Technology

-developed and used to aid mainly in food production.

- was developed to make physical tasks easier.
-was given a new directive or role – that of managing information.
-Business competitiveness today seems to be determined more by access to and ability to
process information.

Social Responsibility
-Businesses today are expected not only to behave ethically but also to have Corporate Social
Responsibility projects. Environmental and social concerns are integrated in their business operations
and interactions with their stakeholders.

Corporate Social Responsibility

- Environmental and social concerns are integrated in their business operations and interactions
with their stakeholders.

Inclusive Growth
-businesses benefit from including, or the active participation of, all sectors of society,
including the poor, in its development process as workers, suppliers or service providers.

Globalization
-Changes in international trade affect businesses in many different ways.
-They may “weaken or strengthen market competition or expansion.
-It may also enhance labor-exchange opportunities, or influence management coordination or
sharing.”

E-Commerce
-the process of buying and selling by electronic means.
-Advancements in internet and communication technology have made it possible to transact
businesses in non-traditional ways.

The Cyberspace
-is a virtual computer world or an electronic medium used to form a global computer network to
facilitate online communication. This cyberspace phenomenon has spurred various enterprises
based on online communication.

Franchising Trend
-Franchising businesses especially in food retailing has picked up significantly.
-is a form of business by which the owner (franchisor) of a product, service or method obtains
distribution through affiliated dealers (franchisees).
-https://www.entrepreneur.com/encyclopedia/franchising.
-This opened up new entrepreneurial opportunities such as franchise brokering and franchising
consultancy.

Green Economy
-Making money out of products and services that help reduce environmental risks and ecological
scarcities is something worth entertaining. Examples of businesses under a green economy
would be recycling centers, green architecture, and organic products.
Corporate Social Responsibility
-Corporate Social Responsibility (CSR)
-is a management concept whereby companies integrate social and environmental concerns in
their business operations and interactions with their stakeholders.
-CSR is generally understood as being the way through which a company achieves a balance of
economic, environmental and social imperatives (“Triple-Bottom-Line- Approach”), while at the
same time addressing the expectations of shareholders and stakeholders.

Q: Are there other external factors that might influence the business environment?
A:
● Geographical and Ecological or Natural Factors
● Demographic Factors
● Economic Factors
● Political and Legal Factors
● Social and Cultural Factors
● Physical and Technological Factors

Topic # 1 Risks and Challenges

Risks & Challenges

The risk of failure Small Businesses have a difficulty to obtain

capital and limited bargaining power compared
to large or big businesses.

Unpredictable business conditions small businesses will be easily affected by

changes in the business environment (ex.
Change in the price of raw materials, inflation)

Long hours of hard work Creating something new and requires time and
effort, the entrepreneur needs to develop the
product and produce it in commercial quantity,
perseverance and patience are required during
the initial stage

Unwanted responsibilities Management responsibilities, social

responsibility (pay decent wages, provide value
for the customer’s money in terms of products
and services, compete fairly and share your
wealth and good fortune to the community and
society)

Why do entrepreneurs take risks?

1. Risks can be calculated

When taking a major risk, it is important to calculate the potential results and have contingency plans in
place. While there are success stories of entrepreneurs taking the ‘ultimate’ risk, no risk which could see
your business goes completely under. General George Patton put this perfectly when he said, “Take
calculated risks. That is quite different from being rash”.

2. You will never know until you try

For the majority of entrepreneurs, a risk is a case of ‘what if’ and is seen as a means of advancing their
business in some way. No matter how calculated it is, you can never be sure that a risk will pay off.
However, there is only one way to find out. As Frederick Wilcox said, “Progress always involves risks.
You can’t steal second base and keep your foot on first”.

3. Risk helps to distinguish between leaders and followers

Generally speaking, entrepreneurs take risks as it allows them to distinguish themselves from their
competitors. In the competitive business environment that exists today, those who are willing to risk
position themselves as leaders, while others get left behind. If you take a minute to think of a leader
who you consider successful, chances are that they changed the way things were done for the better,
and put themselves on the line during the process. This does not mean that all leaders take major risks
on a regular basis, but it is safe to say that all leaders have taken at least one risk in their career which
has helped them achieve their current position.

4. Without risk there is no innovation

Innovation cannot occur unless there is an element of risk to begin with. Whether it’s a new product or a
change to existing practices – these will both be considered a risk. T.S. Eliot said, “Only those who will
risk going too far can possibly find out how far it is possible to go”. When innovating, the level of risk
can be mitigated by ensuring that all possible calculations have been made to evaluate whether it is the
best option moving forward.

5. It is a chance to learn
Without risk, entrepreneurs will not experience failure and therefore will not learn from their mistakes.
Of course, it is possible to learn from positive experiences too, however, failure teaches us a very
powerful lesson that tends to stay with us for life. In addition, taking risks teaches us important skills
such as how to calculate contingencies as well as strategic thinking and planning.

Topic # 1 The Creative Process

Creativity
-is the generation of ideas that result in the improved efficiency or effectiveness of a system.
-Plays an important role in innovation and therefore, by extension, entrepreneurship.
-There are two important aspects of creativity: process and people.
The process is goal-oriented; it is designed to attain a solution to a problem. The people are the
resources that determine the solution. The process remains the same but the approach used by the
people will vary. For example, sometimes they will adapt a solution, and at other times they will
formulate a highly innovative solution.

The Nature of the Creative Process

Creativity is a process that can be developed and improved (Kuratko and Hodgetts) Hence, the creative
process may be implemented by anyone. However, the process is grasped and applied by people in
differing degrees of ease. This is more likely a function of nurture instead of nature. Some people grew
up in environments that encourage creativity. Others, in environments that stifle creativity. Creativity is
not some mysterious and rare talent reserved for a select few. It is a distinct way of looking at the world
that is often illogical. The creative process involves seeing relationships between things that others have
not seen before.

Four-step Creative Process

1. Background or Knowledge Accumulation
As in most cases, the creative process usually involves a lot of research or investigation and information
gathering. The kind of information accumulated may come from various fields that may seem totally
unrelated to each other. The creative person usually is interested in a lot of things. He may absorb bits
of information from anything and everything. This step in the creative process allows the entrepreneur
to look at a problem, a new product, a new way of doing things, a business venture, from a variety of
perspectives.

2. The Incubation Process

When confronted with a problem or with a ton of information, the creative person usually just lets the
problem and all the information he has amassed penetrated in his head. The incubation happens in the
subconscious. The creative person often engages in activities that are totally unrelated to the problem
he is working on.

3. The Idea Experience

This exciting phase in the creative process is sometimes referred to as the “eureka moment.” This is
when an idea for a solution or an answer to a perplexing question emerges, seemingly from out of the
blue. But really, this Archimedean exclamation of discovery is nothing more than the product of all the
incubating information inside one’s head and the subconscious trying to fit them together into patterns
not previously seen or observed. The patterns are created because the relevant bits of information are
available in the first place. Without the information then, “new” knowledge or a new way of looking at
things would not have been possible.

4. Evaluation and Implementation

This is where it gets difficult for the creative mind. The idea or solution that emerges during the “eureka
moment” has to be evaluated for its feasibility. An entrepreneur may perform a cost-benefit analysis to
gauge the risks, gains, and if the entrepreneur has the means or ability to implement the solution or
bring an idea to fruition. The creative person, indeed, the entrepreneur will lean on his courage, self-
discipline, and perseverance during this stage.

Sometimes, due to following a routine or a habit, the thinking process also goes along the line of those
established processes. Creativity enables people to connect dissimilar and unrelated subjects and make
successful entrepreneurial ideas. Merging different fields create interesting intersections that create
new niches. Most people are afraid of bringing different disciplines together, but most interesting ideas
come from colliding different fields.

Developing new niches through creativity and entrepreneurship. In entrepreneurship, it is important

that new aspects of traditional business are explored. This can be in the form of changing the method of
manufacturing the product or delivering the service or how they are supplied to the user. All these areas
can create a niche that has great potential in business
Some Characteristics of Creative People [Kuratko and Hodgetts, p. 71]:
1. Bright but not necessarily brilliant. Not necessarily a genius.
2. Good at generating a high degree of different ideas in a short period of time.
3. Have a positive self-image. Definitely not lacking in self-confidence.
4. Sensitive to the world around them and to the feelings of others.
5. Motivated by challenging problems (results oriented).
6. Is not given to jumping to conclusions in the absence of sufficient information.
7. Values their independence and do not have strong needs for group approval.
8. Active imagination.
9. Flexible. Not rigid or dogmatic.
10. Eyes are trained on the meanings and implications of a problem rather than its nitty-gritty.

Creativity leads to success by:

✔ Creating new ideas for competitive advantage. The whole process of entrepreneurship is rooted in
creation and exploration of new ideas. When an entrepreneur is able to generate a new idea that is
feasible as well as efficient, it gives him an edge over the competition. The ability to explore different
niches is just like a learned skill or a resource that is possessed by an individual.

✔ Thinking of novel ways to develop your product and improve the business. Creativity helps develop
new ways of improving an existing product or service and optimizing a business. There is always room
for improvement in the deliverables of an enterprise; it is the creative entrepreneur who can assess how
to do it.

✔ Thinking the unthinkable. Creativity requires imagination to produce the most obscure ideas.
Imagination is needed to cross the boundary of “usual” and “normal” or to think outside the box. This
allows entrepreneurs to think beyond the traditional solutions, come up with something new,
interesting, versatile, and yet have success potential.

Two Approaches to Problem Solving

Innovator
-Employs a disciplined, precise methodical approach.
-Approaches tasks from unusual angles.
-Is concerned with solving, rather than finding, problems.
-Discovers problems and avenues of solutions.
Adaptor
-Tends to be means-oriented. Has little regard for means; is more interested in ends.
-Is capable of extended detail work. Has little tolerance for routine work.
-Is sensitive to group cohesion and cooperation. Has little or no need for consensus; often is
insensitive to others.
-Attempts to refine current practices. Questions basic assumptions related to current practices.

Q: Why is creativity crucial for entrepreneurs?

A: A thorough observation of the entrepreneurial process shows that creative thinking is the must-have
“skill” of an entrepreneur for the creation of new ideas. Creativity allows a person to devise interesting
processes, which gives so many advantages to entrepreneurs.
According to Peter F. Drucker, “Innovation is the specific function of entrepreneurship...It is the means
by which the entrepreneur either creates new wealth-producing resources or endows existing resources
with enhanced potential for creating wealth.” For Drucker, innovators are those who introduce
something new to the market – a new product, new service, or a new business model. Josiah Go adds
that this must also lead to commercial success to be rightfully called an innovation. Both agree that the
success of a new business depends a lot on the innovative quality of an idea. This session will explore
the concept of innovation and examine its role in entrepreneurship.

Topic # 1 Principles of Innovation

A potential entrepreneur needs to realize that there are principles of innovation. These principles can be
learned and, when combined with opportunity, can enable the individual to innovate. The major
principles of innovation are:
● Be action-oriented. Innovators must always be active and searching for new ideas, opportunities, or
sources of innovation.
● Make the product, process, or service simple and understandable. People must readily understand
how innovation works.
● Make the product, process, or service customer-based. Innovation must always keep the customer in
mind. The more the innovator has the end-user in mind, the greater the chance that the concept will be
accepted and used.
● Start small. Innovators should not attempt a project or development on a grandiose scale. They should
begin small and build and develop, allowing for planned growth and proper expansion in the right
manner and at the right time.
● Aim high. Innovators should aim high for success by seeking a niche in the marketplace.
● Try-test-revise. Innovators should always follow the rule of try, test, and revise. This helps work out
any flaws in the product, process, or service.
● Learn from failures. Innovation does not guarantee success. More importantly, failures often give rise
to innovations.
● Follow a milestone schedule. Every innovation should follow a schedule that indicates milestone
accomplishments. Although the project may run ahead or behind schedule, it still is important to have
the schedule in order to plan and evaluate the project.
● Reward heroic activity. This principle applies more to those involved in seeking and motivating others
to innovate. Innovative activity should be rewarded and given the proper amount of respect. This also
means tolerating and, to a limited degree, accepting failures as a means of accomplishing innovation.
Innovative work must be seen as heroic activity that will reveal new horizons for the enterprise.
● Work, work, work. This is a simple but accurate exhortation with which to conclude the principles of
innovation. It takes work, not genius or mystery, to innovate successfully.

Sources of Innovation