ST.

ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

MODULE DESCRIPTOR
This unit explains the Creating an Enterprise. It includes Identifying Business.

NOMINAL DURATION
September 20-24 (3 hours)

LEARNING OUTCOMES
At the end of this module, you MUST be able to:
1. identify the three basic forms of business ownership;
2. discuss the advantages and disadvantages of each of the three basic patterns of
business ownership; and
3. gain competence in making a business legal.

LEARNING EXPERIENCES

Learning Activities Special Instructions

1. Read Information Sheet about In the learning outcome you must identify
Creating an Enterprise. the three basic forms of business
2. Answer Self- Check and compare your ownership, discuss the advantages and
answers with the Answer Keys. disadvantages of each of the three basic
3. Perform Task Sheet by following the patterns of business ownership and gain
given instruction. competence in making a business legal.
4. Perform Job Sheet by following the To be able to this you should understand
given instruction. the following:

1. Creating an Enterprise.
2. Identifying Business

Go through the information sheets and

answer the self- check to ensure that
knowledge context of concept of
Creating an Enterprise. is acquired.
5. Evaluate your own output using the After doing all these activities, you are
performance criteria. ready to proceed to the next module.

INFORMATION SHEETS 5.1-1

Identifying Business Opportunities in the Environment

Entrepreneurs usually start from scratch. The term start-up means creating a new
business from scratch or from zero. Start-ups could be a business that provides
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

customers with products that do not exıst or a busincss that provides customers with
improvements on existing products.

Sources of Product ldeas

ldeas for new products or scrvices may come from any of the following:
1. Chance happening. While strolling in the park. you saw an old couple who, after a long
walk, were looking for a vacant bench to sit down on. Untortunately, all benches were
occupied. Thus, you come upon the idea of producing a cane that coulad open into a
small chair.
2. Personal interest or hobby. Hobbies like tinkering with machincs could develop into a
machine repair shop business combined with abarber shop so that one can have his hair
trimmed while waiting for the repair of his car to be finished.
Friends and relatives. A family of five girls who are conscious of how they look and
meticulous about the products they use could start a beauty salon business with their own
brand of beauty products.
4. Family business. The cldest son of a couple operating a hotel or resort, for example,
could establish a liquor store in one corner of the hotel lobby.
5. Suggestions. A cellphone repair center could be a suggestion of someone for you to
open one considering that there is none in the area where a lot of cellphones are being
sold.
6. Eaucation or courses. Short courses like tour guiding, international cooking
landscaping and others are offered by entrepreneurial individuals because they realize
that there are people who are not financially capable of going to college
but need to have a means of earning a living.
7. Prior work experience. Working in a bank, you realize that very snmall business owners
or market vendors cannot avail of the lending services of the bank because of the absence
of collateral. A lending business can therefore be put up With very easy terms like no
collateral and paying daily or weekly as soon as sales is elfected.
8. Research and Development. With the use of a questionnaire, customers are requested
to say what they want about a product or service. Through interviews or informal
discussions, middlenmen or distributors may give suggestions about a product or service
based on their contact with eustomers.
9. Creative problem solving is a method for obtaining new 1deas focusing on certain
parameters. Creativity can be unlockcd and creative ideas and innovation can be
generated by using creative problem solving techniques. The most common creative
problem solving technique is brainstorming. It is als0 a popular method of generating
company ideas. Atthis point, t is important to brainstorm on:
a. the product to introduce, and
b. the form of business organization.
Ten pcople may be organized for this activity. The brainstorming output will be the starting
point in demonstrating ablity to apply trading, manufacturing, serive as an entrepreneurial
activity.
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

10. Focus Group Discussions. A group of individuals provide information in a strctured

format.
11. Brainstorming. A group of individuals meet and they stimulate each other through
freewheeling discussions. This is an unstructured process of generating all possible ideas
about a problem within a limited timeframe through the
spontaneous contributions of participants.
12. Problem Inventory Analysis. The consumers are given a list of problems with a general
product category. The consumerS are asked to identily and discuss products in this
category with particular problems. A new product idea may come out from this approach.
13. Other means. New product ideas could also come from other means like need. The
copying machine was invented because of the need to produce several copies of
documents that look exactly the same as the original.

New ideas may come from consumCrs, existing companies, distribution channels, and
government through the use of a questionnaire in research and development. The
consumers are requested to say what they want. The entrepreneur looks at the
competitors and think of how to improve what is already available in the market. Through
interviews, the middleman or distributors may give suggestions based on their contact
with consumers or complaints from customers. The middlemen or distributors may relay
to the manufacturers the problems With existing products in the market.
Govemment regulations may lead to a new product demand, for example, the national
identification system or an ID for every Filipino. The rescarch and development of a
company may come up with a new product idea.

Improvements on Existing Products

mproving an existing product or service renders it new. For example, instead of producing
only a hair brush, you put a small mirror on the handle of the hair brush. Thus, the product
gives dual function.
Changing the presentation of the product also makes it new. Pharmaceutical products,
for instance, may originally be produced in liquid form. But because it can be messy or
inconvenient to lake outside the home, those products are now made into tablet and
capsule forms.
Changing the package is another way of introducing a new product. Products in bottles
made of glass could be presented in plastic bottles or perhaps the same bottle but
different shape.

Spotting Opportunities
Below are some factors that will help you spot opportunities
• Market need. Be observant and be keen in determining the needs of the people in the
community. For example, you observe that the children in the community are left with
their nannies while their parents go to their respective offices. Thus, perhaps a daycare
center would be a good business.
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

• Location. Your place is near a school with many students. Thus, opportunity would be
for a store of school supplies, a snack bar, or a shop for sewing uniforms.
• Hobby of the people. The hobby of the women in the community is needlework.
• Therefore, your opportunity would be for a store for threads or framing services.
• Available materials in the community. Your community, for instance, is near the sea with
an abundance of shells. Such resources can be made into decorative articles that can be
sold outside the community.
• Your interest and on how your interest and Know-how- itself, an opportunity. You love
plan is, for example, and you are well-versed in taking care of them. Your opportunity is
to rent out plants or to sell them.

Ways of Going into Business

An entrepreneur starts a business that he thinks has a lot of potential for profit. His family
may have been in business for a long time and he may take a part or department in that
business. Another way is to duplicate his family business in another place. He may also
pick up an idea from his 1amily business, modify it or apply it to another product. For
example, one who grew up with a family-owned restaurant chain may go into business of
ready-to-eat packaged meals. One who grew up in a bookstore business may now deal
with special-interest books. Specifically, going into business could be any of the following:
1. Start a new business. A bakeshop may be opened in a place where no bakeshop exists.
A laundry shop may be put up in a new subdivision. A transportation service may be
extended to a barrio. The first is an example of an existing business which is not yet
available in a certain place. The second business is providing a new product. The third
business is about providing improved products. Such as food products in plastic
containers. Starting a new business is the whole concept of this book.

2. Buy an existing business. Would be entrepreneurs are sometimes attracted to buy1ing

existing businesses. The reasons for this are existing businesses eliminate the
uncertainties encountered by a new business; the cost of starting is also eliminated; the
business has already gained a foothold in the industry, it has established its name; and
finally, there is already an established relationship between customers and the business
and between the business and the suppliers.
The price could also be a bargain because the owners are migrating to another country
or the owners are already old and would like to retire.
Of course, no investor would buy at first glance. Customers of the business, bankers,
employees, suppliers, the industry, and professionals like accountants and lawyers are
good sources of information to determine whether the business is worth
buying or not. Examine its business papers, tax returns, receipts, invoices, and most of
all, its financial statements. It is also good to inspect the premises of the business, the
building, machines, tools, equipment, materials, and other assets that are included in the
sale.
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

The potential entrepreneur is also cautioned to be aware with unreported company debt
or obligation that might come out after the sale. The contract of sale should specify that
debts or other obligations after the sale is for the account of the seller
3. Take over a family business. An entrepreneur may be a member of the family. He has
been exposed to the business as he was growing. The business is ongoing. Capital may
not even be needed because the parents are ready to give the business to the children.
If the parents are not yct ready to leave the whole business with the children, they may
meanwhile share it with the children.

4. Buy a franchise. Operating a franchise can also be an attractive business venture

considering that the name of the franchisor is already well-established. Furthermore,
franchisors offer free training to the employees of the franchise, free advertising, financial
assistance, technical assistance, and the continuing supply of materials. The
franchisor provides all assistance to make sure the business is successful because their
name is at stake. Given these benefits, the worry of the franchisee is only the daily
operation of the business.

In spite of its advantages, franchising has its own set of drawbacks. These are:
1) the franchise fee could run into million pesos;
2) the investment cost that include the renovation of the place f operation to jibe with the
Concept of the franchisor, furniture, fixtures, equipment, insurance, inventory, etc.
3) royalty payments for the use of the name of the franchisor. These couid be a certain
percentage of the sale or gross income;
4) advertising/promotion fee - sometimes franchisees are asked to share in the
advertising expenses of the franchise.

Moreover, there are certain Restrictions that must be observed by the franchisee such as
only the products of the franchisor are to be offered for sale by the franchisee, or
employee uniform should be the same as that et the concept of the franchisor.

Ways numbers 2, 3 and 4 are shortcuts to being an entrepreneur. These businesses have
very short start-up time, Some young, would-be entrepreneurs would prefer to0
gain experience through employment before going into their own business. Some go to
fill time employment and at in the same time have business as a sideline with a plan that
eventually they would go full time in their business. Some become entrepreneurs because
of unusual opportunities, such as loss of job, migration, change in family structure like
death, marriage, health and other events.

Opportunities for Business

In the Philippine free enterprise system, any person is free to go into business. In every
corner within the country, there are opportunities for doing business. You start small with
the hope of making it big soon. Look around and it may not take you long to see more of
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

the likes of your favorite fast food or your relative or friend who is making good money
from his service, trading, or manufacturing venture. This person may even be your parent
or your own brother or sister.
Entrepreneurs are called energizers of small business. They speak economic growth.
They provide jobs. They introduce products. They provide goods and services. In a broad
sense, services are also called products.

Entrepreneurs are in the following businesses

1. grocery stores
2. drug stores
3. gasoline stations
4. fast food outlets
5. hardware stores
6. constructions
7. repair shops
8. laundry shops
9. restaurants
10. travel agencies
11. insurance agencies
12. transportation services
13. real estate brokerages
14. bakeshops
15. machine shops
16. preschools
17. beauty parlors
18. spas
19. barber shops
20. importers
21. exporters
22. producers of crafts
23. boutiques
24. computer shops
25. dress shops
26. courier deliveries
27. food catering
28. boarding houses
29. internet cafes
30. resorts
31. sports venues
32. coffee shops
33. professional services like medical and dental clinic
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

There are some more not listed here. Some of those listed are in retailing or trading some
in manufacturing and others in services.
The government through the Department of Trade and Industry (DTI) has come up with
a list of provinces per region and the products/raw materials coming from that
province/region. The objective is to inform potential buyers and sellers
where to buy or sell what product. The list is at the end of this lesson.

Environmental Scanning
An analysis of the environment is done to determine what approach to use in the conduct
of business. This is called strategy. Strategy is the way by which goals are attained.
To determine what strategy to use, a SWOT analysis Is made. The strength and the
weakness (SW) refer to the internal characteristics of the business, while the opportunity
and threat (OT) are external characteristics.

Assume that you would want to go into the business of broiled chicken with rice and
vegetable salad. You arrive at this decision because you have a special recipe that your
friends like very much because of its very good taste and appearance. You analyze the
environment. You observe high volume pedestrian traffic in your intended location at the
Lopez entrance of B.F.Homes in Sucat, Parañaque City. You have noticed that there are
food sellers within the 100-meter radius of the Lopez entrance. There are Jollibee,
Baliwag Chicken, Manok ni San Pedro, Julie's Bakery, Lots-a-Pizza, wet market, 24-hour
grocery store, Mercury Drug store,
and sidewalk vendors of fruits, vegetables and native snack foods. You see the heavy
pedestrian as an opportunity and the existing businesses as threats. You made an
assessment of yourself and concluded that among your strengths are your being an
owner of a commercial unit in the place, your tasty chicken recipe, and the fact that you
have a poultry farm in Silang, Cavite. Of course, you realize that the competition is a
threat. You also see your lack of experience in the broiled chicken business as a
weakness. After a month of being in business. you review the financial results and
continue monitoring results not only monthly but practically every day.

Below is a table that shows the SWOT of the proposed business:

Strengths (S)
• Owner of commercial unit
• Tasty Chicken recipe
• Poultry farm owner

Weaknesses (W)
• Lack of experience in business

Opportunities (O)
• Heavy pedestrian traffic
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

Threats (T)
•Strong competition

Clearly, the strengths are more than the weakinesses. Your best strategy would be to
make your broiled chicken aromaue anad Visioiy mouth watering to attract the
pedestrians to buy. Your day-to-day operation will give you the experience you need and
get adjusted into the business

In an ongoing busıness, planning should include planning for the functional areas of the
business, such as:

1.operations
a. buying and selling
b. manufacturing
c. servIce

2 marketing
3. finance
4. human resource management
5. accounting
6. computer infomation system

The functional areas listed above are discussed in the subsequent chapler of this book.

The Blue Ocean Strategy

In recent years we have seen many business entities in one particular type of business.
The most common iS the food business. Of the food business, the favourite is the fastfood
type. In not a too distant past, hot pan de sal was hot business, then there was lechon
manok, then food franchising. Now we have cakes and cup cakes. Where we see a lot of
crowding is referred to as "red ocean"

In 2005, Iwo intends identified a business strategy which they called "blue ocean". The
collaboration of these two friends is also a form of enterprise. Enterprise is defined as
Venture characterized by innovation, creativity, dynamism, and risk. The two friends
believed passionately in their idea of the "blue ocean" that they ventured into the study.
Blue Ocean breaking away from what is ordinary. Itis breaking away from the hotpan de
sal and investing on specialty cup cake. it is breaking away from the handicraft and
focusing on then
expensive wallets of exclusive department stores. It is breaking away from popular and
establishing a Very exclusive unknown vacation place.
You may also plan first to be in the Ted ocean" before going into the "blue ocean
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

DTI Province Focus Sectors - Plus Ones

The different regions, provinces, and cities in the Philippines have their own product and
specializations.
The following data are sourced from Department of Trade and Industry (DTI) Bureau of
Small and Medium Enterprise Development (BSMED), printed July 2004.)

Cordillera Administrative Region (CAR)

Abra - bamboo-based industry (furniture, processed bamboo
pole, bamboo shoots as food item)
Benguet - vegetable industry (canned vegetables/ production and selling of fresh
vegetables)
Ifugao - houseware and holiday décor
Kalinga - coffee industry (raw beans)
Apayao - banana industry
Mountain Province - loom weaving

Region I
Ilocos Norte - meat processing
Ilocos Sur - furniture
La Union - antique furniture
Pangasinan - processed milk fish

Region II
Batanes - wine fermentation
Cagayan - wood furniture
Nueva Vizcaya - fruit processing and fresh vegetables
Quirino - wood furniture
Isabela - wood furniture

Region lII
Aurora - coffee
Bataan - fresh and processed food
Bulacan - sweets and delicacies
Nueva Ecija - fresh fruits and vegetables
Pampanga - meat processing
Tarlac - mango industry
Zambales - fresh mango

Region IV
Laguna - processed fruits
Quezon - lambanog
Rizal - native delicacies
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

Batangas - cocoa tablets

Cavite - coffee

Region IV-B
Oriental Mindoro - ethnic craft
Occidental Mindoro - seaweeds and bangus
Marindugue - buntal handloom weaving
Romblon - marble
Palawan - fish processing

Region V
Albay - gifts and housewares (abaca)
Camarines Norte - pineapple processing
Camarines Sur - bamboo industry
Sorsogon - pili process
Catanduanes - lasa/tiger grass; abaca rugs and crafts
Masbate - aqua-marine processing

Region VI
Aklan - loom weaving (pina industry and abaca sub-sector)
Antique - muscovado industry
Capiz - horticulture
Guimaras - lime processing (industrial grade)
lloilo - bamboo-based products (furniture and furnishings)
Negros Occidental - gifts and holiday décor (ceramics, woven items, mixed medium)

Region VIl
Bohol - loom weaving (raffia, mats, table cloth/linen products)
Negros Oriental - home furnishings
Siquijor - ceramics
Cebu - furniture

Region VIII
Leyte - food processing
Southern Leyte - Sinamay industry
Samar - mussel industry development (fresh mussels/ vacuum fried/ shell eratt)
Eastern Samar - seaweeds
Northern Samar - coconut coir indusiry development (planters, geotextiles, cocopeat and
holiday decors)
Biliran - pandan

Region IX
Zamboanga City - fish processing (canned tuna/ bottled sardines)
 ST. ANTHONY COLLEGE
Module for Entrepreneurial
CALAPAN CITY, INC. Mind

Zamboanga del Sur - seaweeds

Lamboanga del Norte - fresh mango
Isabela City - rubber industry
Sibugay - rubber sector (industry rubber product: latex, cuplump, crumb rubber, air-dried
rubber)
Angel
Angel Maming Madrigal
Region X
Bukidnon - high-value vegetable production (project: packing shed with cold chain
capability)
Camiguin - tourism support service: restaurant, transpo, resorts
Misamis Occidental - aqua-marine industry (aqua-business center and contract growing
with buy-back scheme)
Misamis Oriental - fiber-base (silk, abaca and hand-made)
Lanao del Norte - seaweed industry (Carageenan)

Region XI
Davao City - fresh and processed fruits (banana, mango, papaya, durian)
Davao del Norte - fresh and processed mango (fresh, puree, jam)
Davao del Sur - fresh and processed food (tresh mango, cassava chips, banana chips)
Davao Orientalcoconut-based items (coco milk, fiber board, coco peat)
Compostella Valley - wood products (resource-based: gemelina, furniture, fumishings,
construclion materials)

Region XI
North Cotabato - palm oil
Sultan Kudarat - palm oil
Saranggani - processed fish (dried fish, bangus)
South Cotabato - processed fish (tuna)

CARAGA

Agusan del Norte - cavendish banana (fresh)/ food procesSing: banana chips
Agusan del Sur - palm oil processing
Surigao del Norte - citronella oil processing
Surigao del Sur - coffee production (raw beans)