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ENTREPRENEURSHIP MANAGEMENT Q1

WEEK 1

Entrepreneurship refers to the ability of an individual to determine and come up with


the proper combination of the resources available in the environment and transform this
into an out of either goods or services and obtain a fair profit at the price the
entrepreneur sets.
Several factors an entrepreneur turn his idea into a profitable product.
Idea Something an entrepreneur conceptualized or imagined painting a more or less
clear picture in his mind.
Raw materials Inputs that comes from his environment and are usually found to be in
their unprocessed or natural states.
Capital refers to buildings, machinery, equipment and tools used in the course of
production.
Laborers people directly responsible in the production process.
Finished products when inputs are transformed into outputs.
Richard Cantillon a noted economist and author in the 17th century who introduced
the term Entrepreneur.
Contribution of Entrepreneurship to the Economy
1.Entrepreneurship employs the various resources present in the economy
2.Entrepreneurship need manpower for the business operations
3.Entrepreneurship is the backbone of the economy
4.An entrepreneur is in their ability to innovate goods and services.
5.An entrepreneur is in their ability to gain international popularity for their country
6.An entrepreneur is their willingness to take risks, risks that society will otherwise
hesitant to take.

SOCIO-ECONOMIC BENEFITS FROM ENTREPRENEURSHIP.


1. Promotes self-help employment
2. Mobilizes capital
3. Taxes
4. Empowers Individual
5. National Identity and price
6.Competitive consciousness
7.Improves quality of life
8.Enhances equitable distribution of income and wealth.
Catergories of MSMEs ( MICRO, SMALL, MEDIUM, LARGE) Enterprises.
1. Asset size
Micro: up to 3,000,000
Small: P 3,000,001 P15,000,000

Medium: P15,000,001 P 100,000,000


Large: Above P100,000,000

2. Number of employees
Micro:1 -- 9 employees.
Small:10 99 employees.

Medium: 100 199 employees.


Large: More than 200 employees.

Barriers to growth of MSMEs


1. Poor Finance
2. Obsolete technology
3.Low productivity
4. Lacks of skills upgrading
5. Lack of Information
6. Inability to make entrepreneurial transition
7.Poor linkage to industries

8. Inappropriate location
9. Management Incompetence.
10. Poor Market access
11. Lack of Infrastructure
12. Bureaucratic procedures
13. Severe global competition

Challenges for small business


1. Having decision on your own and hardwork
2. Capitalization and other resources are not abundant
3. Limited discount on buying raw materials
4.Inability to employ specialists or highly skilled laborer
5. Availability of better technology and better information
6. Access to greater finance

WEEK 2
Attributes of Entrepreneur
Attributes of an entrepreneur
1. Entrepreneurship comes form entrepedre to innovate.
2. Intrapreneur Internal corporate entrepreneur
3.Home based entrepreneur reduce expense on home based business
Key terms associated in entrepreneur.
1. Ideas and ability to make it happen in real life.
2. Business skills
3. Assumes risk
4. Desires for profit.
Characteristic of the average Filipino entrepreneur
1. First born or eldest in the family
2.Married individuals
3.Men still out numbers women
4. Entrepreneur starts on their thirties early for men and late for women
5. Creativity, Independence and ability to handle uncertainty emerges on teenage years.
6.Bachelors degree or college degree
7.Need for independence
8.Strong relationship to their parents
9.Need for luck
10.Entrepreneur and Venture capitalist are always on conflict.
11.Professional management throught external
12. Take prides on being DOERS.
13.Calculated Risks
14. Fit in the crowd
15. Falls in love with new ideas, new employees and new financial plans.
16. Rarely concentrates on one business venture.
5 characteristic of successful entrepreneurs.
1.Drive most important attribute.
2.Thinking ability encompasses creativity, criticial thinking, analytical and originality.
3.Aptitude for human relations Personality and ability to motivate other role players.
4. Communication Skills ability to make yourself understood.
5.Technical skills Strategic management Skills

Roles of an entrepreneur
- Perceives Opportunities
- Take Risks
- Mobilizes capital
- Introduces Innovation
- Organizes labor and production
- Makes decision
- Plans ahead
- Sell products for profit
Types of Entrepreneurs
1. Type A Idea person
2. Type B Crusader / Change the world
3. Type C Independent / Business according to his lifestyle
4. Type D Looks out for Ideas, waves and opportunites for financial reward
Basic skills of an entrepreneur
1. Ideation Ability to generate ideas
2. Creativity Ability to produce something new from imagination
3. Innovation doing something new or different
Factors of Success
1. Entrepreneur Dimension ( ED ) Refers to the entrepreneurs qualities and
technical skills
Personal Quality
Self confident
Achievement oriented
Hardworking
Prefers moderate risks

Technical skills
Visioning / Goal - setting
Organizing
Implementation
Evaluation

2. Firm Dimension ( FD ) integrations of business functions and effective application


of management functions.
Business organization functions
1. Marketing Product , Price , Place of Distribution , Promotion , Research.
2. Production - Innovation, Raw materials manage , Machinery , methods for efficiency
3. Finance Funds allocation, supervision, utilization , sources and availability
4. Human Resource Recruitment, development, compensation, Maintenance
5. Management Functions - Planning , Organizing , Leading , Controlling.

Level 3: Enviromental Dimension ( ID ) refers to the enterprise external


environment.
1.Socio-Cultural and demographic factors fosters competition and encourages
trade, Looks at work as duty and values hones and productive labor.
2.Technological Advancement related to technology , methods , machineries.
3. Economic Low Inflation and interest rates, High GNP , High national productivity.
4.Political Legal Conducive peace and order situation.
Ingredients for success.
- Sufficient Funding
- Right People
- Marcket niche
- Perseverance
- Luck

- Strategic planning
- Business plan
- Drive and desire
- Business experience
- Good education.

Advices for entrepreneurs


1. Starting a business must should be the one thing you want in life and dont start a
business just because you only think you will be good at it or others think so.
2. Research potential market
3. Be sure of a market for your product.
4. Assemble the best people
5.Also recruit people you do not know.
6.Sufficint funds
7. Be flexible and dont be discouraged.

WEEK 3
ENTRY OPTIONS

5 Reason why people go to Business


1. Adventure
2. Creativity
3. Competition
4.Control
5. Earning Potential
4 current thriving business
1. Retailing Clothing stores and such
2. Food and recreation Fast foods, hotels , gyms
3. Services transportation and such
4. Other commercial Fields Industrial , wholesaling, delivery services
Sources of entrepreneurial inspiriration
- Trade Journals
-Directories
- Trade associations- Personal interest
- Conventions
- Wish list
- Exhibits
- others
- Product catalog
Routes to Entrepreneurship
1. Family business one of the most successful routes.
Model of succession of family business
Stage 1 Pre Business Awareness of heir.
Stage 2 Introductory Exposure on business infos and jargons.
Stage 3 Introductory Functional Heir starts part time.
Stage 4 Functional - Full time employees
Stage 5 Advance Functional Managerial positions
Stage 6 Early succession - Assumes presidency
Stage 7 Mature Sucession Becomes the de facto head of the company
2. Franchising two party legal agreement when franchisee conducts business
according to franchisers contract terms
Franchisee limited by the contract.
Franchiser contract creator

3. Buy out Buying of existing business for sale and appliying innovations and
improvements.
4. Start Up business Started from scratch
Types of Start up business
1. Distributorship Agreement to distribute a product without tradename participation
2.Rack Jobber Agreement to a parent company to market its good to various stores.
3. Wholesaler Directly buys from a producer and sells in bulk
4. Subcontracting Agreement or contract to have a responsibility on particular
aspects of operation.
Stage of companys development / Life cycle.
1. Birth stage seed capital is needed at this stage.
Establishing firms
Getting Customers
Finding the money
2. Breakthrough stage/ Early Growth Stage Early financing is need at this tage and
its coping for growth and take off.
Working on finances
Becoming profitable
Growth
3. Expansion stage/ Maturity stage Funds for expansion into new market or product
line are needed at this stage. Venture capital are also helpful for finances. This stage is
for investing wisely and staying flexible
Refining Strategy
Continuing Growth
Managing for success
Causes of business failure
- undercapitalization
- Poor business location
- Negligence of public policy
- Unprepared to risk

- No Innovation ( New product or Services )


- Unsatisfactory performance of relatives
- Irregular attendance.

3.2 Ownership and Organization


Things to consider in selecting legal form of organization.
1. Ownership Number of owners and equity.
2. Management Person who will manage the business.
3. Financing Sources of money and capability
4. Liability Incentive that are attractive to managerial talents.
5. Taxation - Legal form for efficient tax management
6. Retention of Income Maximum/ Optimal Income
7. Protection Availability of a person who handles the business incase of natural
disaster ( death ). Sole Proprietorship , Partnership , Corporation , Cooperative.

Capital Requirements.
1. Fixed Capital Money needed to purchase fixed assets or capital goods ( machinery
, buildings, office equipments and others )
2. Working Capital Funding of day to day operations and short term like payroll ,
utilities, etc.
3. Growth Capital Funding expansion and diversity changes.
Sources of Capital
Formal Sources Borrowing funds form instituions.
Informal Sources Not mandated by law examples are relatives. Outside the financial
system.
Republic Act 6977 MAGNA CARTA for small entreprises. Only for small and medium
enterprises. This funds could be availed by single prorprietorship, partnership,
cooperatives or corporations
a. Micro-enterprises Less than P50,000.00 b.Cottage Industries P50,001500,000
c. Small Enterprises P500,001 P 5,000,000 d. Medium enterprises P5 M P 20 M
Republic Act no. 6810 is establishing MAGNA CARTA for barangay and countryside
enterprise with exemptions from any and all government rule.
Long term Borrowing ( banks, mortgage houses )
1. Mortgage Collateral borrowing.
2. Bonds Government promise for interest with fixed amount.
3. Long term commercial papers Guaranteed returns regardless of operation
outcome.
Short term Creditors 1. Commercial Banks Duty bound to provide both short term and long term financing.
2. Merchandise Suppliers Credit terms with your supply.
3. Credit Card companies Most convenient and most expensive loan terms.
4. Capital equipment supplier Desires to sell equipment and give favorable terms
because the equipment secures the loan.
5. Leasing Companies Arrange procurement of capital items
6. Receivable factors Selling of receivables
7. Deferral of payables Lagging behind in payment on payables.
8. Venture Capital Companies Private and for profit organizations that provide funds.

Other Sources of capital


1. Lending investors Licensed by BSP to provide quick financing with less papers.
requires collateral like real estate documents.
2. Government institutions Govt Agencies who provide special financing package.
3. Non Govt organizations Major programs are meant for upcoming small- scale
entrepreneurs and underprivileged.
4. Political Sources Philanthropists
5. Friends and relatives self explanatory
6. Purchase order financing The payment will be directly paid in to the banks in
exchange of production fund.
7. Employees Employees stock option plan.
8. Angel Inventors Wealthy individual who provide early stage of capital to new
companies.
5 Cs of Credit
1. Collateral Borrowers guarantee
2. Capacity Refers to borrowers ability to pay the loan.
3. Character - Personal attitude and credibility
4. Contract Agreement defining the obligations of the contracting parties.
5. Conditions Terms of payment In case of defaust as well as provision for settlement
of disputes as necessary.

WEEK 4. Start-up Operations

General Requirements in Putting Up a Business


1. Choose a Business
2. Search for a Business Name
Tips in choosing.
a. Easy to remember
b. Pleasant meaning
c. Easy to pronounce
d. Easy to spell
e. Related to the product
3. Register your business name
For the following issuance of the certificate or registration of business
name
Single proprietorship
Department of Trade and Industry ( DTI )
Partnership and Corportaions
Securities and exchange commission ( SEC )
Cooperative
Cooperatives development Authority (CDA)
Registration of business organizations ( SSS , PAG-IBIG FUND , BIR for TIN)
Permits for location , mayors , sanitary , building
4. Application in different government Agencies for Business Registration
1. City Hall - Business permit
2. Barangay Hall Barangay Clearance
3. BIR - Tax account number
4. Social Security System - SS number
5. Pagibig Pag Ibig FUND
6. Philhealth Health care system
7. Department of labor and employment Recruitment or placement agency for local.
8. Bureau of Food and Drugs Food health
9. Technical Eduscation and Skills Development Authority Technical Education
10. Department of Agriculture
11. Bureau of Fire protection
12. Banko Sentral ng Pilipinas

Consideration regarding location


1. Raw materials Location of raw materials
2. Customers - Customer available on the location
3. Transportations Facilities Availability of heavy duty transportation
4. Labor Employment on vicinity
5. Power and utilities - availability of light and water.
6. Waste Disposal Facilities Waste segregation on vicinity
7. Community Rules and regulation affecting the business in the vicinity
8 Decision - to buy or to rent.

WEEK 5 PRODUCTION OF FOOD AND SERVICES

Production Creation or processing of raw materials to produce goods and services.


Operation represents the main steps in a process.
Assembly Putting parts together to form a final product
Finishing Last part of the production process
Inspection Double checking the quality and quantity by the 5 senses.
Factors of Production
1. Land 2. Labor 3. Capital 4. Entrepreneurial Ability 5. Foreign Exchange rate.
Costs of production
1. Direct materials are material inputs that become the part of the product.
2. Direct labor Output of the workers are closely related to the product
3. Manufacturing Overhead all other costs incurred in maing of the products but do
not become part of the product. ( Usage of building , Fuel ,Salaries , transport , office )
Kinds of Productivity
1. Productivity of materials Utilization of materials by the employees.
2. Productivity of Labor Increase Production output because of improved work
methods.
3. Productivity of machines Adjustment or optimization of machineries.
Improved Product Quality
1. Control manufacturing information.
2. Control purchases and storage of raw materials
3. Control manufacturing process
4. Control finished products
5. Control measuring instrument and test equipments
6. Control corrective action
Channel Distribution
a. Direct Marketing

b. Wholesalers

c.Agents

Pricing Value placed on goods and services offered to public


Basic pricing principles
Prices over cost
Regularly upgraded to reflect market development
Adjustment accordingly for product utility , longevity , maintenance.
Set to preserver order in the market place
Fix to support corporate goal
Lower cost for lower sales price
Ensure Sale
Pricing a Service
1. Labor Cost - Salaries, wages benefits paid to the employees
2. Overhead expenses indirect expenses required to operationalize the business.
(Insurance premiums , equipment depreciation , business forms, rentals )
3. Profit - Amount earned after all cost