor supply – is there a ready
supply of qualified workers? What is the prevailing
wage rate in the area?

5. Factory Overhead – how much, more or less, would

be the factory overhead given the cost of utilities like
water and electricity and other costs?

6. Cost of manufacturing- of the cost of manufacturing

would be higher than that of the competition, then
perhaps manufacturing is not enough to venture.
Manufacturing Business

7. Technology – to produce a product,

technology should be available.

8. Availability of raw materials – this is vital.

No product will be produced without the
materials.

9. Competition – as mentioned, if the

producer will produce at a higher cost
compared to his competitors, selling price
will be high, causing a difficulty in moving
Manufacturing Business
• In spite of the high financial and complex operational
requirements of a manufacturing enterprise, many
entrepreneurs venture into it for the following reasons:
– - the desire to earn
– Low manufacturing cost
– Well planned sales
Generally, the cost of manufacturing a product is lower than
the cost of purchasing a completely finished product. Sales
can be well planned, and maximum sales projections can be
attained since the business will not be depending on outside
suppliers for the goods it will sell.
Thus, lower cost plus unhampered selling operations can
ultimately result in high net profit.
 PROCESS OUTPUT
INPUT

PROCESSESS
PURCHASE OF RAW MATERIALS SELLS FINISHED
RAW MATERIALS DIRECT LABOR GOODS
FACTORY OVERHEAD

FEEDBACK

Manufacturing Process
MANUFACTURING BUSINESS
• The manufacturing process can either:
– Labor intensive – processing is done
manually by the workers
Ex: manufacturing of shell crafts and abaca
products

– Capital intensive – the processing is done

through the use of machinery
Ex: manufacturing of canned products
Role of Manufacturing in economic development

• Aside from selling, manufacturing is the

other dimension in economic
development.
• No product will be sold without producing
it.
• In the process of producing the products,
exchange also takes place.
• Raw materials will have to be purchased
and labor will have to be paid plus all other
expenses.
MANUFACTURING COST
• Manufacturing cost or production cost is the sum
of the cost of direct materials, direct labors, and
factory overhead.

• ELEMENTS OF MANUFACTURING COSTS

1. Direct materials – pertain to all materials which
are form part of the finished goods which can be
measured and charged directly, and can be
identified as forming part of the product.
Ex: leather to make bags and shoes, lumber to
make tables and chairs, etc.
Manufacturing cost

2. Direct labor – the labor used in

manufacturing a product which can be
charged directly to that particular product.
Ex: the labor paid to a carpenter making
chairs in a furniture factory.

3. Factory overhead – refers to indirect

elements of cost incurred to turn out
finished product which may be in the form
of indirect materials, indirect labor, or other
indirect expenses.
• Indirect costs
1. Indirect materials - materials needed
for the completion of the product. These
also include factory supplies or physical
goods which are used in the production
as a whole or not for a particular unit of
product.
Ex: sand paper used in the manufacture of
furniture,
lubricants and oil for factory machinery,
janitorial supplies etc.
2. Indirect labor – refers to human efforts
used in the factory which cannot be
identified as pertaining to a particular
product.
The cost of indirect labor includes salaries
and wages paid to foremen, supervisors,
janitors, timekeepers and the like.

3. Other indirect expenses – are expenses

necessary for the production as a whole
such as light and power, rental, insurance,
Importance of manufacturers
• Manufacturers of product are important because of the ff:
reasons:
1. Considering the expenses and receipts of manufacturers,
they contribute to the movement of the economy.
2. manufacturers provide the supply of products needed by
the people like canned milk or powdered milk, clothes,
bag, etc.
3. Manufacturers provide employment and income to the
household.
4. They pay taxes which are used by the government to
finance its projects and pay the salaries of government
employees.
• The salaries and wages received by the
employee either in private business or in
the government allow for another round of
purchases, production and sales.
• With production there is value or money
equivalent to the product.
• More goods produced means increase in
gross domestic product (GDP) and
national income (NI).
• Fueled by money in the circular flow, the
economy moves towards development.
Creativity in manufacturing
• The availability and the production of new products in the
market can be attributed to manufacturing.
• Since manufacturing is the process of transforming raw
materials into finished products, it allows for the creative
talents of an individual/manufacturer to manifest.
• Many kinds of products in different designs owned their
production in the creativity of manufacturers.
Ex:
bags comes from different colors, sizes, shapes for different
uses, occasions, and even reasons.

Manufacturers need to be creative to meet the ever

changing demand of the customers
How can an individual be creative?

• Creativity is developed by being observant

-observe what people are wearing or using and
try to improve it by way of functions or ease of
use.
Ex: many years ago, people used pen and ink,
thus there is need to carry bottle of ink in the
bag to refill anytime ( the very convenient
ballpen with dry ink was introduced.

– Creativity is developed by imagination

- Through imagination, toy manufacturers are
able to introduce toys that move with use of
• Creativity is developed because of external conditions
- Manufactured products change because of people’s life
styles
Ex: The introduction of small and portable products

The economic conditions in the country can also influence the

manufacture of products from the expensive to the affordable.
Ex: from pure leather to leatherette products

The changing seasons also help develop one’s creativity.

Ex: like during summer months, beach product like rubber
slippers, sunglasses, beach bags, creams are saleable.
During rainy season, umbrellas, rain coats and jackets.
Why should manufacturers be creative?

• Manufacturers need to be creative for the

following reasons:
1. to be competitive
- if you do not introduce products that are
different and affordable, sooner or later, you are
going to be out of business.
2. To meet the need of customers
- customers are very choosy and fickle-
minded. They do not buy the same product for
long. They want to try new things, thus
manufacturers need to be creative.
Elements in choosing products or services to offer

1. personal interest
- Your interest will determine your success. If
you love what you do, you will persevere in spite
of odds. Together with perseverance is patience
to finish what ever it is you are doing.
2. Your competence.
Determine your competency. What are you
good at? If you are good in baking, then put up
a bakeshop. If you are good in cooking, then put
up a cafeteria. If you are good in handicrafts like
making décor, them manufacture decors.
-
 3. Competence
- Consider the reality of competition.
- If you love broiled chicken and your recipe
is super good, you may say “ I will go and
put up a litsong manok stand in front of
our garage”
- But check first, how many roasted chicken
stand are there in your block or in your
small subdivision?
- - may be right now there are 2 or more but
because this is easy to put up business,
 4. Available resources
- The manufacturing operation is highly dependent
on resources such as raw materials, machines,
and labor. Without any of this, the operation will be
affected very much.
- Ex: abaca is available in Bicol region, while the
shoe makers are found in Marikina
5. Season
ex: unless you receive an order for next year’s
summer season, you do not manufacture swim suits
during the rainy season
 6. Capital
- The amount of capital necessary to
operate your manufacturing business will
determine whether you have the capacity
to establish or not.
- -while there are institutions where you can
borrow money for capital, this would
require knowledge in the preparation of a
feasibility study that will be evaluated by
the banks,.
- Based on the study, if the bank officers are
 7. Personal exposure
- usually, children of manufacturers become
manufacturers or entrepreneurs
themselves. This is because they learned
the operations from their parents or
grandparents. As they grow, the children
take over the operations of the business.
8. Market demand
- Manufacture products that are in demand.
Check market or industry figures to
determine sales. If the sale potential of a
 9. Ethics in business
- This is important because many
manufacturers nowadays cheat their
customers by way of quality.
- Cheating will not do! Customers are
protected by law. Cases can be filed in
court.
- products, wherever they are in the world,
can be recalled causing immense losses.
Thank you for
listening!
Unit 6 : Service business

Chapter 2
What is service business?
• Service business is doing work for others.
It is a kind of business that sells services

Concepts now can be sold. Your ideas as

to how a product should be marketed
commands a price.
Your artistic talent as to how garden should
look has a tag price.
Examples of business under the service sector

• Small businesses
– Beauty parlors
– Barber shops
– Daycare centers
– Restaurant or snack bars
– Collection (bayad) centers
– Flower shops
– Pensionne houses
– Bake shops
– Dress shops
– Car repair shops
– Water stations
Examples of business under the service sector

• Large corporations
– Banking and finance
– Hotel and restaurant services
– Schools
– Hospitals
– Call centers
– Transportation services
Bus companies
Airlines
Shipping lines
– Entertainment
• Theme parks
• Movie houses
• Tv productions
Examples of business under the service sector

• Professional services
– Medical/dental services by doctors
– Legal services by lawyers
– Accounting services
– Engineering services
– Tutoring services by teachers
– Services by architects
How to put price to your service
• Below are some guides in pricing your service:
1. Consider the minimum wage as fixed by law
2. Determine how long, more or less, it will take you to finish the
job
3. Find out your competitors price
4. Consider the risks involved
5. Consider the paying capacity of your customers
6. Consider the resources that you will put in, aside from your
efforts.
For ex: thread, buttons, etc in the case of a dress shop. Also you
have to factor in your overhead cost like rent for the shop,
electricity, water,,etc.
7. Consider the simplicity or complexity of the job to be performed.
Advantages of establishing service business

• Easy to establish
– Service business is easy to establish
– Documentation is simple
• It requires minimum capital
– The capital requirement in establishing a service business is
very minimal
Ex. To start a parlor, all you need is a small space with mirror,
chair, and tools for hair trimming, as the business grow,
additional tools can be purchased.
• service are non-perishable
– Products and services, unlike fruits and vegetables are not
perishable. Therefore, there is no need of space to store the
products and there is no risk of spoilage.
Advantages of establishing service business

• You are your own boss

– As a service entrepreneur, you are expected
to guide the employees of your organization
to eliminate customer complaints
• Mobility
– Service is a very mobile business.
Ex: if the business is coordinating events, the
tools/equipment needed are only
communication gadgets and probably a video
camera. The added advantage is you get to
enjoy the party.
Community oriented services
• A body building gym
• This type of service business is to encourage people to keep themselves
trim and physically fit. Once engrossed in this type of activity, the youth
are driven away from drugs, liquor, gambling and other bad influences in
the community.

• Water station
– Providing clean water to the community is a noble undertaking.
This allows people to have a supply of clean drinking water.

• Services offered by carpenters, plumbers, masons, etc.

– This help people in fixing parts of the house or community that
need repair.
Community oriented services
• Dance and music instructors
– The exercise will strengthen the relationship in the community. The
youth attention is focused into something worthwhile and tensions is
eliminated in the neighborhood.
• Daycare centers
– centers for babies and toddlers are now flourishing especially in
exclusive villages where parents are both working and do not want to
risk leaving their children alone;
• Computer centers
– Many families do not own a computer, but children have school
assignments to work on, this kind of business is also becoming a
common sight in the community.
• Barber shops/beauty parlors
– Their peak season is during fiestas, school openings, Christmas
season, graduation in schools and other occasions.
Importance of service to the economy

• The economy moves through the process

of exchange, while manufacturers
exchange products for money, service
business exchange service for money.
• Both sectors are helping the economy
move through the exchange of goods or
services.
• If we stop one and depend on the other
only, the economy will weaken because
without employment, income will fall.
• This will result to the vicious cycle of
Importance of service to the economy

No income

No government
Unemployment Taxes/revenues

No government
services

Vicious Cycle of Poverty

Importance of service to the economy

• Poverty is experienced when people are

unemployed because they do not have the
money to buy things they need.
• Taxes paid to the government are based
on income, thus people are not earning
income, then no taxes will be paid.
• If the government does not have money,
people cannot expect government
services like public education, the building
of roads and bridges, the service of public
hospitals and health centers, social
Importance of services
• It helps the economy.
– Service is a contributor in moving the
economy.
– It allows people to have jobs and earn in
income so they can participate in the
exchange process.
– Manufacturers need to sell their products ,
thus services like brokerage companies
(people who transport products from the
factory to the shipping lines), shipping
(companies that move products from one
point to another), service deliveries, trucking
Importance of services
• It allows people to travel and communicate with each other
– The services of travel agencies, hotels, restaurants, resorts,
entertainment services, communications services and others.
• It makes product available
– Products become within people’s reach because of services like
the delivery of snack foods, and mail to order goods. Products
from other countries in another country because of shipping and
airline services.
• It makes life not only pleasant but also comfortable
– Consider the services of the garbage collectors, the street
sweepers, the laundry stations and the personal service
providers like the barbers, taxi drivers. Without them, life would
be unbearable.
Thank you!
Learning Objetives
1. identify the three basic forms of business ownership
a. sole proprietorship
b. partnership
c. corporation
2. discuss the advantages and disadvantages of each of the three
basic patterns of business ownership
3. gain competence in making a business legal
4. generate a set of opportunities that respond to the needs of the
environment in terms of key needs, resources and trends
5. identify several opportunities that he can choose from in thinking of a
business idea
6. decide on a business oppotunity to work on
7. realize the importance of environmental screening
8. apply the knowledge acquired in managing a simple business
Unit 7

IdentIfying Business Opportunities in the

Environment
Start up- means creating new business
from scratch or from zero.
Sources of Product Ideas
1. chance happening
2. personal interest or hobby
3. friends and relatives
4. family business
5. Suggestions
6. Education or courses
7. Prior work experience
8. research and development
9. creative problem solving
10. focus group discussions
11. brainstorming
12. problem inventory analysis
13. other means
• Improvements on Existing Products
– improving an existing product or service
renders it new
– changing the presentation of the product also
makes it new
– changing the package is another way of
introducing a new product
• Spotting Opportunities
market need
location
hobby of the people
available materials in the community
your interest and know-how
• Ways of going into Business
1. start a new business
2. buy an existing business
3. take over a family business
4. buy a franchise
• Opportunities for Business
– in the Philippines free enterprise system, any
person is free to go into business.
– Entrepreneurs are called energizers of small
business.
Environmental Scanning

-An analysis of the environment is done to

determine what approach to use in the
conduct of business.
-Strategy is the way by which goals are
attained.
-To determine what strategy to use, a SWOT
analysis is made.
Evaluate
Results
Identify Analyze the
Business Environment
Goals
Implement
Strategies Identify the
opportunity
& threats
Formulate
Strategies Analyze the
organization's
resources
SWOT
Analysis Identify the
Formulate Strategies
Strengths &
Weaknesses
Implement Strategies
Identify
Business
Goals Evaluate Results
Strenghts
• owner of commmercial unit
• tasty chicken recipe
• poultry farm owner
Opportunities
• heavy pedestraina traffic
Weaknesses
• lack of experience in business
Threats
• Strong Competition
• In an ongoing business planning should include planning for the
functional areas or business such as:
1. operations
a. buying and selling
b. manufacturing
c. service
2. marketing
3. finance
4.human resource management
5. accounting
6. computer information system
• The Blue Ocean Strategy
- breaaking away from what is ordinary.
Unit 8 - Global Opportunities

Franchising Opening Branches

Partnership

Exporting

Ways of Going Global

Exactly How Does a Company Go
Global
• Exporting- this means selling products to another
country. Prices are in foreign currency, usually US
Dollars, qouted as FOB,CIF or C & F.
• Partnership-entering into an agreement wwith a oreign
company to do business in that country would be
beneicial to the local entrepreneur.
• Franchising- this is being practiced by big foreign
corporations by allowing their company's name to be
used by local entrepreneurs to give their business a
global reputation.
• Branch opening- is also an expensive ventre especially
for start-ups.
Connecting with Foreign
Buyers/Partners
• Travel
• Trade Fairs
• Government agencies
• through friends
• the internet
Obstacles to Globalization
• Language barrier
• laws
• currency fluctuation
• political climate
• tariff or taxes
• fortuitous events
• peace and order
• regional trade alliances
Factors that Drive Entrepreneurs to Go
Global
• Cutting Costs
• Competition
• Availability of Resources
• Market growth
Unit 9 -Forms of Organization

1. Sole Prpprietorship
2. Partnership
3. Corporation
PARTNERSHIP
Advantages Disadvantages
1. easy to form 1. unlimited liability of the partner for
the debts of the partnership
2. subject to less government 2. limited term of existence
requirements
3. suited to the practice of a profession 3. limited capital
4. some are exempted from income
tax
5. flexibility of operations
SOLE PROPRIETORSHIP
Advantages
1. easy to form
2. less government requirements
3. fast decision making
4. flexibility of operations
5. suited to small business
Disadvantages
1. limited source of capital
2. life of business may be dependent
on the life of the owner
3. management that may be limited to
the capacity of the owner
CORPORATION
Advantages
1. capacity as a legal entiry
2. practically unlimited life
3.limited liability of stockholders for
crporate debts
4. wider sources of capital
Disadvantages
1. activities limited by the articles of
incorporation and corporate by-laws
2. possibility of abuse of powers of
officers
3. subject to more governmental
requirements
• Articles of Co-Partnership
• Articles of Incorporation of a Stock
Corporation
• Registering a Business
– www.dti.gov.ph
Registering the Sole Proprietorship
Registering Partnership and Corporation
Registering with Other Agencies
IV Buiness Planning

Learning Objectives
1. discuss the importance of a business plan
2. enumerate the components of a business plan
3. conduct environmental scanning
4. design a production plan
5. determine the financial needs of the proposed
business plan
6. analyze the feasibility of the proposed business
plan
7. write a business plan
Planning the Business to Establish
• Planning is the defining of goals for future
organizational performance and deciding
on the tasks and resources needed to
attain them
• Applied to manufacturing, it involves
planning for
– 1. the product
– 2. the process
– 3. the facility location
– 4. the facility layout
– 5. the jobs
1. Product planning involves determining:
a. how the product meets customer's needs,
b. how long it takes for the product to make
and to be marketed, and
c. the total cost to the customer
2. Process planning deals with the
determining the specific technologies and
procedures required to produce a product or
service.
3. Facility location planning deals with the identification of the place
where manufauring process will be situated. The criteria that should
serve as guide in facility location planning are:
a. proximity or nearness to customers
b. business climate
c. total costs
d. transportation facilities
e. quality of labor
f. supplies
g. location of comapny's other facilities
h. peace and order condition
i. government laws, rules and regulations
j. environmental regulation
k. host community
l. competitive advantage
4. Facility layout planning involves the placement of
departments, workstations, machines, and inventory
storage within the factory.
The objective of facility layout planning is to ensure
smooth workflow. The factors to consider in facility layout
planning are:
a. objective or purpose of the system in terms of output
and flexibility
b. product and service demand
c. number and volume of operations
d. space availability
5. Job planning or job design is the function of specifying
work activities of an individual or group in an organizational
setting.
The objective of job planning or job design is to develop
job structures that meet the requirements of the
organizations.
Job design satisfies the employees' personal and
individual requirements.
The areas to consider in job planning or job design are:
a. tasks to be done
b. qualification of worker
c. physical location
d. working time
e. reason for hiring
f. performance measurement
g. motivation
h. training
Ways of promoting Sales
• Marketing- the activity involved in moving
products from the manufacturers to the
customers is divided into 4P's
– 1.Promotion-means telling the target market
about the product. It requiers effective
communication and involves personal selling
and mass selling.
– Personal selling involves direct communication between
sellers and potential buyers.
– Mass selling is communicating with a large group of
buyers at the same time (advertising,publicity)
Sales promotion refers to activities that stimulate
interests, trail, or purcahse by final customers
• Objectives of promotion
– 1. to inform
– 2. to persuade
– 3. to remind
• Creative Pricing
• Consumer's evaluation of the Purchase
Process
1. price
2. product quality
3. convenience
4. impact of promotion
Cosumers buy products because of the “need” or because of
“want”
Social needs
• Physiological needs are:
1. love
1. food
2. frienship
2. drink
3. status
3. rest
4. esteem
4. sex
Personal needs
• Safety needs
1. self-esteem
1. health food
2. accomplishment
2. medicine
3. fun
3. exercise
4. freedom
5. relaxation
• Good Location and Workplace
– quality of labor is abundant
– availability of raw materials
– total costs

• A good workplace is one that conforms to the

standards of the industry and the rules set by
the government.
• Home-Based Business
– there should be clear physical and time
boundaries between business and home.
– the area for business should be identified
– and the time for work should be known to
workers and client
• Meeting Financial Requirements
– The financial plan will consider the cash
requirement for:
1. fixed capital
2. working capital
3. organization cost or expenses
4. contingencies or unforeseen events
• The Sources of Cash
1. the personal money of the entrepreneur
2. loans from relatives and friends
3. loans from banks and other lending institutions
4. investors
5. government assistance programs
6. non-government organizations
• Rules for Sound Financing
1. know the cash requirements
2. know the best terms
3. know when and how to pay
4. owner's investments should be more than the borrowings
5. if borrowings are needed for fixed assets or working
capital
a. financed fixed assets from long-term borrowings
b. finance working capital from short-term borrowings
Unit 11 Project Feasibility Study
• A feasibility study is an activity designed to find out what
is feasible, achievable, attainable, practicable, or
workable.
• Project feasibility studies are needed by:
1. management
2. investors
3. lenders
4. government agencies
• Parts of the Feasibility Study
1. The Executive Summary
-presents the highlights of the study that are shown in
detail in the different section
-presents conclusions arrived at on the feasibility of the
project
2. The project background and history
-discuss the proponents of the project or the owner of
the project
-states the name of business
-states the form of organization
-identifies the location of the business
-include brief history of the project
3. The industry study
-involves the analyses of the treat of new
entrants and the bargaining power of buyers
and suppliers
4. The market study
– consists of market description,
demand,supply, statistical analysis of demand
and supply, general marketing practices,
proposed marketing programs,projected sales
and system design
– This part of the study focuses on the four P's
of marketing (product,place,promotion, and
price)
5. The management study
- consists of personnel requirement,
management policies, timetable (Gantt
Chart) and system design
- it shows the organization chart of the
proposed business.
-it provides job analysis,jod
descriptions,job specification, and job
classification
6. The technical Study
-consists of identification of the product,
the process of acquiring, processing and
bringing the product to the point of sale.
-the study covers materials, technology,
physical facilities, manpower
requirements,costs and system design.
7. The financial study
- consists of projected balance sheet, projected income
statement and projected cash flow over a period of time,
which is usually five years. These projections are based on
reasonable assumptions.
- shows computations using financial analytical tools like
ratios and trends and the interpretations of the
computations arrived at.
- the study tests the financial health of
business(liquidity,capital adequacy,profitability,and break-
even point)
8. The socio-economic study
-shows the impact of the project on the
personnel , on the community, on the
environment, on the government and other
beneficiaries.
FINANCIAL 13. Prepar a budget
PLAN
12 .Deterrmine your financial requirements

11. Identify your workforce

10. Determine your key personnel
MARKETING 9. Determine the process and equipment you will use to manufacture your products
PLAN 8. Identify your material requirements and sources of supply
7. Determine your marketing mehod
6. Consider your pricing policy
5. Identify your competitors
4. Identify your potential market3. 3.Describe your products or services

INTRODUCTION
2. Describe the business
1. State your business
Unit 12 Writing the Business Plan
• A business plan is a written document describing all relevant internal
and external elements and strategies for starting a new venture, a
new product or a business expansion.
• It provides a guide and structure to management.
• The business plan detail the following:
1. product to be made or traded or service to be rendered
2. marketing-when, where, to whom the product or service is to be sold
3. management- organization, employees' and officers' position, and
job assignments
4. finance- financial needs and where the money will come from and
paid to
5. operations- how the product will be produced, how the service will be
rendered or how the merchandise is to be acquired.
• The business plan may be simple or
complex depending upon the product or
service.
• The entrepreneur doing the “road map”
gets to:
1. see the product and service in detail
2. do self-assessment
3. see obstacles
4. assess cash and other resource requirements
• Usually, a business plan has the following
parts:
• Executive Summary- highlights briefly and convincingly
the different sections in the business plan. It supports the
conclusion that the business is profitable and that it is
worth pursuing.
• Description of the Venture- provides a complete picture
or description of the products, and services and their
unique features.
• Operating Plan- gives the detail of how products are to
be manufactured . The merchandising plan for a trading
business shows in detail how the products are to be
acquired.
• Marketing Plan- describes market conditions and
strategy related to how products and services
will be priced, distributed and promoted.
• Organizational Plan- describes the form of
ownership and lines of authority and
responsibiliies of the people in the organization
• Financial Plan- projects financial data that show
profitability, liquidity, and stability
• Appendices or Annexes - back-up materials that
support the text of the business plan. They are
mentioned in the text as references.
• Business goals should be SMART
Specific
Measurable
Attainable
Realistic
Time-bound
• Contents of a Business Plan
I. Cover Page
a. Name and address of business
b. Name(s) and address (es) of the owners
c. Contact persons
d. Date Prepared
e. Statement of confidentiality of report
II. Executive Summary-one to four pages overview of the total business
plan highlighting the significant point arousing interest on the part of the
reader.

III. Product- description of products or services and their unique

features.
• Contents of a Business Plan
IV. Marketing Plan- who the customers are, competition, marketing strategy,
competitive edge,pricing

V. Organizational Plan- states the form of business organization. It identifies

management team, investors, their background, their duties and responsibilities
and states the plan for employees' recruitment and training.

VI. Operating Plan- explains the process of acquiring and processing products.
It identifies equipment, physical plant, machinery, materials.

VII. Financial Plan- specifies financial needs and sources of financing and
shows a three to five year period pro forma income statement, cash flow
projections, pro forma balance sheet, and break-even analysis.

VIII. Appendix - shows supplementary materials.

• Desirable Business Practices
• The Entrepreneur is ready to start business. He does the
following:
1. Computes costs, determines selling prices, adds mark-ups,
subtracts markdowns.
2. Prepare price tags
3. Makes promotional or advertising materials like brochures, posters,
ads for TV, radio, magazines and newspapers
4. Review purchase orders from customers
5. Fill-up orders of customers by packaging products for delivery
6. Prepares delivery receipts, and sales invoices for the products to be
delivered and issues official receipts for payments from the cusomers
7. Practices courtesy and efficiency in serving customers
8. Gets ready to answer and properly handled complaints of customers