M1S1: Introduction to Innovation and o A new form of selling or marketing change in the way of doing things; renew, alter.

ng change in the way of doing things; renew, alter. — Webster’s

o A new product New World Dictionary, 1982
Entrepreneurship
Conceptual Relationship Between Innovation and
Innovation and Entrepreneurship Entrepreneurship
Research, Development and Design:
- Innovation is the powerful instrument of entrepreneurs - Herbig et al. also stated in his literature that “Innovation
through which they convert an opportunity into a business or a requires three basic components: the infrastructure; the
- Research and development are also commonly referred to as
different service. capital; and the entrepreneurial capacity needed to make the
R&D, whose primary objective is creation and development
- A combination of entrepreneurship and innovation is a crucial first two work.”
of new products and new ways of making them.
factor to the long-term sustainability of a business. - According to the economics of innovation theory, the
- It is a search to fulfill a market need by developing new
products or methods and finding uses for scientific and entrepreneur paradigm stresses that the person who
technological inventions. establishes a new company only on the basis of a new
- It is a vital part of business clearly associated with science idea can be called an entrepreneur and entrepreneurship is
The Concept of Innovation and technology. viewed as a creative act and an innovation
- Innovation is the key function of business and which is
- The term “innovation” is a broad concept that holds all the related to entrepreneurship which is the driving force behind
activities that contribute to the efficient introduction and business growth and development. Other concepts which are
exploitation of new improved processes and products which Key Definitions of Innovation related to innovation are: invention, research and
are of critical competitive performance and long-term growth of development. — Needle, 1994
any industrial economy. - Entrepreneurship is about creating something that did not
- Albert Rubenstein defined innovation as “the process
- Innovation is related to entrepreneurship which is the driving previously exist. The creation adds value to the individual
whereby new and improved products, processes,
force behind business growth and development and the community, and is based upon perceiving and
materials, and services are developed and transferred to a
plant and/or market where they are appropriate.” capturing an opportunity. — Johnson, 2001
- Innovation is the specific tool of entrepreneurs, the means - Corporate entrepreneurship often refers to the
by which they exploit change as an opportunity for a different introduction of a new idea, new products, a new or
Invention and Concepts Related to It business or service. It is capable of being presented as a organizational structure, a new production process, or the
discipline, capable of being learned, capable of being establishment of a new organization by (or within) an existing
Invention: practiced. — Peter Drucker, 1985 organization.
- Companies achieve competitive advantage through acts of - Innovation is the specific tool of entrepreneurs, the means
- Invention is the act of creating something new and unique innovation. They approach innovation in its broadest sense by which they exploit change as an opportunity for a
[MPOSP] including both new technologies and new ways of doing things. different business or a different service. It is capable of
- Once an idea becomes a reality and economically relevant, — Porter, 1990 being presented as a discipline, capable of being learned,
it concludes to be an invention and becomes an innovation. capable of being practiced.
- An invention may give escalation to: - Entrepreneurs need to search purposefully for the
o A new method of production sources of innovation, the changes and their symptoms that
o A new process of manufacture - Innovation: the act or process of innovating; something indicate opportunities for successful innovation. And they need
o New form of organization structure newly introduced, new method, custom, device, etc; to know and to apply the principles of successful innovation
(Drucker, 1985, p. 19).
 - Drucker (1985) argued that innovation should be viewed as - Lundblad (2003) defined diffusion of innovation as “the o The rate of adoption will depend upon the sources of
an economic or social phenomenon rather than a adoption and implementation of new ideas, processes, communication, even more so than the technical
technological term. Innovation is not about making new products, or services” as she studied the diffusion of information contained in the messages (Lundblad,
inventions, but rather about recognizing how to take advantage innovation “within and across organizations” (p. 51). 2003).
of opportunities and changes: “Systematic innovation therefore - This concept is particularly important because many sectors - Time is the third element of the theory. According to Rogers
consists in the purposeful and organized search for changes, of the economy strive for organizational improvement, but (2003), who developed the Theory of the Diffusion of
and in the systematic analysis of the opportunities such “innovations often are not diffused within and across Innovation, three considerations are related to the time
changes might offer for economic or social innovation” (p. 35). organizations to achieve improvement” (p. 51). element.
This is consistent with Schumpeter’s (1934) view that - To illustrate her point, she described how research in the o The first is the innovation-decision process that
innovation arises from new combinations of materials and healthcare sector has led to the development of new describes the gap in time between when a potential
forces. advancements in clinical practice and process improvements, early adopter learns about an innovation and either
yet—despite the relatively low cost to implement many of these adopts it or doesn’t. There are several stages that the
process innovations—it often takes many years before these potential adopter goes through during this time frame.
improvements are adopted into practice, if they ever are o Second, Rogers (2003) classified potential adopters
Elements of Innovation - This means that often there is a gap between when an as “innovators, early adopters, early majority, late
innovation is developed and when it is implemented in majority, and laggards” (Lundblad, 2003, p. 54)
Innovation Criteria practice. based upon how early they were likely to adopt an
- The Theory of the Diffusion of Innovation can help us innovation.
- Matthews and Bruggemann (2015) argue that a design understand what we must do in terms of implementing o Finally, the rate of adoption describes how quickly
should be judged based on its desirability, feasibility, and steps and processes for innovations to be diffused into the the innovation is adopted. As Lundblad (2003)
viability: “An innovative design needs to be desirable, areas of practice where they are needed. noted
feasible, and aligned with a sustainable business model” o Innovation adoption tends to follow an S-shaped
curve, meaning that only a few individuals initially
adopt the innovation; but as time moves on and
There are four main elements of the theory. more and more individuals adopt, the rate increases.
Innovation Process Eventually, though, the adoption rate levels off and
- The first element of the theory is the innovation itself, whether begins to decline. (p. 54)
- Another element of innovation is the set of planned that be an idea, a product, a process, or something else - The final element of the theory is social system. Rogers
innovation processes that are required to make innovation that is new to the potential adopters. (2003) said that diffusion of innovation occurs within a social
happen. These processes must balance the need to provide o The theory says that there are several characteristics system, which might be somewhat limited, like the
customers with what they want with what is technologically of the innovation that affect its rate of adoption, members of an organization, or widespread, like all of the
feasible and financially viable. One example of an innovation including its complexity and its compatibility with consumers in a country. Some members within a social
process is design thinking whatever it will be connected within some manner system, such as “opinion leaders, change agents, and
(Lundblad, 2003). champions” (Lundblad, 2003, p. 55), influence others.
- The second element is communication, specifically the
processes used by people to share the information needed Innovation Pacing
Innovation Diffusion to develop a common understanding.
 - Innovation pacing refers to the speed with which an an innovation that is affordable, simple, and available to innovative products, processes and services that can
organization delivers innovations, and how that impacts its broader markets (Matthews & Brueggemann, 2015, p. 63) improve the effluences of an organization. In earlier time,
ability to compete: “Pacing is influenced by your innovation organizations used to develop the technologies in large
capability and the ability of your customers to adopt those Research and Development centers.
innovations” (Matthews & Brueggemann, 2015, p. 60)
Relationship Between Innovation and Technology Competitor actions

- Technology evolution drives change within an industry and - Another motivating factor for the organization to engage
Innovation Value also provides the means or entrepreneurs to respond to themselves in innovation may be the innovative actions from
the change and build competitive advantage. its competitors. Competitor innovative action forces
- Red ocean strategies focus on competing with other Entrepreneurs are able to adapt and apply science and organizations to follow them if they want to be competitive
players for market share within industries that currently exist. technological inventions to create new commercial solutions in in the market. Sometimes by adopting the competitor
This type of thinking can be a constraint if it restricts the form of new products, services and processes. innovations reduces risk because the products may have
organizations’ abilities to adapt to change and to figure out - Fig. 1.1 Cycle of Technological Development already been adopted by the market
ways to pursue blue ocean strategies, namely entirely new
markets, business models, industries, and other opportunities New ideas
that others have not yet been conceptualized or pursued.
- Blue ocean strategies are not about competing with - New ideas are also a great source of innovation nowadays.
others; they are about rendering competitors irrelevant Organizations may get new ideas sources from employees,
because they are not playing in the same field as your distributors, suppliers, customers, partners or
organization, and, more importantly, they are not matching the stakeholders. These new ideas become the motivating factors
value that you create for customers in the new market that you for the organizations to involve themselves in the innovation
opened up process.
- “Value without innovation is an improvement that may not
be sufficient for organic growth. Innovation without value External Environment
does not provide the utility that customers would be willing to
purchase. Innovation needs to be aligned with value comprised - External environment has a major impact on all
of utility, price, and cost” (Matthews & Brueggemann, 2015, p. organizations whether small enterprise or giant
62) corporations. External environment of the organizations is
considered as an uncontrollable factor. External environmental
Disruptive Innovation changes can occur because of macro shifts in the political,
economic, cultural, or technological environment. Due to these
- Disruptive innovations are different than incremental, M1S2: Introduction to Innovation and challenges’ organizations struggle to readjust with their new
evolutionary, and revolutionary innovation degrees. Driving Factors for Innovation business environment and can be another drive for innovation.
- A disruptive innovation is not a revolutionary innovation that Emerging technologies
makes other innovations, such as products and services, Categories of Innovation
better. Rather, a disruptive innovation transforms any type of - Emerging technologies have the potential for extensive
innovation that historically was expensive and complicated into innovation and it also becomes the basis to develop
 - The first category is different “Forms of innovation”. Form in - Innovation is a process by which organizations make
the sense, the use or application of the innovation. Three significant developments.
applications are considered: product, process and service - Stage 1: Idea Generation and Mobilization
innovations; The second categorization is based on the
“Degree of novelty” associated with the innovation. o The generation stage is the successful idea
generation should be focused both by the pressure
Forms of Innovation to compete and by the providing freedom to explore
new idea.
Product Innovation: Product innovation is about making valuable - Stage 2: Advocacy and Screening
changes to physical products. Product innovations appear large in
the public imagination. o In this stage, Advocacy and screening have to take
- They use a two-dimensional matrix. On one axis are
place at the same time to weed out ideas that lack
 Incremental Improvements: component changes on the other are linkage system changes.
potential without allowing stakeholders to reject ideas
o Products must be incrementally improved or In this analysis Incremental and Radical innovation are
impulsively solely on the basis of their novelty.
adjusted as problems are identified in product, polarized as being at opposite extremes. However the analysis
- Stage 3: Experimentation
service or new requirements demand emerges. introduces two intermediate stages between these two
 Additions to product families: extremes: Modular innovation and Architectural innovation
o The experimentation stage tests the sustainability
o It becomes vital work of product design team to keep of ideas for a particular organization at a
on adding products to the product families. Changes associated with Types of Innovation
particular time and in a particular environment. It
 Next-generation products: is important to determine who will be the customer
o One of the main activities of the product design team - Incremental innovation refines and improves an existing
and for what purpose they will use the innovation.
is to work and produce next-generation products design, through improvements in the components.
- Stage 4: Commercialization
or new models of products. Incremental innovations are improvements not changes, the
 New Core products: components are not fundamentally changed
o “An invention is considered an innovation only
o They may also work on designing radical new
- A radical innovation involves in totally developing a new
once it has been commercialized. “ In this stage,
design by using new components configured and
products or new core products that expand the the organization should verify that the innovation
incorporated into the design in a new way. Radical innovations
portfolio significantly and often involve radically new actually solves the problems of its customers or not
are comparatively rare.
processes to create them. and should analyze the costs and benefits coming out
- In modular innovation the architecture and configuration
from the innovation. The commercialization stage is
associated with the existing system of an established
Service innovations: typically take the form of a new method of an important stage which is similar to advocacy in that
product are used and it employs new components with
providing a service. Sometimes even take the form of an entirely new it takes the right people to progress the idea to the
different design concepts.
service. next developmental stage.
- According to Tushman and Anderson(2004), architectural
- Stage 5: Diffusion and Implementation
innovations are the changes in the subsystems and linking
Process Innovations: Process innovation is the introduction of a new
mechanisms that are necessary to obtain the best benefit
or improved method for the production that adds value to the o The diffusion is the process of gaining final
from minor technological changes.
organization. recognition of an innovation and implementation is
Stages in the Innovation Process [IAECD] the process of setting up the structures, maintenance
Topology in Innovation and resources needed to produce it.
 should ideally be in a collaborative environment in o Innovation in production
which people can work together to develop ideas. o New usage of materials
The Innovation Process [ITCCCDI] - Step 5: Combine and evaluate ideas o Creator of market
- Step 1:Innovation starts with a problem.
o The innovation process starts with a problem or o After collection of ideas from various activities, DEFINITION
probably with an objective. Businesses may be the next step is to combine similar ideas into idea - Entrepreneurship is the process of creating incremental
considering it as a problem, if it is unable to achieve groups or big ideas. Each idea group can be wealth. The wealth is created by those individuals who
its objectives. All businesses have problems like – processed as a single idea, thus making the next assume the major risk in terms of equity and time or providing
how to improve sales; what kind of alteration in steps of the process more efficient. Then evaluate value for others.
products could make it improved; which processes ideas with an evaluation matrix in which promising - Robert Hisrich (1985) defined entrepreneurship in a relatively
could be more efficient and helpful in costs reduction. ideas are compared to relevant business criteria. comprehensive as: “A process of creating something
- Step 2:Transform the problem into a challenge. - Step 6:Develop the new ideas different with value by devoting the necessary time, and
effort assuming the accompanying financial, psychological,
o Once a problem has been identified, it needs to be o Developing new ideas depends on the innovation and social risks, and receiving the resulting rewards of
transformed into a challenge. A challenge is a challenge and the kind of ideas generated. New monetary and personal satisfaction.”
short, brief question that calls for the creative product ideas might be developed into samples.
solutions. For instance challenges include: Process efficiency ideas may be modeled. Process of Entrepreneurship
 In what ways a product can be improved? • - Step 7: Implementing the idea - Creation Process
How wastage can be reduced in o Creating something new of value.
manufacturing process? o This is the final stage where new product is ready o The creation has to have a value to the
 Formulating a good challenge that to manufacture, reorganizing the processes or entrepreneurship and value to the audience for which
addresses problem is very important to the organizing whatever is required to execute the it is developed
innovation process. developed ideas into implementations that create - Devotion of the necessary time and effort
- Step 3: Challenge others to give suggestive solutions value for the business. It is at this step that creative o Only going through the entrepreneurial process
ideas grow up and become innovations appreciate the significant
o Once we have an incredible innovation challenge, - Assuming the necessary risks
there is a need to communicate it to the M2S1: Entrepreneurship o The risks take a variety of forms, depending on
colleagues or with others such as business the field of effort of the entrepreneur, but usually
partners, customers or even the public. So in this center around financial, psychological, and social
INTRODUCTION
manner there will be idea generations from them and areas.
- Entrepreneurs are the major power houses of a business
hence there will be a creative solution to the - Rewards
or the social sectors, who play a vital role in the economic
challenges. o The most important of these rewards is
development of a country. Without entrepreneurs, there
- Step 4:Collaborative Idea generation independence, followed by personal satisfaction.
would be no business or social development.
- Entrepreneurship is one of the four mainstream economic o For profit entrepreneurs, money becomes the
o Idea generation might be in the form of a indicator of the degree of success.
factors: Land, Human power, Capital and Entrepreneurship
brainstorming activity or a team may be assigned - Entrepreneurship is a dynamic activity, which helps the
to devise and develop ideas. The teams generate entrepreneur to bring changes in: Entrepreneurship and Philosophy
more creative than individuals. Idea generation o The process of production - Fundamentally, Entrepreneurship is a human creative act,
 involved in building a team of people with complementary skills o Person
and talents. - Entrepreneur is one who is endowed with more than o Organizer
- Entrepreneur Behavior average capacities in the task of organizing and o Innovator
o Initiative taking, organizing, reorganizing of coordinating the factors of production, i.e. land, labour capital o Risk-bearer
social/economic resources and acceptance of risk or and enterprises. —F.A. Walker o Creator
failure. o Visualizes

Entrepreneurship Defined - Entrepreneurship involves doing things in a new and better

way. Entrepreneurial role calls for decision making under - Entrepreneurship
- Robert Hisrich (1985) defined entrepreneurship in a relatively
uncertainty. —McClelland o Process
Comprehensive as: “A process of creating something
o Organization
different with value by devoting the necessary time, and
effort assuming the accompanying financial, psychological, - An entrepreneur is an economic man who tries to maximize o Innovation
and social risks, and receiving the resulting rewards of his profits by innovation, involve problem solving and gets o Risk-bearing
monetary and personal satisfaction.” satisfaction from using his capabilities on attacking problems. o Creation
—E.E. Hagen o Vision
Definitions of Entrepreneur
- An entrepreneur as one who always searches for change,
responds to it and exploits it as an opportunity. Innovation - Entrepreneurs are a product of particular social condition in
is the basic tool of entrepreneurs, the means by which they which they are brought up and it is the society which shapes
individuals as entrepreneurs. —Max Weber
M2S2: Entrepreneurship
exploit change as an opportunity for a different business or
service. —Peter F. Drucker Historical Perspectives
- Entrepreneurs are people who have the ability to see and - The term entrepreneur comes from the French word and
- Entrepreneurs as those people who have the ability to see translated means ‘to undertake’ or ‘go-between.’ Meaning
and evaluate business opportunities, together with the evaluate business opportunities, the ability to gather
resources to take advantage of them; and the ability to initiate those, who undertook the risk of new enterprise.
necessary resources to take advantage of them and to initiate
appropriate action to ensure success. — International Labour action to ensure success.
- In the Earliest Period: An entrepreneur was viewed as a ‘Go-
Organization (ILO) between’, who attempts to establish trade Routes and
- Frank Young defined entrepreneur as a change agent
signs contracts with many persons (forerunners of today’s
venture capitalist) to Sell goods; while the capitalist was a
- A decision maker whose entire role arises out of his alertness
- Akhouri describes entrepreneur as a character who passive risk bearer, the merchant adventurer who took the
to hitherto unnoticed opportunities. —Kirzner – 1973
combines innovativeness, readiness to take risk, sensing active role in trading, bearing all the physical and emotional
opportunities, identifying and mobilizing potential resources, risks.
- An entrepreneur is a person who buys factor services at
certain prices with a view to selling its product at uncertain concern for excellence, and who is persistent in achieving the
prices. —Richard Cantillon goal.
- In the Middle Ages: The term ‘entrepreneur’ was used to
Entrepreneur and Entrepreneurship describe a person managing large production projects. In
this case, the person would not take any risks but would
- Who uses available resources in novel ways. —
- Entrepreneur merely manage the project using the resource provided
Schumpteter – 1934
 Importance of Entrepreneurship progress is the creation of ample job opportunities
- 17th Century: Richard Cantillon, a noted economist of the - Entrepreneurial endeavours have had a large-scale impact for the people of the country. Small-scale
1700s, developed theories of the entrepreneur and is regarded on economic conditions, business environment and job enterprises are pivotal in training locals with new skills
as the founder of the term. He Viewed the entrepreneur as a generation in various countries. In fact, they make a to acquire entry-level jobs and gaining experience
risk taker who “buys at certain price and sells at an significant contribution to the country’s GDP and are often to become skilled professionals. Start-ups are
uncertain price, therefore operating at a risk.” Richard referred to as a national asset. Gone are the days when responsible for generating a majority of the total
Cantillon used the term entrepreneur in the business context. starting a business of your own was considered risky or only fit job opportunities in the marketplace
for brick and mortar shops. Today, entrepreneurial instincts
are encouraged and held in high regard. However, - Promotes social change:
- 18th Century: In the 18th century the person with capital was achieving this feat was not easy, especially since it was difficult o The introduction of new products and services
differentiated from the one who needed capital. In other words, to find the right marketplace for the right idea. With decreases the dependency of the country’s
Entrepreneur was distinguished from the capital provider. modernisation and the constantly changing pace of life, population on obsolete organisations or
Many of the inventions developed during this time as was the entrepreneurial ventures with promising potential are now technologies, giving way to better quality of living.
case with the inventions of Eli Whitney and Thomas Edison sponsored by government organisations and even by other Bridging the gap between the scarcity of a product
were unable to Finance invention themselves. Both were established entrepreneurs. and its demand can help create a positive impact
capital users (entrepreneurs), not capital providers (venture - Popularity of innovative ideas: on people and bear fruitful results from a business
capitalists.) Whitney used expropriated crown property. o Entrepreneurial endeavours are witnessing a viewpoint.
Edison raised capital from private sources. growth in popularity, thanks to the innovative ideas
that start-up owners have brought to the fore. People - Promotes research and development:
- 19th and 20th Centuries: In the late19th and early 20th with an entrepreneurial instinct are coming forward o While it is important to produce new business ideas, it
centuries, entrepreneurs were viewed mostly from an with excellent business ideas and plans that are is also essential to cultivate the ideas for the
economic perspective. The entrepreneur” contributes his capable of transforming the landscape of the development of a successful business structure.
own initiative, skill and ingenuity in planning, organizing and business world. This not only contributes to the With the rise in entrepreneurial endeavours and
administering the enterprise, assuming the chance of loss and changing dynamics of business but also creates a minds, the need to see an idea through execution is
gain.” platform for better, more efficient ideas to be crucial. Entrepreneurship promotes the importance
translated into reality. of research and development in testing the
- In the middle of the 20th century, the notion of an longevity of an idea and its subsequent commercial
Entrepreneur as an innovator was established. Innovation, - Economic advancement: success.
the act of introducing something new, Is one of the most o Setting the wheels in motion for economic
difficult tasks for the entrepreneur. development, entrepreneurial ventures make a Role of Entrepreneurship in Economic Development
significant contribution to national income. The - The market for goods and services is the place where
economy of a country is directly proportional to households spend their money buying goods and
- According to the Schumpeter “The entrepreneur is the amount of international business garnered by services produced by firms. In other words, is the place
someone, who carries out New combination by such things a domestic organisation and the money earned by where firms sell the goods and services they have produced,
as: local employees receiving a revenue paid by households. This market
o Introducing new products and processes represents the place where money and goods are
o Identifying new export market or source of supply - Employment generation: exchanged. In this case, the flow of money (green arrow in the
o Creating new type of organization o One of the driving forces for a country’s economic diagram below) goes from households to firms, in exchange for
finished products, which flow from firms to households (red
 arrow). - Factors of production flow form households to firms, so
they can produce more goods and services. – True

- The introduction of new products and services decreases

the dependency of the country’s population on obsolete
organisations or technologies, giving way to better quality of
living – True

- The term entrepreneur comes from the French word and

translated means ‘to undertake’ or ‘go-between.’ – True

- The market for factors of production is the place where

M2: Formative Questions - Entrepreneurship promotes the importance of research and
households offer their labour, capital and other factors
development in testing the longevity of an idea and its
such as land, receiving an income for their use. Firms use
subsequent commercial success. – True
these factors in their production. In this case, money flows - Entrepreneurship is a very dynamic activity which involves
from firms to households (green arrow in the diagram below) in the process of production, Innovation in production, new usage - People with an entrepreneurial instinct are coming forward
the form of wages in exchange for labour, interests for capital of materials, creator of market. – True with excellent business ideas and plans that are capable of
and rent for the use of land. Factors of production flow form
transforming the landscape of the business world. – True
households (red arrow) to firms, so they can produce more - Entrepreneurship requires the devotion of necessary time
goods and services and effort. – True - A capitalist is a passive risk bearer. – True

- An entrepreneur as one who always searches for change, - While it is important to produce new business ideas, it is also
responds to it and exploits it as an opportunity. – True essential to cultivate the ideas for the development of a
successful business structure. – True
- Entrepreneurship also involves creation of wealth. – True
- With modernisation and the constantly changing pace of life,
- Entrepreneurs must always avoid risks. – False entrepreneurial ventures with promising potential are now
sponsored by government organisations and even by other
- Entrepreneur behavior is about initiative taking, organizing, established entrepreneurs. – True
reorganizing of social/economic resources and acceptance of
risk or failure. – True - Money flows from firms to households in the form of
- When we combine both diagrams, we get the circular-flow
diagram, as shown below. The exchanges made in the wages in exchange for labour, interests for capital and rent for
- The economy of a country is directly proportional to the the use of land. – True
economy imply a redistribution of rent according to the amount of international business garnered by a domestic
diagram, and the creation of value makes the economy grow organisation and the money earned by local employees. – - People with an entrepreneurial instinct are coming forward
True with excellent business ideas and plans that are capable of
transforming the landscape of the business world. – True
 enterprise by variety of factors including: - Technical Entrepreneurs
 Unemployment o A technical entrepreneur is essentially compared to a
- Market represents the place where money and goods are  Disagreement with previous employer ‘craftsman.’ He develops improved quality of
exchanged. – True  Challenge goods because of his craftsmanship. He
concentrates more on production than marketing.
- The market for goods and services is the place where
households spend their money buying goods and Classification of Entrepreneurs According to Types of Business - Non-Technical Entrepreneurs
services produced by firms. – True - Business Entrepreneurs o Non-technical entrepreneurs are those who are not
B o Business entrepreneurs are individuals who conceive concerned with the technical aspects of the
- The most important rewards for the entrepreneur are an idea for a new product or service and then product in which they deal. They are concerned
independence and personal satisfaction – True creates a business to materialize their idea into only with developing alternative marketing and
- Entrepreneurship involves the creation process of reality. distribution strategies to promote their business.
something new of value – True
- Trading Entrepreneurs - Professional Entrepreneurs
- Entrepreneurship is not an economic factor – False
o Trading entrepreneur is one who undertakes trading o Professional entrepreneur is a person who is
- Entrepreneurship is a human creative act, involved in building activities and is not concerned with the interested in establishing a business, but does not
a team of people with complementary skills and talents. – True manufacturing work have interest in managing or operating it once it is
established.
- One of the driving forces for a country’s economic progress is - Industrial Entrepreneurs
the creation of ample job opportunities for the people in o Industrial entrepreneur is essentially a Classification of Entrepreneurs According to Motivation
the country. – True manufacturer, who identifies the potential needs - Pure Entrepreneurs
of customers and modifies a product or service to o A pure entrepreneur is an individual who is motivated
- A market is a place where firms sell the goods and services meet the marketing needs by psychological and economic rewards.
they have produced, receiving a revenue paid by households o He undertakes an entrepreneurial activity for his
– True personal satisfaction in work, ego or status.
- Corporate Entrepreneurs
o Corporate entrepreneur is a person who - Induced Entrepreneurs
M3S1: Classifications of Entrepreneurship
demonstrates his innovative skill in organizing o Induced entrepreneur is one who is induced to take
and managing corporate undertaking. up an entrepreneurial task due to the policy
Entrepreneurial Motivation
- Pull Influence measures of the government that provides
- Agricultural Entrepreneurs assistance, incentives, concessions and necessary
o Some individuals are attracted towards business
o Agricultural entrepreneurs are those entrepreneurs overhead facilities to start a venture
ownership by positive motives.
who undertake agricultural activities such as
 Independence
raising and marketing of crops, fertilizers and other - Motivated Entrepreneurs
 Market Opportunity
inputs of agriculture. o New entrepreneurs are motivated by the desire for
 Financial Incentives
 Community Service self fulfillment.
- Push Influence o They come into being because of the possibility of
Classification of Entrepreneurs According to Technology making and marketing some new product for the
o Many people are pushed into founding a new
 use of consumers. - Classical Entrepreneurs to adopt opportunities to make changes in
o A classical entrepreneur is one who is concerned production formulae even at the cost of severely
- Spontaneous Entrepreneurs with the customers and marketing needs through reduced returns.
o These are persons with initiative, boldness and the development of a self-supporting venture.
confidence in their ability, which activate, them, o He is a stereotype entrepreneur whose aim is to
under age entrepreneurial activity. Such maximize his economic returns at level consistent
entrepreneurs have a strong conviction and ‘with the survival of the ‘firm with or without an M3S2: Entrepreneurship Skills
confidence in their in born ability. element of growth.
General Management Skills
- Strategy Skills
Classification of Entrepreneurs According to Growth o An ability to consider the business as whole, to
- Growth Entrepreneurs Classification of Entrepreneurs According to Other Classification understand how it fits within its market place, how
o Growth entrepreneurs are those who necessarily - Innovating Entrepreneurs it can organize itself to deliver value to it’s customers,
take up a high growth industry which has o Innovating entrepreneurs are characterized by and the ways in which it does this better than it’s
substantial growth prospect aggressive assemblage in information and competitors.
analysis of results, deriving from a novel combination
- Super-Growth Entrepreneurs of factors. - Planning Skills
o Super-growth entrepreneurs are those who have o An ability to consider what the future might offer,
shown enormous growth of performance in their how it will impact on the business and what needs to
venture. be done to prepare for it now.
o The growth performance is identified by the liquidity of
funds, profitability and gearing. - Adoptive or Imitative Entrepreneurs - Marketing Skills
Classification of Entrepreneurs According to Stages of o Imitative entrepreneurship is characterized by o An ability to see the past firm’s offering and their
Development readiness to adopt successful innovations by features, to be able to see how they satisfy the
- First-Generation Entrepreneurs entrepreneurs. customer’s needs and why the customer finds
o A first-generation entrepreneur is one who starts an o They imitate techniques and technology innovated by them attractive.
industrial unit by innovative skill. others.
o He is essentially an innovator, combining different - Financial Skills
technologies to produce a marketable product or - Fabian Entrepreneurs o An ability to manage money; to be able to keep
service. o In this classification entrepreneurs are very cautious track of expenditure and to monitor cash-flow; but
and skeptical in experimenting with any change in also an ability to asses investments in terms of their
- Modern Entrepreneurs their enterprise. potential and their risks.
o A modern entrepreneur is one who undertakes o They neither have a will to introduce new changes nor
those ventures, which go well along with the the desire to adopt new methods innovated by the - Project Management
changing demand in the market. most enterprising entrepreneurs. o An ability to organize projects, to set specific
o They undertake those ventures, which suit the current objectives, to set schedules and to ensure that the
marketing needs. - Drone Entrepreneurs necessary resources are in the right place at the right
o These entrepreneurs are characterized by a refusal time.
 Entrepreneurial Skills - Opportunity to reap unlimited profits
- Time Management o The profits their business can earn are an
o An ability to use time productively, to be able to important motivating factor in the entrepreneur’s
prioritise important jobs and to get things done to decisions to launch companies.
schedule. o One venture capitalist that has financed many small
People Management Skills companies says, “Starting your own company has
- Leadership Skills always been the best way to create wealth. And
o An ability to inspire people to work in a specific even if you do not get rich doing it, you will still have
way and to undertake the tasks that are necessary for more fun”
the success of the venture.
o Leadership is about more that merely directing - Opportunity to contribute to society and recognized for
people; it is also about supporting them and helping your effort
them to achieve the goals they have been set o Often, small business owners are among the most
Benefits of Entrepreneurship respected and most trusted members of their
- Opportunity to gain control over your destiny communities. Business deal on trust and mutual
- Motivation Skills
o Owning a business provides entrepreneurs with respect are the hallmark of many established small
o An ability to enthuse people and get them to give
independency and the opportunity to achieve what is companies.
their full commitment to the task in hand.
important to them. o These owners enjoy the trust and recognition they
o Being able to motivate demands and understanding
o Entrepreneurs want to “call the shots” in their live receive from the customer whom they served
of what drives people and what they expects from
and they used their business to bring this desire to faithfully over the years. Playing a vital role in their
their jobs.
life. local business systems and knowing that their work
o They reap the intrinsic rewards of knowing they are has a significant impact on how smoothly the nation’s
- Delegation Skills
o An ability to allocate tasks to different people. driving forces behind their business economy functions is yet another rewards for small
o Effective delegation involves more than instructing. business managers.
- Opportunity to reach your full potential
o It demands a full understanding of the skills that
o Too many people find their work boring, - Opportunity to do what you enjoy
people posses, how they use them and how they
unchallenging, and unexciting but to most o A common sentiment among small business owners
might be developed to fulfill future needs.
entrepreneurs there is little difference between is that their work is no work.
work and play o Most successful entrepreneurs choose to enter their
- Communication Skills
o The two are synonymous. Entrepreneurs business particular business fields because they have an
o An ability to use spoken and written language to
becomes the instrument for self-expression and self- interest in them and enjoy those lines of work.
express ideas and inform others.
actualisation. This is their talent, energy, limits o They have their avocation(hobbies) as their vocations
entrepreneur’s growth and that means entrepreneurial (work) and are glad they did “find a job doing what
- Negotiation Skills
situations. you love, and you will never have to work a day in
o An ability to understand what is wanted from
saturations, what is motivating others in that your life.”
situation and recognise the possibilities of maximizing
the outcomes for all parties. Limitations of Entrepreneurship
- Uncertainty of income
 o Opening and running a business provides no o A question frequently raised by would-be
guarantees that an entrepreneur will earn enough entrepreneurs is whether they will be able to find a - Innovation
money to survive. job and go back to old job if their ventures fail. o is the ability to apply creative solutions to those
problems and opportunities in order to enhance
- Risk - Family and Social Risk people’s lives or to enrich society.
o Starting or buying a business involves risk, and the o Starting a new venture uses much of the
higher the reward, the greater the risk entrepreneur’s energy and time. Consequently, his or o Four Types of Innovation
entrepreneurs face. her other commitments may suffer.  Invention
o This is why entrepreneurs tend to evaluate risk o Entrepreneurs, who are married, and especially those  described as the creation of a new
carefully. with children, expose their families to risk of an product, service or process.
incomplete family experience and the possibility
- Long hours and hard work of permanent emotional scars. In addition, old  Extension
o Business start-ups often demand that owners keep friends may vanish slowly because of missed ‘get-  the expansion of a product, service
nightmarish schedule. together or process.

- Lower quality life until the business gets established - Psychic Risk  Duplication
o The long hours and hard work needed to launch a o The greatest risk may to the well-being of the  defined as replication of an
busines can take their toll on tie on the rest of the entrepreneur. Money can be replaced, a new house already existing product, service or
entrepreneurs’ life can be built, children, and friends can be adapted. process
However, some entrepreneurs who have suffered
- High level of stress financial catastrophes have been unable to bounce  Synthesis
o Starting and managing a busines can be an incredibly back, at least immediately. The psychological  the combination of existing
rewarding experience, but it also can be highly impact has proven to be too severe for them. concepts and factors into a new
stressful. formulation.

- Complete responsibility
o It is great to be boss, but many entrepreneurs find Entrepreneurship, Creativity, and Innovation
that they must make decision on issues about - Entrepreneurship = Creativity + Innovation M3: Formative Questions
which they are not knowledgeable. - Studies show that successful entrepreneurs tend to be
- Creativity confident individuals who see the problem in launching a
Risks for Entrepreneurs o is the ability to develop new ideas and to discover new venture but believe in their own ability to overcome these
- Financial Risk new ways of looking at problems and opportunities. problems. – True
o In most new ventures, the individual puts a o Developing creativity is a process of changing the
significant portion of his or her saving or other way you look at things. To do this individual must look - Super-growth entrepreneurs are those who have shown
resources at stake. This money or resources will, in for different relationships between people and things. enormous growth of performance in their venture. The growth
all likelihood, be lost if the venture fails. Another way to be more creative is to view people performance is identified by the liquidity of funds, profitability
and things in terms of how they can be used to satisfy and gearing. – True
- Career Risks needs (both as resources and problem solvers).
- Fabian entrepreneurs are characterized by a refusal to True
adopt opportunities to make changes in production formulae - Sometimes new entrepreneurs experience a low quality of
even at the cost of severely reduced returns. – False life until the business is established. – True - By the very nature of their work entrepreneurs are leaders. –
True
- Corporate entrepreneur is a person who demonstrates his - Starting a new venture uses much of the entrepreneur’s
innovative skill in organizing and an organization’s energy and time. – True - Time management skills is the ability to use time
undertaking. – True productively – True
- Duplication is defined as replication of an already existing
- Non-Technical entrepreneur is essentially compared to a product, service or process. – True
‘craftsman.’ – False M4: ENTREPRENEURIAL PROCESS
- Invention is described as the creation of a new product,
- A classical entrepreneur is one who is concerned with the service or process. – True
Introduction to Entrepreneurial Process
customers and marketing needs through the development of
- The decision to start a new company occurs when an
a self-supporting venture. – True - Marketing skills is the ability to see how the company can
individual perceives that forming a new enterprise is both
satisfy the needs of the customers. – True
desirable and possible. The entrepreneurial process can be
- Innovating entrepreneurs are characterized by aggressive
viewed in the four stages:
assemblage in information and analysis of results, deriving
- Business Entrepreneurs are individuals who conceive an o pre-Startup stage;
from a novel combination of factors. – True
idea for a new product or service and the creates a business o Startup stage;
to materialise their idea into reality – True  can be further divided into four stages:
- Industrial entrepreneur is essentially a manufacturer. –
Identifying opportunities, evaluating
True
- A pure entrepreneur is an individual who is motivated by opportunities, feasibility study and
psychological and economic rewards – True developing business plan
- The risks that the entrepreneur takes in starting and or
o early growth stage and
operating their own business are varied. – True
- Professional entrepreneur is a person who is interested in o latter growth stages.
establishing a business, but does not have interest in
- Delegation skills is the ability to allocate task to different managing or operating it once it is established. – True The Entrepreneurial process
people – True - involves finding, evaluating, and developing an
- Leadership skills is the ability to get the enthusiasm of the opportunity by overcoming the strong forces that resist the
- Entrepreneurs face a lot different types of risks. – True employees so that they will become committed to the creation of something new.
achievement of company goals. – False
- Being the boss is very difficult at times because you have to - Pre-Startup Stage
make decisions in which you are not knowledgeable. – True - Communication skills is the ability to transmit ideas well. o The period during which entrepreneurs plan the
– True venture and the preliminary work of obtaining
- Planning skills is ability to consider what the future might resources and organizing prior to start-up.
- Motivation skills is the ability to inspire people to work in a o During this preliminary phase, ideas evolve from a
offer. – True
specific way. – False creative process to the point of being consciously
- Strategy skills is an ability to consider as a whole and to perceived as commercial endeavors.
- Successful entrepreneurs are creative decision makers –
understand how it fits within a marketplace. – True Entrepreneurs have already begun to believe that
their ideas are feasible and they become fascinated needed at Startup, obtain feasibility plan and to achieve
by visions of their enterprise necessary licenses, projected sales mix of products and
premises, leases, facilities services as summarized in
 Business Concept Defined and equipment feasibility plan.
 What is the purpose of the  Revenue:
business?  The purpose of this objective is to
 What does the entrepreneur want - Startup Stage achieve cash flow within budget
to accomplish with the business? o The initial period of business when the entrepreneur based on sale volume and price
must position the venture in a market and make projections to meet targets above
 Product Market Study necessary adjustments to assure survival. variable costs with appropriate
 Product Research o It is the initial period of business. For companies with operating margins
o Is the product or service products or services to sell, it is the first stage into  Growth:
needed? revenue-generating activity  The purpose of this objective is to
o Is it realistic? realize incremental growth within
 Market Research o Meeting operating objectives: seasonal pattern of forecasts to
o Who will buy?  Ideally the venture will generate projected maintain balance of growth with
o Where are they? sales or do slightly better. If sales are ability to underwrite inventory
o What niche? significantly below projections the venture materials and human resources
risks of running out of cash and closing  Position:
o What competitors exist?
 The purpose of this objective is to
o Positioning the Enterprise: solidify a long-term position in
 Financial Plan
 Every successful business starts with a pre- appropriate markets as a result of
 Financial Projections
conceived business idea, which includes a adaptation during start up and to
o What cash is needed?
concept of the product or service, markets identify market strategy for niches
o How will income be or opportunities in new products,
and growth potential. However,
generated? services or markets during start-up.
entrepreneurs often find that reality is quite
o What expenses are
different from what was projected. Two
expected? - Early Growth Stage
conditions are important here:
o What is invested? o A period of often rapid development and growth when
 The business must survive in the
o Burrowed? short run, and the venture may undergo major changes in markets,
o What is needed to meet  The business must be positioned finances, and resource utilization
operating requirements? to achieve long-term objectives. o Once the venture is positioned, successful
businesses will experience a stage of early growth.
 Pre-Startup Implementation o Startup Stage Objectives This is a period of intense monitoring, and growth can
 Getting ready to start  Sales occur at different rates along a long continuum,
o The entrepreneur must  The purpose of this objective is to ranging from slow growth through incrementally
find resources, attain monthly sales volume as higher sales to explosive growth through quantum
purchase, beginning projected at prices projected in changes in consumer demand.
inventory, hire those  Very Slow
  Sales increase slowly because of o The solution: Proper budgeting and planning are many (and all) hats. If you only had more time, you
the nature of the product or the critical to maintaining cash flow, but even these won’t could accomplish so much more!
limited market always save you from stressing over bills. One way to o The solution: Make time. Like money, it doesn’t grow
 Perceived Comfort Zone improve cash flow is to require a down payment for on trees, of course, so you have to be smart about
 Incremental growth is within a your products and services. Your down payment how you’re spending it. Here’s how:
comfort zone of the venture’s should cover all expenses associated with a given  Create goal lists: You should have a list of
resources and owner’s resources project or sale as well as some profit for you. By lifetime goals, broken down into annual
and owner’s profit objectives requiring a down payment, you can at least rest goals, broken down into monthly goals, then
 Very Rapid assured you won’t be left paying others’ bills; by broken down into weekly goals. Your weekly
 Sales increases rapidly as new padding the down payment with some profit, you can goals, then will be broken down into specific
products gain wide acceptance in pay your own. tasks by day. In this manner, what is on your
new markets task list in any given day is all you need to
- Hiring Employees do to stay on track with your lifetime goals
- Later Growth Stage o The challenge: Do you know who dreads job  If any tasks do not mesh with your goals,
o The evolution of a venture into a large company interviews the most? It’s not prospective candidates eliminate them
with active competitors in an established industry — it’s entrepreneurs. The hiring process can take  If any tasks do not absolutely have to be
when professional management may be more several days of your time: reviewing resumes, sitting completed by you, delegate them
important than entrepreneurial emotions through interviews, sifting through so many  Consistently ask yourself: “Is what I’m doing
o If the enterprise proves successful in the early unqualified candidates to find the diamonds in the right now the absolute best use of my time?”
growth stage and has momentum, it can find itself rough. Then, you only hope you can offer an
in competition with larger companies. This is the later attractive package to get the best people on board - Delegating tasks
growth stage, when the rate of growth may be slower and retain them. o The challenge: You know you need to delegate or
and the industry has attracted competitors. o The solution: Be exclusive. Far too many helps outsource tasks, but it seems every time you do
wanted ads are incredibly vague in terms of what something gets messed up and you have to redo it
Challenges to Entrepreneurship qualifications candidates must have, what the job anyway.
duties are, what days and hours will be worked, and o The solution: Find good employees (see above) and
- Cash flow management what wages and benefits will be paid. You can save good outsourced contract help, for starters. You might
o The challenge: Cash flow is essential to small yourself a ton of time by pre-qualifying candidates have to pay a little more for it, but the savings in time
business survival, yet many entrepreneurs struggle to through exclusive help wanted ads that are ultra- (and the resulting earning potential) more than make
pay the bills (let alone themselves) while they’re specific in what it takes to be hired at your firm, as up for it.
waiting for checks to arrive. Part of the problem stems well as what the day-to-day work entails. Approach
from delayed invoicing, which is common in the your employee hunt the same way you would - Choosing what to sell
entrepreneurial world. You perform a job, send an approach a customer-centric marketing campaign: o The challenge: You know you could make a mint if
invoice, then get paid (hopefully) 30 days later. In the through excellent targeting. you just knew what products and services to sell.
meantime, you have to pay everything from your You’re just unsure how to pick a niche.
employees or contractors to your mortgage to your - Time Management o The solution: Admit that you’re weak in identifying
grocery bill. Waiting to get paid can make it difficult to o The challenge: Time management might be the prosperous niches, and delegate the task to someone
get by — and when a customer doesn’t pay, you can biggest problem faced by entrepreneurs, who wear who is strong in this area. You don’t have to hire a
risk everything.
 huge, expensive marketing firm; rather, recruit a you. As they do, develop systems and business creeps in, and you feel like giving up.
freelance researcher who has experience in whatever processes that allow you to delegate tasks without o The solution: Being able to overcome self-doubt is a
type of field you’re considering entering (retail sacrificing quality. Your business will grow slow and necessary trait for entrepreneurs. Having a good
ecommerce, service industry, publishing, etc.). Have steady, and you’ll be able to solve problems while support system will help: family and friends who know
them conduct market research and create a report they’re small. your goals and support your plight, as well as an
with suggested niches, backed by potential profit advisory board of other entrepreneurs who can
margins and a complete SWOT analysis: Strengths, - Strapped Budget objectively opine as to the direction of your business.
Weaknesses, Opportunities and Threats. o The challenge: Even though cash flow is fine, it
seems you never have enough in your budget to
- Marketing Strategy market your company to its full potential.
o The challenge: You don’t know the best way to o The solution: Unless you’re one of the Fortune 500
market your products and services: print, online, (and even if you are), every entrepreneur struggles M4: Formative Question
mobile, advertising, etc. You want to maximize your with their budget. The key is to prioritize your
return on investment with efficient, targeted marketing marketing efforts with efficiency in mind — spend
that gets results. Every successful business starts with a pre-conceived business
your money where it works — and reserve the rest for
o The solution: Again, if you’re not adept at creating idea, which includes a concept of the product or service, markets and
operating expenses and experimenting with other
growth potential – Positioning
marketing plans and placing ads, it’s a good idea to marketing methods.
outsource your marketing strategy to someone who
It is the initial period of business. For companies with products or
is. At this point, all you need is a core marketing plan: - Business Growth
services to sell, it is the first stage into revenue-generating activity –
what marketing activities will you undertake to o The challenge: We’re assuming you are growing, not
Startup Stage
motivate purchases? Give your planner a budget and that you can’t grow, and you’ve come to the point at
tell them to craft a plan that efficiently uses that which you can’t take on any more work in your current
This stage can be divided into: identifying opportunities, evaluating
budget to produce profits. structure.
opportunities, feasibility study, and developing a business plan –
o The solution: Create new processes that focus on
Startup Stage
- Capital task delegation. Many entrepreneurs, used to wearing
o The challenge: You want to start or grow your all the hats, find themselves in this position once
What is the purpose of business? – Business concept
business, but you have little capital to do it with. they’ve achieved a modicum of success. Because
o The solution: There are many ways to earn funding, you’re doing everything, your growth halts to a stop
Is the product or service needed? Is it realistic? – Product- Market
from traditional bank loans to family and friends to when it hits a self-imposed ceiling. The only way to
Strategy
Kickstarter campaigns. You can choose these routes, break through is to delegate tasks to others to take
certainly, but I prefer the self-fueled growth model in yourself out of the production end, and segue into
How much cash is needed? – Financial Plan
which you fund your own business endeavors. management and, finally,
Instead of trying to launch a multi-million dollar
During this preliminary phase, ideas evolve from a creative process
corporation overnight, focus on your initial core - Self Doubt
to point of being consciously perceived as commercial endeavors.
customers. Continually work to find new customers, of o The challenge: An entrepreneur’s life is not enviable,
– Pre-Startup Stage
course, but consistently strive to be remarkable to at least in the beginning. It’s extremely easy to get
those customers you already serve. Word-of-mouth discouraged when something goes wrong or when The entrepreneur must find resources, purchase beginning inventory,
will spread, and more customers will come looking for you’re not growing as fast as you’d like. Self-doubt hire employees, obtain licenses etc. – Pre-Startup Implementation
 - Grameen Bank, which makes small loans to the poor for
The evolution of a venture into a large company – Later growth During the start up stage, entrepreneurs have already begun to small business development and other uses. Since its
stage believe that their ideas are feasible and they become fascinated by inception in the 1970s, Grameen has provided $10 billion in
visions of their enterprise. – false loans to more than 10 million people, and has proven the need
There are many ways to earn funding, from traditional bank loans to and viability for financial services to the poor. Grameen
family and friends to Kickstarter campaigns. – True During the start up stage, these two conditions are important: ( a) The received the Nobel Peace Prize in 2006 as a reflection of its
business must survive in the short run, and ( b) The business must be efforts and success.
Proper budgeting and planning are critical to maintaining cash flow – positioned to achieve long-term – True
True - Greyston provides the homeless employment in a bakery that
To succeed in business, new entrepreneurs need to hire huge and The later growth stage, when the rate of growth may be slower and makes brownies for Ben & Jerry’s ice cream. As Greyston
expensive marketing – False the industry has attracted competitors. – True says, “we don’t hire people to bake brownies, we bake
brownies to hire people.”
An entrepreneur ‘s life in enviable even from the beginning – False No need to hire a huge, expensive marketing firm; rather, recruit a
freelance researcher who has experience in whatever type of field
Being able to overcome self-doubt is a necessary trait for you’re considering entering (retail e-commerce, service industry, - [Link] designs affordable solar-powered devices that
entrepreneurs – True publishing, etc.) – True provide an option to people that lack access to reliable energy
sources. In its eight-year history, [Link] has sold more than
The key is to prioritize your marketing efforts with efficiency in 10 million solar lamps, improving the lives of 50 million people.
mind; spend your money where it works; and reserve the rest for M5: SOCIAL ENTERPRISE
operating expenses and experimenting with other marketing methods – - Dispensary of Hope aggregates prescription medications
True that are nearing their expiration date and redistributes these
What is a social enterprise?
drugs to free clinics in low-income communities. Clinics pay
- Organizations that address a basic unmet need or solve a
Time management might be the biggest problem faced by Dispensary of Hope a monthly subscription fee that covers
social or environmental problem through a market driven
entrepreneurs, who wear many (and all) top hats – True basic expenses, and drug manufacturers save money by
approach.
avoiding costs associated with destroying expired products.
Even though cash flow is fine, it seems you never have enough in Social Enterprise Models
your budget to market your company to it’s full potential – True - Teracycle upcycles packaging and other non-recyclable
- Opportunity Employment:
consumer waste, keeping it out of landfills and turning it into
o organizations that employ people who have
If any task do not mesh with your goal, eliminate them – True new products. Today, Terracycle has established a recycling
significant barriers to mainstream employment.
network of more than 31 million consumers and 100 major
- Transformative Products or Services:
A period of often rapid development and growth when the venture may corporate brand partnerships, resulting in more than 3 billion
o organizations that create social or environmental
undergo major change markets, finances and resource utilization during units of garbage averted from landfills and transformed into
impact through innovative products and services. new, 100% recycled products.
the early growth stage - True
- Donate Back:
Positioning the enterprise means that “every successful business starts
o organizations that contribute a portion of their - Benetech develops and uses technology to create positive
with a pre-conceived business idea, which includes a concept of the
product or service, markets and growth potential. - True profits to non-profits that address basic unmet social change. One of Benetech’s signature programs is
needs. Bookshare, the largest literacy resource for people with
If any tasks do not absolutely have to be completed by you, delegate disabilities. Before Bookshare, only 5% of printed materials
them. – True What kind of problems Social Enterprise tries to solve? were accessible to people with disabilities. Today, Bookshare’s
 more than 330,000 subscribers have access to more than operations o Reduction of polluting potential of products
300,000 titles in a variety of accessible formats. o Efforts to increase the energy efficiency of products o Improvement in nutritional value of products
o Other energy-saving programs (for example, o Improvement in packaging and labeling
- Warby Parker partners with Vision Spring to enable access company sponsored car pools) -
to affordable prescription glasses to people in developing
countries who are otherwise functionally blind. They do - Fair Business Practices
this by selling fashionable eyewear to customers in developed o Employment and advancement of women and
markets, and making a contribution for each pair sold. So far, M5: Formative Question
minorities
this partnership has distributed nearly 2.5 million pairs of In the aspect of human resources, a social enterprise is involved in
o Employment and advancement of disadvantaged
glasses to those in need. child day-care facilities for working parents - True
individuals (disabled, Vietnam veterans, ex-offenders,
former drug addicts, mentally retarded, and hardcore Alcohol and drug counseling programs, as well as career counseling
What is a Social Entrepreneur?
unemployed) is a concern for social enterprises – True
- Social entrepreneurs work to solve critical social problems
o Support for minority-owned businesses
and address basic unmet needs through innovation. Their
entrepreneurial endeavors create system change, improving Providing micro-loans to the poor is a practice of a social enterprise
the lives of underserved or marginalized groups. - Human Resources – True
o Promotion of employee health and safety
- Famous Social Entrepreneurs o Employee training and development Social enterprise develops and uses technology to create positive
o Muhammad Yunus, who founded Grameen Bank in o Remedial education programs for disadvantaged social change – True
1983 to provide micro-loans to the poor in his native employees
Bangladesh and beyond. o Alcohol and drug counseling programs Employee physical fitness and stress management program are
o Becca Stevens, the founder of Thistle Farms, a o Career counseling practices made by social enterprises – True
social enterprise that treats, supports and employs o Child day-care facilities for working parents
women who have survived prostitution, trafficking and o Employee physical fitness and stress management Recycling efforts is done by a social enterprise to help the
addiction. programs environment – True
o Jim Fruchterman, CEO of Benetech, who uses
technology to address unmet social needs frequently - Community Involvement Sponsorship of product safety education programs are examples of
overlooked by Silicon Valley. o Donations of cash, products, services, or activities of social enterprises – True
employee time
What is the Nature of Social Enterprise? Reduction of polluting potential of products is one of the goals of
o Sponsorship of public health projects
- Environment social enterprises – True
o Support of education and the arts
o Pollution control o Support of community recreation programs
Support for minority-owned business is an example of a social
o Restoration or protection of environment o Cooperation in community projects (recycling centers, enterprise practice in human resource management – False
o Conservation of natural resources disaster assistance, and urban renewal)
o Recycling efforts
Social entrepreneurs work to solve critical social problems and
- Product address basic unmet needs through innovation – True
- Energy o Enhancement of product safety
o Conservation of energy in production and marketing o Sponsorship of product safety education programs Conservation of natural resources is a practice of a social enterprise
– True CHAPTERS PROFITS DURING THE LIFETIME OF THE
TITLE PAGE BUSINESS.
A social entrepreneur creates system change, improving the lives of - EXECUTIVE SUMMARY o COMPANY LOGO
underserved or marginalized groups – True o PROVIDE A BRIEF AND ABBREVIATED  IT SHOWS THE DESIGN OF YOUR BRAND
OVERVIEW OF THE BUSINESS PLAN. LOGO AS WELL AS THE TAGLINE
Social enterprises are involved in restoration or protection o THIS WILL BE THE FIRST SECTION OF BUSINESS o BRIEF PROFILE OF THE ENTREPRENEURS
environment – True  IT OUTLINES THE DETAILS OF THE
PLAN BUT THIS IS THE LAST SECTION TO BE
COMPLETED. YOU HAVE TO WRITE YOUR PROPONENTS.
There are social enterprises who support and employ women who
EXECUTIVE SUMMARY AFTER YOU COMPLETED
have survived prostitution, trafficking and addiction – True - BACKGROUND OF THE BUSINESS
WRITTEN YOUR BP
o THIS WILL BE HELPFUL IN GIVING YOURSELF o PROVIDE A BRIEF SUMMARIZED OVERVIEW OF
A social enterprise seeks improvement in the packaging and labeling THE CURRENT STATUS OF THE INDUSTRY
AND YOUR ENABLERS, READERS, APPROVERS,
of products – True WHERE BUSINESS IS ENGAGE IN.
LENDERS AND INVESTORS AN OVERVIEW OF
YOUR BP o IT ALSO EXPLAINS HOW YOUR
A model of a social enterprise is an organization that employ people
o IT CONTAINS QUICK OVERVIEW OF THE MAIN PRODUCT/SERVICES CAN CHANGE THE
who have significant barriers to mainstream employment – True
POINTS AND CONCEPTS OF THE BP. BALLGAME OF INDUSTRY
Remedial education programs for disadvantaged employees is a
o INNOVATIVENESS - DESCRIPTION OF THE BUSINESS
priority of a social enterprise – True
 IT OUTLINES HOW YOUR BUSINESS o THIS SECTION STATES THE TYPE OF BUSINESS
COVERTS OPPORTUNITIES INTO ACCORDING TO OPERATION ACTIVITIES
Promotion of health and safety of employees is a way of showing
MARKETABLE IDEAS AND GENERATE o IT ALSO OUTLINES THE MAIN OBJECTIVES OR
concern for conserving energy – False
NEW IDEAS FROM PRE-EXISTING GOAL STATEMENTS OF THE BUSINESS
Organizations that create social or environmental impact through CONCEPTS. o TARGET LOCATION OF THE BUSINESS
innovative products and services are also categorized as social o SOCIAL IMPACT o WHO WILL WORK FOR THE BUSINESS
enterprise – True  IT OUTLINES HOW YOUR BUSINESS
TRANSFORMS THE SOCIETY BY o WHAT IS BUSINESS
Improvement of nutritional value of products is a concern of social CREATING BETTER LIVES AND  REFERS TO AN ORGANIZATION-
enterprise – True OPPORTUNITIES TO STAKEHOLDER COMMERCIAL OR INDUSTRIAL FIRM
o GREEN MARKETING THAT MANAGES RESOURCES ENGAGED
Employment and advancement of women and minorities is a  IT OUTLINES HOW YOUR BUSINESS IN VARIOUS ACTIVITIES TO
practice of a social enterprise in terms of fair business practices – True TAKE INTO ACCOUNT THE EFFECTIVELY PRODUCED THE DESIRED
ENVIRONMENT AND CONSUMER ONE COMMON GOAL.
Public health projects are programs usually sponsored by social CONCERNS BY PROMOTING  IT IS AN UNDERTAKING WHEREBY ONE
enterprises – True PRESERVATION OF NATURAL SELLS GOODS AND OR SERVICES IN
ENVIRONMENT. EXCHANGE FOR MONEY OR ITS
o PROFITABILITY EQUIVALENT.
Business Plan
 IT OUTLINES HOW YOUR BUSINESS  BUSINESS COMPOSE OF TYPE OF
CONTENT OF BUSINESS PLAN
WILL GENERATE ACCUMULATED OWNERSHIP AND TYPE OF
 OPERATIONS/ACTIVITIES  Demographic the selling price.
 TYPE OF OWNERSHIP  Behavioral
o SOLE PROPRIETORSHIP  Psychographic o MANUFACTURING COST FORMULA
o PARTNERSHIP  Target market- is broader of  COST OF DIRECT MATERIALS
o CORPORATION potential customer defined by range  + COST OF DIRECT LABORS
 TYPES OF BUSINESS  Target Customer- is a person,  + COST OF DIRECT INDIRECT
ACCORDING TO OPERATION specific group of people you've MATERIALS
o SERVICE identified with.  + COST OF INDIRECT LABORS
o MERCHANDISING  + OVER HEAD MANUFACTURING COST
o MANUFACTURING
o MARKETING MIX o SALES FORECAST
 PRODUCT- its object is to satisfy the needs  OVERHEAD MANUFACTURING COST
- VISION, MISSION OF THE BUSINESS
and wants of target market RENT
o VISION STATEMENT
 PRICE- is what you pay or the value of the  + ELECTRICITY
 picture of your company in the future
product or service  +WATER
organization will look like at least 3-5 years
 PLACE OF DISTRIBUTION- platforms of  +TELEPHONE/INTERNET
from today.
distribution  +TAXES
o MISSION STATEMENT
 PROMOTION- the way a company  +INSURANCE (IF ANY) WHY PRICING IS
 explains the companies existence. A communicates its offerings to customers. IMPORTANT?
statement of purpose.
 Pricing decision is important because
o CORE VALUES o MARKETING RESEARCH customer have alternatives to choose from
 fundamental beliefs of an organization  RESEARCH METHOD and are better informed.
o SWOT ANALYSIS  DESCRIPTION OF RESPONDENTS  Value for money is a term used to assess
 Strength, Weaknesses, Opportunities and  POPULATION AND SAMPLING whether or not an organization has obtained
Threats  DEMAND AND SUPPLY ANALYSIS-ability the maximum benefit from the goods and
and the need to purchase a commodity or services it both acquires and provides within
- MARKETING PLAN service the resources available to it.
o TARGET MARKET  MARKET RESEARCH QUESTIONNAIRE
 What is Market? market is a group who have - BUSINESS REQUIREMENTS
purchasing power and satisfied needs - SALES PLAN o THIS ANSWERS:
o SALES FORECAST- the total demand of the product  THE TYPE OF BUSINESS OWNERSHIP
o MARKET SEGMENTATION is about 1,1 48 or 110,228 annually this is based on (SOLE PROPRIETORSHIP OR
 means divide a market into well-defined the survey conducted to observe the average number CORPORATION)
slices. a market segment consists of a group of customers in the target market. However, demand  LEGAL REQUIREMENTS AND PERMITS
of customers who share a similar set of is projected to increase 5% annually. To come up with THAT ARE NEEDED TO SECURE (DTI,
needs and wants. projected sales forecast in terms of money, one must SEC, SSS, PHILHEALTH, PAG-IBIG, BIR,
 HOW YOU SEGMENT YOUR CUSTOMER analyze first the possible product that the business DOLE, LGU, ETC)
 Geographic can produce per day and its related prices based on  FDA, NFA, BFAR,NTA ETC.
- SALES AND COST PLAN/STAFFING AND COSTING
o IT OUTLINES THE :
 ORGANIZATIONAL STRUCTURE
 FUNCTIONS OF EACH PERSONNEL
(SKILL, NUMBER OF LABOR REQUIRED,
SPECIFYING DUTIES AND
RESPONSIBILITIES AND TIME DEVOTED
TO PROJECT, AS WELL AS THE
COMPENSATION AND BENEFITS)
 EQUIPMENT REQUIREMENT
 SPACE REQUIREMENT

- FINANCIAL ASPECTS
o OUTLINES THE
 SALES AND COST PLAN
 CASH FLOW
 BALANCE SHEET
 HORIZONTAL FINANCIAL ANALYSIS

- CONCLUSION