CHAPTER-7-PROBLEM-SOLVING-STRATEGIES.pptx

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1. PROBLEM SOLVING STRATEGIES Chapter 7 The entrepreneurs are not discouraged with the constraints along the causes of our economic malady. It should be turned into positive note, and new solutions must be made to make them different from other individuals, Business opportunities are wide open for people who would like to invest their money into gainful business activities, They need to find out this new venture that interests them and how they can harness their technical knowledge of the trade. The search for business opportunity should start with the individual entrepreneur. He has to find out the skills and . talent for that particular type of business activity.

2. FACTORS TO CONSIDER OF A NEW ENTREPRENEUR Know your Product or Service Analyze the market potential Determine the Marketing Potential Know the Competitors Do not set on your Laurel’s

3. STEPS IN PROBLEM SOLVING 1. Identify the problem- The risk involved in the management of the business has to be identified and analyzed before solutions could be made. 2. Gather the data that brought the problem- Good and intelligent entrepreneur must be able to get the data that boroughs about the problem. 3. Analyzing the data- Not all information is relevant to the solution to the problem. Some data must be discarded. The data must focus on the problem at hand. 4. Formulating alternative solutions- The entrepreneur makes various alternative solutions to the problem at hand. These solutions are subject to a series of analysis and he may need outside opinion. 5. Selecting the best alternatives course of action- After all the alternative courses of action had been analyzed, the entrepreneur makes the decision. The decision has to be implemented with the less possible risks in terms of money, time, and effort. 6. Implementing the best alternative - modern entrepreneur utilizes group efforts in solving business problems. Problems and Solutions are best arrived when people who will be implementing the decisions are properly consulted and their opinions and ideas are taken into account before the final decision is implemented.

4. PECULIAR CHARACTERISTICS OF MANAGERS IN SOLVING PROBLEMS 1 .He develops systems and procedures that are precise based on current practices in an industry. 2. The manager is interested in solving origination problems rather than finding other avenues in the solution of the problems. 3. The manager calibrates in the refinement of policies and procedure and tends to revise them to solve existing problems. 4. He finds ways and means to provide solutions and compliance to routine activities. 5. He is interested in details and sensitive to group cohesion and extract group cooperation as a means to group accomplishments

5. CHARACTERISTICS OF AN INNOVATOR ENTREPRENEUR IN SOLVING PROBLEMS 1. He looks at the problem on different angles and finds means to circumvent the same. 2. He discovers the roots of the problem and developed avenues to better solve the problem. He formulates solutions and alternatives. 3. He develops basic assumptions and hypothesis related to current practices and makes innovations based on careful analysis through SWOT. 4. The innovator entrepreneur is interested in the end results rather than the means to achieve it. He has little tolerance for details and routine work. 5. He capitalizes on people with bright ideas and talents and gets their opinion and consensus and with little regard for people with mediocre ideas.

6. ENVIRONMENTAL SCANNING The environment of business is vast with opportunities and the enterprise must have greater look at this potential well as the conditions prevailing in the community. The following factors are contributory to the development of customer satisfaction Business Location for Small Entrepreneurs retail outlet would need a site that is convenient to prospective customers in terms of perking space or availability of transportation. In choosing the location, the following factors must be looked into by the entrepreneur. Rent and Space - the cost of rent is a regular monthly expense and it must be sustained with the possible income that will be generated. terms of Lease Agreement -The term of lease must be studied carefully as some owners of space might take advantage of lessee.

7. c. Type of Goods or Merchandise- A convenient store is located where there are pedestrians passing by. D. Income Level of Prospective Customer -Th e type of pedestrians and the income level of customer must be taken in to accounted. e. Prospective Sales Volume - High density sales volume need to be located in shopping areas where customers converse to buy essential goods’. f. Municipal on City Ordinances including taxes and fees - The location must not violate city or municipal on finances and the taxes and tees mint be reasonable for the owners of business’. G. Locution of the Areas - The area must be free from floods and other calamities that will endanger the business.

8. 2. Location for Small Industrial Plant or Manufacturing Facilities Environmental factors in locating a manufacturing plant or industrial facilities need to be studied carefully as plant location is a great factor in the investment of funds and its profitability in the long run. The following are important factors to consider: A. Land Area - The contour of the land, its size, and shape must be suitable tar the plant site. It must be free from floods or other environmental hazards that will disturb operation’s B. Facilities for Expansion- The land area must have ample space for plant expansion and provisions for parking facilities for customers and employees. c. Power and Utilities - Availability of power supply and the cost of electricity involve in the operation are great factors in the production of goods. d. Building and Other Utilities - The building must be within the restrictions code of the municipality or city. E. Plant Site Accessibility - The plant site must be accessible to public or service transport for its employees and valued customers.

9. STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS (SWOT) Swot ANALYSIS is an entrepreneurial tool in determining the of the business operation. The product must be evaluated along the following areas: Product strength in the market must have the following: a. Available Technology in Product Processing -Technology is an Important component in producing the product as the economies of scale determines the price index. B. Source of Raw Materials must be Abundant and at Lower Price - The constant supply of raw materials is an important factor in the production of the product. C. Skilled Workers must be Available- Technology must have the component of skilled workers that shall operate the machineries and other equipment. d. Capital investment in Machinery and Operating expenditures – A starting venture may have little investment in terms of machinery and equipment but starting with small capital should generate profitable operation. E. Expertise and Technical skills of the Management Team - A good product is the making of well-concave idea of the management team.

10. 2. Characteristics of Weak Products and Weak Management. A. Poor Quality and High Price- The entrepreneur should not launch a poor product the market as it will surely fail to advance in the sales and profit. B. Product Design and Appeal-P roduct design should appeal to customers demand. C. Production Cost- Production cost is the price demand. d. supply and Demand -Intermittent supply to the market will make customers shift to other products. e. Weak Product Management- Weak management is created when people if the top of the organization fail to sustain a vigorous effort for expansion and growth when management sets on his initial laurels and ventured on vices and other extra activities that will lose his total investment. 3. Sustainable Product Opportunities in the Market: a. Product Demand - Product demand is the greatest opportunity of an Entrepreneur.

11. b. Pce of Poor Quality in the Market - The presence of poor quality product in the market place is an opportunity for the entrepreneur. c. Government Policies and Support - The government support to local entrepreneur is an opportunity for greater expansion. d. Liberal Credit Terms and Interest Rates - Liberal credit terms by banks and other government institutions will generate expansion for the local entrepreneurs. 4 . Treats to Product Profitability and Market Expansion: a. Entrance of Competition- The entrance of many competitors in the market place will definitely give problem to entrepreneurs. b. The supply Of raw materials Will be limited As other competition Be gelting The Same supplier – As demand for Materials Become competitive In price , c. The Emergence of Leftwing Lab our Unions - Many companies close shops with the advent of lab our unions with leftist philosophy as they want more wages and benefits that the company not give.

12. D. The Presence of Double Taxation - T he government already imposed a lot of taxes to the entrepreneur. e. Peace and Order in the Area of Business Operation - Peace and order are components of business growth. Criminality and killings would drive away investors. f. The Cost of Power Supply Cost - of production increases with the cost of utilities like current and water. THE ENTREPRENEUR SHOULD LOOK DEEPER INTO THE FOLLOWING AREAS: The Management Team Management be able to set the direction of the enterprise with a clear MISSION and VISION as the guiding tool for its plans and programs. Plans and programs are tentative activities that will make a definite step towards the accomplishments of target objectives. Objectives set into motion the goals of the enterprise to profitability. The technical and manpower complements are important factors in the success of the business. The entrepreneur cannot do the task alone as he needs people with the same outlook and perseverance as he has, especially at the early stage of the business. They must work hard, persistent and must focus on the vision mission of the business. Manpower complement may need some training and indoctrination of company's operation.

13. 2. The Production Process Product specifications must be maintained according to product standards that are acceptable to customers. Product quality is now the name of the game in business. The management must look into cheap available raw materials in the production of goods. Good quality materials should not be sacrificed in terms of price as poor quality will affect the production of quality products. For service industries like restaurants, hotels, beauty salon, barber shops or even water stations, the customers must be served with dignity and smile. Front line production crew must have the personality that will attract customers. They must possess pleasing personality, clean in looks, and proper attire. 3. The Marketing Program The marketing program needs demand analysis for the last 5 years as to the major users of the product. A new product would need customer viewpoint before it is launched into the market. Product samples may be necessary at the initial stage so that customers' tastes and preferences could be considered before mass production.

14. Product competitiveness is determined by quality and price. A demand and supply analysis must be conducted through marketing research. Marketing research will determine the true picture of the market demand and the product competitors. The growth in market demand needs channels of distribution. The channels of distribution should be measured in terms of the capability of the distributors to handle the product. It must reach the consumer at the time they need it and the price that is affordable to them. 4. The Financial Management Venturing into a business needs financial resources. Money is needed to finance the activities of business. Whatever capital is available determines the kind of business operation. Then, internal source of capital will come from the savings and assets of the starting entrepreneur. Other sources of funds are partnership and stock options. While funds could source from other people, the entrepreneur must look into the controlling management of the business.

15. THE IDENTIFICATION OF BUSINESS OPPORTUNITY The entrepreneur's desire to establish his business is a visible idea yet, it must come into a test whether it is a viable business option. It needs a careful analysis of opportunity evaluation. The following stops still help the prospective entrepreneur evaluate the idea before going into business 1.The starting point of conceiving the idea of the type of business Conceiving a new product is a process of innovation and when this come into a reality, the product must be different from an existing product. The entrepreneur must find a new approach to win customer on his side if the product or service is similar to what is existing in the community. 2. The technical feasibility and time frame An idea is not only concentrated on one entrepreneur. The entrepreneur might have conceived an idea that is also in the mind of other person. The new product must have its technical feasibility and the time to launch the product must be immediately to take ahead before others take the idea. The new product needs testing as to its technical capability to satisfy customers' needs and wants. In the food industry, the growing fast food chain is crowded with growing senior citizens who have money to buy yet they have not discovered their need for health foods with less cholesterol.

16. CAUSES OF BUSINESS FAILURE 1. Business profitability is to provide high benefits to the employees such as profit sharing: 2. Survival from an economic crisis is ability to stay in the industry amidst financial difficulties that cause closure and bankruptcy of other establishments most particularly the competitors; 3. Incremental sales and share of the market is the introduction of new product lines and design that expands market share and attract new market segments; 4. Expansion of market area and product lines such as opening of new outlets, branches and attracting new dealers by offering new product designs and images; 5. Acquisition and ownership of plant machinery and premises in buying or acquiring new plants, factory and other fixed assets shows success in the industry; 6. Getting a long term business contract with the government or a big business Success is having avoided the causes of failure which the entrepreneur is supposed to avoid. They are as follow: 1. Undercapitalization -The entrepreneur must make sure that before the business started, there must be a contingency fund if in case the expected ROI (Return on Investment) did not operate.

17. 2. Poor Business Location-T he location must be strategic enough for the suppliers of the raw materials, accessible to the customers, convenience to the future market. 3. Negligence to Public Policy -"Ignorance of the law in not an excuse" emphasizes that the bus affect organization must be aware of the existing and proposed law that can affect the operation of the entity. 4. Unprepared to Risk- The entrepreneur may not be able to control the market situation but there is surely a way to manage the risk in business that arises from fortuitous events like fire, flood, or theft. 5. No New Product or Service - The entrepreneur must be creative and innovative to promote new product design and image. 6. Unsatisfactorily Performance of Relatives -Blood is thicker than water when workers consider their employment by relatives (even family members) is a matter of privilege rather than a duty to be sincere and productive. 7. Irregular Attendance - The absentee entrepreneur will not be there to make critical decision.

18. SIGNS THAT BUSINESS MIGHT FAIL 1. Lack of Experience by the Entrepreneur 2. Lack of Capital 3. Poor Location 4. Wrong or Inaccurate Inventory 5. Permanent Equipment Problems 6. Poor Credit Practices 7. Increasing Personal Expenses 8. Premature Expansions of the Outlets 9. Bad Attitude of the Owner or Employees 10. Overuse of resources 11. Poor Collection 12. Low Sales in Daily Operations 13. Poor Inventory Management 14. Competition (external and internal) 15. Crime (Internal and External)

19. TACTICS TO SOLVE BANKRUPTCY 1. Make a new SWOT analysis considering all factors of present business condition 2. Start collecting the accounts receivable and notes receivables. In An impending bankruptcy, cash is king. 3. At the same token, minimize credit sales. Give a higher discount for cash sales. 4. Borrow money while you are still in a good credit standing. 5. Increase the prices of tack on additional charges much axe vice fees ne hamming fees when appropriate 6. Move Inventory either by returning them to the supplier for a refund or selling them to the public at deep discounts. 7. Monitor cash-on-hand on a daily basis. 8. Delay payments to suppliers and creditors. Offer to pay them off with your inventory instead such as in an exchange deal, Le. groceries for employee's salaries if you are a grocery store. 9. Renegotiate contracts for smaller and cheaper rent area, 10. Move out to a smaller and cheaper rent area. 11. Institute drastic belt tightening measures. No more Christmas Par-tee or a basketball tournament. 12. your personal expenses 13. Outsource. Get someone from the outside what you do in business. For example, let someone manufacture your goods to save on production cost. 14. Find new clients or customers to increase sales. 15. Find new salespeople to sell on pure commission basis.

20. 16. To stave off lay-offs, institute a three-day workweek. Ask employees to go on a forced leave or vacation. 17. Terminate unproductive workers. If still not enough, terminate unnecessary employees. Consolidate job items or descriptions. Ask for voluntary overtime without pay. 18. Get everyone involve in generating sales, including janitor. Robust sales can stop an impeding bankruptcy. 19. Liquidate or sell your office furniture, fixtures, or equipment to generate cash Sell your car or house or both. 20. Get professional help, or at the very least, ask a friend to counsel you on what to do on next. Fresh eyes can see well than do. Perhaps, that unsolicited advice is all that need. 21. Find a prospective buyer of your business in whole or in part, but it is much better if you can sell the whole business. This way you will fetch a better price213and get out of the business completely or at a best possible position. 22. As a Plan B, make plans for filing bankruptcy. Consult a lawyer.