Topic 3 - Starting a Business in the Philippines

Question 1

Ability to develop something original, particularly an idea or a representation of an idea, with an element of aesthetic flair

Answer 1

creativity

Question 2

change that add value to an existing product or service

Answer 2

Innovation

Question 3

Truly novel product, service, or process that, though based on ideas and products that have come come before, represents a leap, a creatiom truly novel and different.

Answer 3

Invention

Question 4

What are the five stages of creativity?

Answer 4

Preparation
Incubation
Insight
Evaluation
Elaboration

Question 5

Involves investing a chosen field of interest, opening your mind, and becoming immersed in material, mindset, and meaning.

Answer 5

Preparation

Question 6

Refers to giving yourself, and your subconscious mind in particular, time to incorporate what you learned and practiced in the preparation stage

can take short or long time

Answer 6

Incubation

Question 7

“illumination” a term for the “aha!” moment — when solution to a creative problem suddenly becomes readily accessible to you conscious mind.

Answer 7

Insight

Question 8

purposeful examination of ideas

Answer 8

Evaluation

Question 9

actual production

Release of a “minimum viable product” — function well enough that you can begin to market it while still elaborating on it in an iterative development process.

Answer 9

elaboration

Question 10

defined as the change that adds value to an existing product or service

Answer 10

innovation

Question 11

The concept of pain point was developed to____

Answer 11

to describe a feeling of dissatisfaction among customers

Question 12

a persistent recurring problem that frequently inconveniences or annoys customers

Answer 12

Pain point

Question 13

key point about innovation is that it is a response to both changes ________ and changes from ________ (Peter Drucker).

Answer 13

Within markets, outside markets

Question 14

Two types of sources of innovative opportunity

Answer 14

Internally focused
Externally focused

Question 15

Seven Sources for Innovative Opportunity (Drucker, 1985 as cited in Kuratko, 2016)

Answer 15

The unexpected
Incongruities
(Innovation bsed on) Process need
Industry and Market Structures
Demographics
Changes im Perception, Mood, and Meaning
New knowledge

Question 16

Unforeseen circumstances that may come as hindrance

• Unexpected failure (penicillin)
• Unexpected success
• Outside events (COVID-19 pandemic)

Answer 16

The unexpected

Question 17

a difference exists between expectation and reality

Answer 17

Incongruities

Question 18

process gaps or bottlenecks where an answer is required

Answer 18

Process need

Question 19

changes caused by consumer attitudes, advancements in technology, etc.

Answer 19

Industry and Market Structures

Question 20

age, status, race, sex

Answer 20

demographics

Question 21

uniqueness of every individual creates a differentiation of the offered good and services

Answer 21

Changes in Perception, Mood, and Meaning

Question 22

Both scientific and non-scientific (knowledge-based concepts)

Answer 22

New knowledge

Question 23

Types of innovation

Answer 23

Incremental innovatiom
Pioneering innovation
Disruptive innovation
Social innovation

Question 24

truly novel product, service, or process that, though based on ideas and products that have come before, represents a leap, a creation truly novel and different

Answer 24

inventions

Question 25

a process or a device which has never been made before

Answer 25

Developing invention

Question 26

Known and the “unknown”

Answer 26

Sources

Question 27

different sources of the “known”

Answer 27

1. Education/Research 2. Experience/skill 3. Family(business/tradition)

Question 28

Source of the “unknown” (outside of our education, skills, experience)

Answer 28

1. Information from friends 2. Brainstorming (friends,work, schoolmates,family) 3. Tips information from various sources (socialmedia,articles, magazines, government plans - CLUP/CDP, seminars/conferences).

Question 29

creates significant value for customers and offers significant profit potential to the entrepreneur (Jeffrey Timmons, 2004 as cited in Harvard Business Review, Entrepreneur’s Handbook, 2018).

Answer 29

Entrepreneurial opportunity

Question 30

it can also be said that there exists an entrepreneurial opportunity when a gap exists between supply (amount and characteristics of the product produced) and demand (consumers’ desire for the product).

Answer 30

Entrepreneurial opportunity

Question 31

Key Aspects of Evaluating opportunity

Answer 31

1. Competencies 2. Competition 3. Sustainability 4. Profitability 5. Financing

Question 32

Questions under competencies

Answer 32

• Do I have substantial knowledge and skills? • Do I know someone who has advanced knowledge and skill who I can trust to be a partner or employee? • Do I have connections inside the industry who can help me?

Question 33

Questions under competition

Answer 33

• How many competitors are there in the area? in the industry? • What are their strengths and weaknesses? • How are you going to be different?

Question 34

Factors in evaluating sustainability

Answer 34

• Threat of new entrants • Threat of substitute/s • Bargaining power of supplier • Short lived trend/fad

Question 35

Factors in evaluating profitability

Answer 35

• Net income • net profit margin • break-even point • payback period • return of investment

Question 36

Factors in evaluating financing

Answer 36

• Compute for capital requirement • check if this can be funded by your savings

Question 37

What should be a first step or priority in evaluating profitability and financing?

Answer 37

establish the price and the demand forecast using your target market segment

Question 38

Contributing factors of a successful opportunity recognition

Answer 38

Prior knowledge of markets and customer problems Entrepreneurial alertness Networks

Question 39

where do we gain prior knowledge of markets and customer problems?

Answer 39

Education Experience

Question 40

Two types of experiences

Answer 40

personal experiences work experience

Question 41

Pathways to New Ventures

Answer 41

Creating the New Venture Acquiring an Existing Venture Joining a Family Business Obtaining a Franchise

Question 42

Legal Forms of Business Ownership

Answer 42

• Sole Proprietorship • Partnership • Corporation • Cooperatives

Question 43

A business that is owned by one person. Simplest form of business ownership and the easiest to start.

Answer 43

Sole proprietorship

Question 44

The most popular form of business ownership

Answer 44

Sole proprietorship

Question 45

What kind of business form is this? no special forms required ends when proprietor dies or leaves business unlimited liability minimal legal requirements full control of managements and operations not a separate taxable entity; taxes are paid through owner’s personal tax returns funding mostly derived from owner

Answer 45

sole proprietorship

Question 46

Advantages of sole proprietorship

Answer 46

ease of formation greater control and flexibility no separate tax return profit is taxed as personal income to owner business losses can offset personal income

Question 47

Disadvanatge of sole proprietorship

Answer 47

Unlimited liability Potential difficulty in borrowing money

Question 48

A voluntary association of two or more persons to act as co owners of a business profit Less common form of ownership that sole proprietorship or corporation no legal limit on the maximum number or partners Large accounting, law, and advertising partnerships have multiple partners usually a pooling of special talents or the results of a sole proprietor taking on a partner

Answer 48

partnership

Question 49

What kind of business ownership is this? partnership agreement is recommended ends upon death or withdrawal of a partner unless otherwise provided for in partnership agreement unlimited liability minimal legal requirements roles specified in partnership agreement; partners generally have equal voice not a separate taxable entity; taxes paid through owner’s tax return Funding raised through partner contributions

Answer 49

partnership

Question 50

a business co-owned by 2 or more general partners; default arrangement; simplest to form; made up of general partners

Answer 50

general partnerships

Question 51

a person who has full or shared responsibility for running the business; they have unlimited liability

Answer 51

general partners

Question 52

A business co-owned by at least one general partner and one limited partner.

Answer 52

limited partnerships

Question 53

Limited liability (only liable for the amount they invested in business). Do not operate business, they provide the capital.

Answer 53

Limited partners

Question 54

Advantages of partnerships

Answer 54

More owners to contribute capital and effort Shared managerial and financial responsibility Utilize complementary skills Easy to form Business losses can offset personal income Profit taxed as personal income of the partners

Question 55

Disadvantages of partnerships

Answer 55

Must share control — and profits Need the right partner Differences in opinion on company’s direction Unlimited liability (general partners only)

Question 56

What constitutes a partnership agreement?

Answer 56

capital contributions responsibilities of each partner decision-making process shares of profits or losses departure of partners addition of partners

Question 57

Is a legal entity, separate from its owners. Owned by stockholders.

Answer 57

Corporations

Question 58

What kind of business ownership is this? Incorporation must be filled with state and federal agencies Separate entity; existence not dependent on owners, founders; ownership transfered easily Owners are not personally liable for debts of corporation Must have board of directors, corporate officers, annual meeting, and annual reporting Shareholders elect board of directors, which provides strategic management or corporation; board appoints senior managment Not a separate taxable entity; taxes are filed through owner’s personal tax return Capital is raises through sale of stock and debt issue

Answer 58

Corporations

Question 59

What are the special elements of a corporation?

Answer 59

Stock Stockholder/Shareholder Dividend Board of Directors Closed (private) corporation Open (public) corporation

Question 60

The shares of ownership of a corporation

Answer 60

stock

Question 61

2 types of stocks

Answer 61

Common stock (voting privileges) Preferred stock (no voting rights, dividends paid first)

Question 62

A person who owns a share or shares of a corporation’s stock

Answer 62

stockholder/shareholder

Question 63

A portion of the corporation’s profit (earnings) that is distributed to stockholders

Answer 63

Dividend

Question 64

The governing body of the corporation, elected by stockholders and appointed corporate officers

Answer 64

board of directors

Question 65

A corporation whose stock is owned by relatively few people and is not sold to the general public

Answer 65

closed (private) corporation

Question 66

A corporation whose stock is bought and sold on security exchanges and can be purchased by any individual

Answer 66

open (public) corporation

Question 67

Advantages of corporations

Answer 67

limited liability extended life and ownership transfer raising capital tax benefits

Question 68

Disadvantages of corporations

Answer 68

reporting requirements can be difficult and costly to form corporations have their own special taxes double taxation

Question 69

It is when corporations pay a tax on their profit; stockholders who receive a divided also have to pay a tax

Answer 69

double taxation

Question 70

a corporation with a single stockholder, who must be a natural person, trust, or an estate.

Answer 70

one person corporation (OPC)

Question 71

Where is OPC institutionalized or written?i

Answer 71

Title XIII (Special Corporations) of Republic Act No. 11232, also known as the “Revised Corporation Code”

Question 72

an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of risks and benefits of the undertaking in accordance with the universally accepted cooperative principles.

Answer 72

cooperative