REVIEWER - ENTREP

Chapter 1: Planning the enterprise

Entrepreneurship - is a science of converting ideas into business.

Business - it is a commercial or mercantile activity engaged in as a means of livelihood.

Business Opportunities - exist at all times, because people need goods and services to
survive.

• What is a Business plan for?

- Business plans are written prior to setting up an enterprise

- Business plans that are written during the first few years of the enterprise in order to
guide the entrepreneur

- Business plans are focused on bringing the enterprise to a higher level of growth

The business plan serves many masters:

1. The entrepreneur who must set the navigational course

2. The investors and the financiers

3. The manager and staff of the organization so they know the strategies and programs of
the enterprise

What is a business model?

- it is a formula on how the enterprise exactly plans to make money out of the business

I. Introduction

A. Business Concept and the Business Model

Business Concept - Contains the essence of the enterprise in a concise but powerful
manner. It stresses the value of the product offering to the target customers.

Business Model - Formula on how the enterprise exactly plans to make money out of
the business.

4 Areas of money making which the business model must address:

1. How will the business raise revenues?

2. What will be the costs of the enterprise products and other costs in doing business?

3. What will be the major investments of the enterprise?

4. How will the enterprise finance the investments?

B. The business goals: Vision, Mission, Objectives, and Performance Targets

 Vision - It is a futuristic image of a business expressed in concrete terms over a time
frame.

Mission - The basic purpose for setting up the business. It tells how the business
conducts business.

Objectives - Are desired outcomes/results of business, inputs process and marketing. It

must answer the SMART criteria.

Specific

Measurable

Achievable

Realistic

Time Bound

Key results area - Subdivision of performance for various objectives.

C. Business Offering and Justification

II. Executive Summary

- This contains everything that is relevant and important to the business audience.

- It is the synthesis of the entire plan.

- This should highlight:

1. Business proponents and their partners

2. Enterprise organization and its capabilities

3. Technology providers and their expertise and experiences

4. Suppliers and all major service providers

- This can only be written last in order to capture the findings and the insights of the
other parts

III. Business Proponents

- This contains information about the business proponents or stakeholders

4 types of stakeholders:

1. Resource mobilizes and financial backers

2. Technology providers and applicators

3. Governance and top management

4. Operating and support team

This answers the following questions:

1. Who will execute the business concepts?

2. Can they do it in a successful winning way?

- It describes cash and competency contribution of proponents -

IV. Target customers and the main value proposition

Target customers - must be sufficient size, sufficient paying capacity, and have sufficient
interest to purchase the product

Main Proposition - The unique selling proposition of the enterprise

V. Market demand and supply, industry dynamics, and macro environmental forces

- The business plan should estimate the total market supply and demand for the
product offerings of the enterprise

- This should also discuss the relevant industry dynamics

1. Who are the competing enterprise?

2. Who are the suppliers?

3. What are the channels of distribution?

Macro environmental forces

Social environment

Political environment

Economical environment

Ecological environment

Technological environment

VI. Product/Service Offering

- This should contain a description, evolution, and justification of the product

VII. Enterprise strategy and enterprise delivery system

- This maps the competitive landscape and by situating the enterprises and its
competitors as to their strategies and chosen positioning.

VIII. Financial Forecasts

- Financial Returns
 -Financial Risks

- Financial contingencies

IX. Environmental and regularity compliance

X. Capital structure and financial offerings

Chapter 2: Opportunity seeking, screening, and seizing

Guide Questions:

1. What are the THREE essential features that an entrepreneur must process to discover and
get into business?

2. What are the many sources of opportunities which the entrepreneur can tap?

3. If you were to get business, what type of business would be most attractive to you?

Would it be food business, the apparel business, the transport business, the
personal care business, or would it be some other business?

4. After determining the type of business most attractive to you. How would you define the
micro market, the market, the industry, and the macro environmental business?

5. What new knowledge or technology is happening concerning the business that you chose
that would lead to new opportunities?

Answers to guide questions:

1. 3 essential features

• Entrepreneurial Mind Frame > Allows the entrepreneur to see things

• Entrepreneurial Heart Flame > Driven by passion

• Entrepreneurial Gut Game > Entrepreneur’s intuition

2. Resources of opportunities:

 Macro environment

 Industry sources

 Market sources of opportunities

 Micro market

 Consumer preference, piques, and perceptions

Types of macro environment:

1. Socio-Cultural Environment - demographics and cultural dimensions

2. Political Environment - governance system of the country

3. Economic Environment - supply and demand forces

4. Ecological Environment - all natural resources and the ecosystem

5. Technological Environment - new scientific and technological discoveries

• Industry sources of opportunities:

> Participants in an industry include:

1. Rivals or competitors in a particular type of business

2. Suppliers of input to rivals as well as suppliers if machinery and equipment

3. Consumer market segments being served by rivals

4. Substitute products or services which customers shift or turn to

5. All other support and enabling industries

> Defining Industry:

I. According to the product type or functions of the product service

II. By tracing from its most basic raw materials down to its various customers

♠ Difference between product chain and value added chain

Product chain - focuses on the volume produced or converted at each link of the chain.

Value added chain - focuses on the economic rather than the volume aspect of the chains.
Market

- Possible customers

- Characteristics

- Demand and supply

MicroMarket

- Target market/customers

Consumer Reference

- Characteristics of my target market

Market sources of opportunities - can be discovered from increased or decreased demand as

well as higher or lower supply

Micro Market - refers to the specific target market

Consumer preferences, piques, and perceptions - refer to the tastes of particular groups of
people like trends

12 R’s of opportunity screening

1. Relevance - vision, mission, and objectives if the entrepreneur

2. Resonance - the opportunity mus watch the values and desired virtues that you have or
wish to impart

3. Reinforcement of entrepreneurial interests - how does the opportunity resonate with the
entrepreneur’s personal interests, talent, and risks

4. Revenues - to determine the sales potential of the products or services you want to offer

5. Responsiveness - to costumers need and wants

6. Reach - have good chances of expanding through branches, distributorship, dealerships or

franchise outlets in order to attain rapid growth

7. Range - wide range of possible product or service offerings

8. Revolutionary impact - game changer that will revolutionize the industry

9. Returns - products with low costs of production and operations but are sold at higher
prices

10. Relative ease of implementation - will the opportunity be relatively easy to implement
for the entrepreneur?

11. Resources required - opportunities requiring fewer resources

12. Risks - calculated risks

The Pre-feasibility study - ascertain the viability of the opportunity.

Factors that are contained in a pre-feasibility study:

> Market potential and prospects - affected by number of establishments

> Availability and appropriateness of technology - most difficult task of the entrepreneur
because of many ways customers can be divided

> Project investment and detailed cost of estimates - determining the target segment

> Financial forecast and determination of financial feasibility - how saturated the market is

Chapter 3: Getting to know the market

Seven basic questions:

Why - purpose and objective for conducting the market research

What - determines the scope and the limitations of the market research to be conducted

Which - determines which segment of the market must be studied; this must be the market
segment that the entrepreneur is eyeing
Who - identifies who among the members of the selected market segment will participate in
the market research

When - determines the time and timing of the research

Where - pinpoints the relevant location of the market research

How - determines the methodology to be used for the market research

Market Research Methodologies

- can only be obtained by conducting a good market research

1. Sales Data Mining - known as the data array, frequency distribution

- construct frequency table - this table organizes data into groups of values according to
the most logical characteristics

Graphs - show visual patterns that are not easily seen in a table.

3 Company used graphs

1. Histogram ( bar graph) - consists of series of rectangles or ‘’bars’’

2. Frequency polygon - constructed by marketing the frequencies on the vertical axis

3. Pie chart - it is a circular graph divided into sections that represent the relative
frequencies or magnitudes of the grouped values

2. Focus Group Discussion (FGD) - one of the most common qualitative research tools

The FGD is an interview by a facilitator of a small group of people

4 decisions to be made:

1. Respondent selection - definition, classification and screening of respondents

2. Sample size

3. Data gathering - selection and preparation of the venue and equipment, formulation of
the discussion agenda, facilitator who is very skilled in moderating

4. Data analysis - integration of the information gathered, some observations on

respondents behavior, and listing of recommendations and report writing

3. Observation techniques - simply observe people as they go about their visual activity

Advatages of observation research

1. See what customers actually do rather than rely on what they say they do

2. To observe customers in their natural setting

3. Does not subject the researcher to the unwillingness of customers

4. Better gathered quickly and accurately through observation

Disadvantages of observation research

1. Cannot get the reasons behind the behavior

2. The researcher can only focus on the ‘’here and now’’

3. May bother on the unethical because the respondents have not agreed to be observed

2 different types of observation technique

A. Human observation - humans observe the events as they happen

B. Mechanical observation - mechanical devices are used to record event for later analysis

Guidelines in conducting observation research:

1. Determine the pre-observation objectives

2. Prepare your pre-observation tips

3. Focus on what you want to observe

4. Observation proper

5. Post-observation tips

4. Survey research

Survey - most preferred instrument for in-depth quantitative research

3 important concerns in planning a survey:

1. Sampling technique

2. Getting the sample size

3. Designing the questionnaire

> Sampling techniques are classified into probability and non-probability sampling.

Probability sampling-where the respondents are randomly selected from a population

Non-probability sampling- refers to the technique that is resorted to ‘’when its difficult to
estimate the population of the study because they are mobile or transitory in a given
location
Sample size ( 3 basic sample size)

1. Date variability of a proportion -dispersion of the data

2. Confidence level in the estimation process - the higher the confidence level desired, the
bigger the sample size needed

3.

Methods of Customer Profiling

Demographics

1. Age

2. Income classes

3. Social classes/Reference groups - often dictate what is acceptable or unacceptable

4. Ethnic backgrounds - affect the cultural beliefs of people

5. Religious beliefs - affect the cultural beliefs of people

6. Occupations -

7. Domiciles - where you live

Psychographics - the customers motivation, perceptions, preferences, and lifestyle

Motivation - goes to the roots of customer’s needs and wants

• Classified into physiological and psychological

Physiological - refer to the customer’s personal likes and dislikes

Perception - the way a person chooses to receive or interpret information

Technographics - classifies people according to their level of expertise

Market segmentation - customers with similar needs and want and similar willingness and
ability to pay can be grouped into one customer segment

Market aggregation - prefer to appeal to broader market if possible

- prefer to deal in commodities

Market mapping - refers to grouping customers and products according to certain market
variables
 The purpose of market mapping is to provide the market analyst a better understanding
of the market as a whole and to paint a clearer picture of where the different competitors
are relative to the different market segments

Chapter 4: Let The Market Know You Better

7 P’s

1. Positioning

2. Product

3. Packaging

4. Place

5. People

6. Promotion

7. Price

• Positioning

3 overlapping objectives:

1st - enterprise perspective

2nd - competitive perspective

3rd - customers’ perspective

Latitude - important to the different customer segments from their differing point of views

Longitude - product features and attributes

Main Value Proposition (MVP)

• Branding serves three purposes

1st - differentiate the product from other product

2nd - avoid a commodity image for the product

3rd - fill a space in the customer’s mind that would prevent other products from
occupying the same space

• Product - is the tangible good or the intangible service

4 general types of products

1. Breakthrough products - offer new performance benefits

 2. Differentiated products - try to claim a new space in the mind of the customer

3. Copycat products - will not make such impression on the consumer’s mind

4. Niche products - do not intend to compete directly with the giants

• Packaging - does not refer only to the wrapper or container of the product

Serves several important purposes:

1. Packaging identifies the product, describes its features and benefits

2. Packaging differentiates the product from its competitors

3. Packaging lengthens the lifespan

4. Packaging has become an environment issue by itself

5. Aforementioned purposes of packaging have increased the cost of packaging and,

therefore, the price of the product

• Place - ‘’Location. Location. Location.‘’

♣Initial Location Screening:I

1. Number of customers residing in the area

2. Density or number of customers per unit area

3. Accessories to alternative locations

4. Buying habits of customers

5. Location features

♣Final choice of location:

1. Image and location conditions

2. Exact fit to target customers

3. Clustering of competitor establishments

4. Future area development

5. Fiscal and regulatory requirements

♣ Relevant location drivers

1. Physical proximity to target market

2. Customer traffic flow

3. Industry clustering

4. Convergence of multiple industries

5. Population concentrations

6. Activity hubs
 7. Growth potential

8. Business climate

9. Cost of doing business and producing goods and services

Comparative Location Analysis - through comparing it with other locations

-Geography Determinant, six decision tensions:

1. Concentration vs Destination

2. Access vs Abundance

3. Clustered vs Dispersed

4. Developed vs Underdeveloped

5. Physical vs Virtual

6. Upscale vs Downscale

Access - ability to reach a place easily and inexpensively

Clustered competitors - allow customers to choose from a great variety of product

Downscale places have the advantage of attracting the masses who might have lower
purchasing power but greater numbers

-Atmosphere Determinant, five decision tensions:

1. Formal vs Informal

2. Exclusive vs Public

3. Conservative vs Adventurous

4. Aesthetics vs Functionality

5. Minimalist vs Maximalist

Atmosphere - refers to the state or condition of the environment

Formal atmosphere - projects a stylized, classy, highly-organized image of the place

Exclusivity - preferred atmosphere by some customers who want privacy and elitist
isolation

• People - are the ultimate marketing strategy

♣ The marketing efforts of people are organized at four levels:

1. To create customer awareness

2. To arouse customer interest

3. To educate customers as they evaluate their buying choices

4. To close the scale and deliver the products

 ♣ The enterprise can use several people or organizational modalities:

1st - outsource the people from advertising agencies

2nd - to build in-house capabilities

3rd - collaborate or enter into partnerships

Availability - means that the enterprise has the goods or services on hand

Adequate - means the product meets the quality and delivery specifications of the customer

Acceptable - means that the customer is convinced by the selling points of the product

Affordable - means the price and payment terms are right

• Promotion - explicit communication strategy adopted by an enterprise to elicit the

patronage, loyalty, and support

• Pricing - depends on the business objectives set by the enterprise

♣The enterprise should set the prices of its product or services based on its business
objectives such as the following:

1. Profit maximization

2. Revenue maximization

3. Market share maximization

4. Attainment of the desired prestige or quality leadership

5. Penetration, survival, or liquidation

6. Scarcity pricing or market skimming

7. Cost recovery

8. Subsidy pricing

9. Marginal pricing

Cost recovery pricing - charges a price that allows the organization to merely recover its full
costs

Marginal pricing - sets the price higher than the variable costs of product but lower than the
full costs

Chapter 5: The right product for the right market

The entrepreneurial mind

> 3 convergence that creates new product:

 Creative Mind - conceptualizes and designs a product that customers find some use for
it - Heart flame
 Technical Mind - the technology originator - Mind flame

 Business Mind - harnesses the potentials of new products by creating the market space
for them - Gut game

- Product Conceptualization of the creative mind

1. List possible

2. Drop the poor ideas

3. Choose best ideas

- Product development and the technical mind

- Product launch and the business mind

Technical Mind

- The new improved product is the outfit of dissastisfiers:

3 Stages of Product Development:

1. Preliminary testing

2. Establishment of specifications for the product

3. Standardization of the product process