A new business venture is confronted with the immediate concern of gaining at least a foothold in the market it desires to serve. An established business, however, has a different concern- it must grow or at least maintain its competitive stance. In both cases, there is a need to adapt new business ideas. This could mean improvements to products or services offered, or in the way customers are served, or innovation in doing business.
The product or service offering may be improved in terms of:
1. Performance- like the chair that can carry more weight.
2. Maintenance cost- like the car battery that requires less servicing that competing brands.
3. Acquisition cost- like the latest low priced model of a certain brand of cellphone compared the competition. 4. Salvage value- like the steel filling cabinet that has a higher salvage value.
5. Uses- like the flypaper that can also be a mousetrap.
Improvement of service to customer s may mean faster delivery or prompt aftersales service when required. An innovation in doing business could mean transactions are entertained 24 hours a day.
What is a Sound Business Idea?
Entrepreneur spend time and money exploiting business ideas. The high rate of failure in new venture business, however, indicates a concomitant failure on the part of entrepreneurs to adapt schemes that will work. Apparently, the business ideas they adapted are not sound. What is a sound business idea and how important is it to the entrepreneur?
A sound business idea may be defined as the economic opportunity which is within the reach of the entrepreneur and which will provide him with a desirable value. An entrepreneur who is will grounded in the concept of sound business idea will be able to save time, effort, and money in pursuing his goals.
When as aspiring entrepreneur is confronted with a business idea, it is to his best interest to determine soundness. He should do it before committing himself financially and otherwise.
Any successful venture started with the adaption of a sound business idea. For instance, before the advent of parcel delivery services, people had to convent with the very poor service rendered by the post office. Complaints about delayed delivery and lost parcel to become common. The situation of ripe for a business solution. Enterprising personalities recognized the economic opportunity and adapted a business idea to serve the people better. The success of DHL, FEDEX, and LBC proves that the business idea they adapted is a sound one.
That production of bottled mineral water is another example of a business idea that was proven to be sound.
Business idea differ in form. Examples of this forms are the following:
1. An old type of business can be professionalized. Operation can be stream lined and better organized. An example of the professional approach that is applied to restaurant is McDonald’s. Food firms such as McDonald’s stress presentation, service, cleanliness, and quality.
2. A standard product can be customized. This is what a recording company did when it to produced minus one music in three pitch level: low pitch, medium pitch, and high pitch. This product, in combination with what the pitch control mechanism of the VCD equipment can do offers a terrific opportunity to perfectly fit any singer’s voice.
3. New technology can be adapted to manufacture an old product. When a certain bakery started using machines to produce various kinds of bread, production cost decreased and more quantities could be produced
quickly.
4. Imported products can be replaced by local products. Importing products can be too cumbersome and
difficult. Local production could be a good business idea. For example, the production of local textbooks was thought to be a good business idea. It turned out to be a lucrative venture.
5. Business operations can be internationalized. This is a real challenge to the entrepreneur. The rewards are great, however, when he is successful. The entry of Jollibee in the foreign market, for instance, is an indication of the possibility of opportunities in the international market, for instance, is an indication of the possibility of opportunities in the international operations.
Procedure in Determining the Best Business Idea
Business idea may be generated by anyone connected with the firm, but it is very important that the most applicable idea to the firm’s objectives and resources in chosen. As such, a procedure must be adopted. The steps in the proposed procedure as follows;
1. preparation of the lists of business ideas;
Success in Competition
2. screening of the listed ideas; and
3. final selection.
Methods of Searching for Ideas
There are two general methods of generating business ideas. They are as follows: 1. unanticipated means; and
2. deliberate search.
Unanticipated Means
When the entrepreneur finds business ideas without serious effort, the method is referred to as unanticipated means. Included in this means are the following:
1. the person’s work
2. the person’s hobbies;
3. the person’s acquaintances; and
4. a chance event encountered by the person.
Unanticipated Means
When the entrepreneur finds business ideas without serious effort, the method is referred to as unanticipated means. Included in this means are the following:
1. the person’s work
2. the person’s hobbies;
3. the person’s acquaintances; and
4. a chance event encountered by the person.
The Person’s Work
Employees who are in direct contact with customers are sometimes confronted with demand for products or services that are not currently provided by the company. To the enterprising employee, this may be interpreted as an opportunity for entrepreneurship. As an example may be provided as follows:
Mr. Rolando So was a teacher in a private elementary school. In the course of his duties, he noticed that there were pupils who may be considered as “slow learners.” He could not anything to help those pupils. The parents were so concerned about the performance of their children, so they requested Mr. So for private torturing during his free time.
Mr. So accepted the offer and he was ρáíd a ρrémíùm rate. The demand for his services increased, however, as the year passed. This prompted him to resign from his regular teaching job in the school. Still, demand increased until he could no longer cope with it. He decided to invite to other to help him. He organized a full-pledged tutorial center. Five years later, his staffed consisted of 15 regular tutors and one full-time secretary. It was clear that Mr. So did not seek the opportunity for entrepreneurship. Yet, he was confronted face-to-face with one during his tour of duty and he accepted the challenge.
The Person’s Hobbies
There are times when a person’s hobby turns out to be a business opportunity. A hobby is a useful means of developing some skill which could be useful late when the hobbyist decided to operate a business. Entrepreneurship literature abounds with stories of people with hobbies which were later converted into successful business ventures.
The case of Mr. Aquilino Co is an illustration of how to hobby can sometimes lead to entrepreneurship. Mr. So began learning how to play the guitar at age six. As he grew up, he became more adept at playing it. His eagerness to play pushed him to acquire different guitar models.
His collection includes a Spanish flamenco guitar, a Gibson electric guitar, an Italian mandolin, and some others. Soon, he began to worry about keeping his instruments in good working condition.
Mr. Co went from the guitar maker to another to get some tips on guitar visit maintenance. He bought some tools and soon he learned not only maintenance but the actual manufacture of guitar as well.
Mr. Co attempted to make a guitar that would suit requirements. After several disappointing prototypes, he finally produces a guitar that he really appreciates. His friends are delighted and they urged to make some more. His friends turned out to be his first costumers. Soon, orders from other people, mostly stranger, came pouring in. When he hired person to help him process the orders, he was not aware that he has started his own business venture.
The Person’s Acquaintance
There are times when person fails to notice the existence of a business opportunity. Sometimes, it takes another person to make him aware of the wisdom of starting a new business venture. This other person could be a friend, a neighbor, or just anybody he meets once in a while. The case of Mr. Manuel Ong is an illustration.
For five years, Mr. Ong had a job as book salesman. He worked with a well-known publisher and he was the best salesman of the company. Once, a friend dropped by his home for a social visit. They conversed for a while until their discussion drifted toward entrepreneurship. His friends suggested that maybe it’s about time for him to start operating his own business. His friends thought that a bookstore situated at the front portion of his residential lot might be a nice idea.
After the visitor has left, Mr. Ong began to think that maybe the idea of a bookstore was a good one because of their reason: he has as good at selling book; his place as right in the middle of the city; and the only bookstore in the city carries a limited number of titles.
A Chance Event Encountered by the Person
There are times when a person encounters an event that will provide him with a clue to a business venture. The case of Mr. Lorenzo de Guzman is an interesting one. Once, Lorenzo ρáíd a visit to Mr. Froilan Pascual. His former classmate in the elementary grades. Froilan is married to a Batangeuña and they are residing in her hometown of Lipa City. During lunch, Lorenzo notice that the tomatoes served by Froilan’s wife were not as a good as those that are found in his hometown of Aliaga, Nueva Ecija. When he enquired about the difference, Froilan replied what Batangas is not excellent producer of tomatoes and they have to make do with what the local farms can offer.
The information provided by Froilan inspired Lorenzo to make some inquiry on the feasibility of transporting commercial quantities of tomatoes in Batangas. Within a few years, Lorenzo became a successful trader of vegetable.
Deliberate Search
A disadvantage of an unanticipated means in idea generation certaining the exact date when the idea will come pouring In. To offset problem, a deliberate search for ideas is made. This type of idea generation takes the form of the following:
1. Using search question; and 2. Idea promoting
.
Business idea are expected to provide answers to some needs. Answer can be obtained if the right question are asked. When question are used to draw out specific answers, they are referred to as “search questions.” Example of search question are:
1. How can this product be made differently?
2. What will motivate the costumers to buy my product instead of the competitor’s product?
Idea Prompting
Encounters with someone else’s idea, or a costumer request, or some other event may provide hints or cues leading to business ideas. For instance, somebody made a casual remark on the difficulty of preparing and meeting the various requirements of a wedding. That idea, when properly viewed, may just lead to the listing of a business idea.
Costumer requests could also be analyzed to give way to idea prompting.
The increasing number of burglaries may lead someone to think a business solution that will offer protection to homeowner.
Screening Generated Ideas
The search for a sound business idea call for the preparation of a list so the best can be selected. Before selection is made, however, the ideas listed must be screened first.
Business ideas may be screened with the used of the following criteria: 1. Market feasibility;
2. Technical feasibility;
3. Financing feasibility; and
4. Financial feasibility;
Market Feasibility
A business idea must pass the test of market feasibility. This means that there must be some positive indication about the following:
1. stable and sufficient demand; and
2.potencial competitive strength of the firm.
Stable and Sufficient Demand. The business idea will not last if there is insufficient demand for whatever product service that is contemplated. Demand that remains constant or show signs of growth throughout long period indicates the probability of market feasibility. Demand must also be large enough to justify the investments that will be needed by the venture.
Competitive Strength. The business idea must be such that the venture can effectively compete with current or potential competitors. The competitive strength of methods, promotion methods, and others.
The proposed business idea must be strong enough to withstand competition.
Source of Market Information. Information Required to determine the market fit of the business idea may be derived from the following:
1. Prior studies of the market or related markets by other companies, government agencies, and entrepreneur.
2. Actual polls of populations sample representing typical costumers. The means used include the following:
a. mail questionnaires;
b. advertisements incorporating feedback mechanism such as mail responses; c. phone interviews; and
b. personals interviews;
3. Negotiations with prospective customers to solicit order the determine whether or not they will actually buy.
Technical Feasibility
Business ideas oftentimes appear easy to execute but it is not really so when converting them into real products or services with the required quality or quantity.
Anything can go wrong in the attempt to assemble the needed resources. Difficulties may be encountered in the procurement of materials and manpower. Production difficulties could take the form of unstable supply of materials, unreliable of fluctuating power supply and others. Nevertheless, technical concerns such as those must be cleared before subjecting the business idea to further consideration.
One of the factors necessary in determining whether a business idea should be considered or not is financing. This means that there must be sufficient funds to finance operations.
The proposed owners of the venture must have sufficient funds to finance operations. The proposed owners of the venture must have sufficient capital or if insufficient, must be of good credit standing in the community. In general, the sources of financing include the following:
1. The preparation of projected financial statements, such as a. income statement;
b. balance sheet statement
c. cash flow statement
2. The determination and analysis of financial ratios derived from the projected statement.
Projected Financial Statements
The forecast of something which will happen in the future is referred to as a projected financial statement.
The projected income statement is a financial record summarizing a firm’s planned or expected financial performance in terms of revenues, expenses and profits over a given period of time.
The projected balance sheet shows the planned or expected financial position of the enterprise on a particular date.
The projected cash flow statement is one in which shows the planned or expected cash sale and or purchase.
Financial Selection
The purpose of screening is to eliminate from the list the generated ideas that did not pass the adapted criteria. After screening, the list may appear to be any of the following.
1. status quo- means all business ideas listed passed the adapted criteria.
2. shorter list- means some of the ideas generated were eliminated.
3. zero listing- means all business ideas generated and listed were eliminated.
Final selection is applied status quo list, or shorter list, whichever is produced by screening stage. A new set
of criteria adapted so the best among those listed can be determined.
Organizational Culture and Creativity
Effective innovation assures the continuous survival and growth of enterprise, but innovation can only thrive in a creative organization with a culture characterized by the following:
1. encouragement of creativity and risk-taking
2. rewards for creativity
3. open communication
4. allowance for errors
5. a climate of participation
6. structural mechanisms that aid creativity 7. training in the creative process
8. flexibility
Encouragement of creativity and risk-taking
Creativity refers to activities involve in finding solutions to problems that hinders the achievement of the firm’s objectives. It is the proactive way of solving problems. In a creative environment solution to problems are expected to come by more easily. If this is true, innovation may will thrive an organization that encourages creativity.
Rewards for Creativity
When an activity is rewarded there is an assurance that such activity will continue existing. Creativity is no exception.
Open Communication
The three flowing exchange of ideas between the members of an organization as referred to as “open communication”. Communication flows through the vertical and horizontal relationships in the organizations structure. An important advantage of open communication is that problems directed to persons with the ability to offer solutions.
Allowance for errors
Innovation thrives in an environment that provides allowance for errors. It’s not right to expect any activity to be devoid of imperfections. When an error is detected a move should be made to correct it. When this is done, creative individual is not discouraged from pursuing his creative endeavors. In the end, it is the company that benefits.
Climate of Participation
When somebody feels that the organization espouses participation, that person will not hesitate to make contribution to the creative efforts of the organization. The firm will benefit from the good effects of employee participation. This is so because there is a chance that more bright ideas will be generated if employees feel free to participate in the creation of solutions to problems. Moreover, an employee who participates in the creative effort feels committed to the exercise and as a result, he is more inclined to support the idea that is chosen.
Structural Mechanisms that Aid creativity
The urge to create solutions to problems would be heeded by the innovative person more easily if there are structured mechanisms within the organization to support the exercise. The person in charge of the unit is usually qualified to manage such activities as creativity.
Training in the Creative Process
Creative pursuits are a bit complicated and it will help if those expected to performs such function are properly trained. Although some persons have natural talents for generating business ideas, those who are not considered as such would benefit from acquiring the required skills through training.
Flexibility
One of the distinct characteristics of the creative organizations is flexibility. The creative employee is allowed to engage in creative activities on hours most convenient to him and to the company. Whenever possible, his working hours are adjusted to accommodate the time that he is most creative. Apart from adjustment in the time schedule, flexibility may also be applied to the place of work, like allowing the creative employee to work in the place where he feels he can be more creative.
ANSWER THE FOLLOWING:
1. Briefly discuss 10 new ideas and/or concepts you learned in this chapter. Write two paragraphs consisting introduction and body only explaining each new idea and/or concept. Please don’t use bullets or numbers just paragraph form only
2. Write your reflection about a specific topic discussed in this chapter. Your reflection can include the reasons why you are interested in the subject matter, your prior knowledge about the topic,
The product or service offering may be improved in terms of:
1. Performance- like the chair that can carry more weight.
2. Maintenance cost- like the car battery that requires less servicing that competing brands.
3. Acquisition cost- like the latest low priced model of a certain brand of cellphone compared the competition. 4. Salvage value- like the steel filling cabinet that has a higher salvage value.
5. Uses- like the flypaper that can also be a mousetrap.
Improvement of service to customer s may mean faster delivery or prompt aftersales service when required. An innovation in doing business could mean transactions are entertained 24 hours a day.
What is a Sound Business Idea?
Entrepreneur spend time and money exploiting business ideas. The high rate of failure in new venture business, however, indicates a concomitant failure on the part of entrepreneurs to adapt schemes that will work. Apparently, the business ideas they adapted are not sound. What is a sound business idea and how important is it to the entrepreneur?
A sound business idea may be defined as the economic opportunity which is within the reach of the entrepreneur and which will provide him with a desirable value. An entrepreneur who is will grounded in the concept of sound business idea will be able to save time, effort, and money in pursuing his goals.
When as aspiring entrepreneur is confronted with a business idea, it is to his best interest to determine soundness. He should do it before committing himself financially and otherwise.
Any successful venture started with the adaption of a sound business idea. For instance, before the advent of parcel delivery services, people had to convent with the very poor service rendered by the post office. Complaints about delayed delivery and lost parcel to become common. The situation of ripe for a business solution. Enterprising personalities recognized the economic opportunity and adapted a business idea to serve the people better. The success of DHL, FEDEX, and LBC proves that the business idea they adapted is a sound one.
That production of bottled mineral water is another example of a business idea that was proven to be sound.
Business idea differ in form. Examples of this forms are the following:
1. An old type of business can be professionalized. Operation can be stream lined and better organized. An example of the professional approach that is applied to restaurant is McDonald’s. Food firms such as McDonald’s stress presentation, service, cleanliness, and quality.
2. A standard product can be customized. This is what a recording company did when it to produced minus one music in three pitch level: low pitch, medium pitch, and high pitch. This product, in combination with what the pitch control mechanism of the VCD equipment can do offers a terrific opportunity to perfectly fit any singer’s voice.
3. New technology can be adapted to manufacture an old product. When a certain bakery started using machines to produce various kinds of bread, production cost decreased and more quantities could be produced
quickly.
4. Imported products can be replaced by local products. Importing products can be too cumbersome and
difficult. Local production could be a good business idea. For example, the production of local textbooks was thought to be a good business idea. It turned out to be a lucrative venture.
5. Business operations can be internationalized. This is a real challenge to the entrepreneur. The rewards are great, however, when he is successful. The entry of Jollibee in the foreign market, for instance, is an indication of the possibility of opportunities in the international market, for instance, is an indication of the possibility of opportunities in the international operations.
Procedure in Determining the Best Business Idea
Business idea may be generated by anyone connected with the firm, but it is very important that the most applicable idea to the firm’s objectives and resources in chosen. As such, a procedure must be adopted. The steps in the proposed procedure as follows;
1. preparation of the lists of business ideas;
Success in Competition
2. screening of the listed ideas; and
3. final selection.
Methods of Searching for Ideas
There are two general methods of generating business ideas. They are as follows: 1. unanticipated means; and
2. deliberate search.
Unanticipated Means
When the entrepreneur finds business ideas without serious effort, the method is referred to as unanticipated means. Included in this means are the following:
1. the person’s work
2. the person’s hobbies;
3. the person’s acquaintances; and
4. a chance event encountered by the person.
Unanticipated Means
When the entrepreneur finds business ideas without serious effort, the method is referred to as unanticipated means. Included in this means are the following:
1. the person’s work
2. the person’s hobbies;
3. the person’s acquaintances; and
4. a chance event encountered by the person.
The Person’s Work
Employees who are in direct contact with customers are sometimes confronted with demand for products or services that are not currently provided by the company. To the enterprising employee, this may be interpreted as an opportunity for entrepreneurship. As an example may be provided as follows:
Mr. Rolando So was a teacher in a private elementary school. In the course of his duties, he noticed that there were pupils who may be considered as “slow learners.” He could not anything to help those pupils. The parents were so concerned about the performance of their children, so they requested Mr. So for private torturing during his free time.
Mr. So accepted the offer and he was ρáíd a ρrémíùm rate. The demand for his services increased, however, as the year passed. This prompted him to resign from his regular teaching job in the school. Still, demand increased until he could no longer cope with it. He decided to invite to other to help him. He organized a full-pledged tutorial center. Five years later, his staffed consisted of 15 regular tutors and one full-time secretary. It was clear that Mr. So did not seek the opportunity for entrepreneurship. Yet, he was confronted face-to-face with one during his tour of duty and he accepted the challenge.
The Person’s Hobbies
There are times when a person’s hobby turns out to be a business opportunity. A hobby is a useful means of developing some skill which could be useful late when the hobbyist decided to operate a business. Entrepreneurship literature abounds with stories of people with hobbies which were later converted into successful business ventures.
The case of Mr. Aquilino Co is an illustration of how to hobby can sometimes lead to entrepreneurship. Mr. So began learning how to play the guitar at age six. As he grew up, he became more adept at playing it. His eagerness to play pushed him to acquire different guitar models.
His collection includes a Spanish flamenco guitar, a Gibson electric guitar, an Italian mandolin, and some others. Soon, he began to worry about keeping his instruments in good working condition.
Mr. Co went from the guitar maker to another to get some tips on guitar visit maintenance. He bought some tools and soon he learned not only maintenance but the actual manufacture of guitar as well.
Mr. Co attempted to make a guitar that would suit requirements. After several disappointing prototypes, he finally produces a guitar that he really appreciates. His friends are delighted and they urged to make some more. His friends turned out to be his first costumers. Soon, orders from other people, mostly stranger, came pouring in. When he hired person to help him process the orders, he was not aware that he has started his own business venture.
The Person’s Acquaintance
There are times when person fails to notice the existence of a business opportunity. Sometimes, it takes another person to make him aware of the wisdom of starting a new business venture. This other person could be a friend, a neighbor, or just anybody he meets once in a while. The case of Mr. Manuel Ong is an illustration.
For five years, Mr. Ong had a job as book salesman. He worked with a well-known publisher and he was the best salesman of the company. Once, a friend dropped by his home for a social visit. They conversed for a while until their discussion drifted toward entrepreneurship. His friends suggested that maybe it’s about time for him to start operating his own business. His friends thought that a bookstore situated at the front portion of his residential lot might be a nice idea.
After the visitor has left, Mr. Ong began to think that maybe the idea of a bookstore was a good one because of their reason: he has as good at selling book; his place as right in the middle of the city; and the only bookstore in the city carries a limited number of titles.
A Chance Event Encountered by the Person
There are times when a person encounters an event that will provide him with a clue to a business venture. The case of Mr. Lorenzo de Guzman is an interesting one. Once, Lorenzo ρáíd a visit to Mr. Froilan Pascual. His former classmate in the elementary grades. Froilan is married to a Batangeuña and they are residing in her hometown of Lipa City. During lunch, Lorenzo notice that the tomatoes served by Froilan’s wife were not as a good as those that are found in his hometown of Aliaga, Nueva Ecija. When he enquired about the difference, Froilan replied what Batangas is not excellent producer of tomatoes and they have to make do with what the local farms can offer.
The information provided by Froilan inspired Lorenzo to make some inquiry on the feasibility of transporting commercial quantities of tomatoes in Batangas. Within a few years, Lorenzo became a successful trader of vegetable.
Deliberate Search
A disadvantage of an unanticipated means in idea generation certaining the exact date when the idea will come pouring In. To offset problem, a deliberate search for ideas is made. This type of idea generation takes the form of the following:
1. Using search question; and 2. Idea promoting
.
Business idea are expected to provide answers to some needs. Answer can be obtained if the right question are asked. When question are used to draw out specific answers, they are referred to as “search questions.” Example of search question are:
1. How can this product be made differently?
2. What will motivate the costumers to buy my product instead of the competitor’s product?
Idea Prompting
Encounters with someone else’s idea, or a costumer request, or some other event may provide hints or cues leading to business ideas. For instance, somebody made a casual remark on the difficulty of preparing and meeting the various requirements of a wedding. That idea, when properly viewed, may just lead to the listing of a business idea.
Costumer requests could also be analyzed to give way to idea prompting.
The increasing number of burglaries may lead someone to think a business solution that will offer protection to homeowner.
Screening Generated Ideas
The search for a sound business idea call for the preparation of a list so the best can be selected. Before selection is made, however, the ideas listed must be screened first.
Business ideas may be screened with the used of the following criteria: 1. Market feasibility;
2. Technical feasibility;
3. Financing feasibility; and
4. Financial feasibility;
Market Feasibility
A business idea must pass the test of market feasibility. This means that there must be some positive indication about the following:
1. stable and sufficient demand; and
2.potencial competitive strength of the firm.
Stable and Sufficient Demand. The business idea will not last if there is insufficient demand for whatever product service that is contemplated. Demand that remains constant or show signs of growth throughout long period indicates the probability of market feasibility. Demand must also be large enough to justify the investments that will be needed by the venture.
Competitive Strength. The business idea must be such that the venture can effectively compete with current or potential competitors. The competitive strength of methods, promotion methods, and others.
The proposed business idea must be strong enough to withstand competition.
Source of Market Information. Information Required to determine the market fit of the business idea may be derived from the following:
1. Prior studies of the market or related markets by other companies, government agencies, and entrepreneur.
2. Actual polls of populations sample representing typical costumers. The means used include the following:
a. mail questionnaires;
b. advertisements incorporating feedback mechanism such as mail responses; c. phone interviews; and
b. personals interviews;
3. Negotiations with prospective customers to solicit order the determine whether or not they will actually buy.
Technical Feasibility
Business ideas oftentimes appear easy to execute but it is not really so when converting them into real products or services with the required quality or quantity.
Anything can go wrong in the attempt to assemble the needed resources. Difficulties may be encountered in the procurement of materials and manpower. Production difficulties could take the form of unstable supply of materials, unreliable of fluctuating power supply and others. Nevertheless, technical concerns such as those must be cleared before subjecting the business idea to further consideration.
One of the factors necessary in determining whether a business idea should be considered or not is financing. This means that there must be sufficient funds to finance operations.
The proposed owners of the venture must have sufficient funds to finance operations. The proposed owners of the venture must have sufficient capital or if insufficient, must be of good credit standing in the community. In general, the sources of financing include the following:
1. The preparation of projected financial statements, such as a. income statement;
b. balance sheet statement
c. cash flow statement
2. The determination and analysis of financial ratios derived from the projected statement.
Projected Financial Statements
The forecast of something which will happen in the future is referred to as a projected financial statement.
The projected income statement is a financial record summarizing a firm’s planned or expected financial performance in terms of revenues, expenses and profits over a given period of time.
The projected balance sheet shows the planned or expected financial position of the enterprise on a particular date.
The projected cash flow statement is one in which shows the planned or expected cash sale and or purchase.
Financial Selection
The purpose of screening is to eliminate from the list the generated ideas that did not pass the adapted criteria. After screening, the list may appear to be any of the following.
1. status quo- means all business ideas listed passed the adapted criteria.
2. shorter list- means some of the ideas generated were eliminated.
3. zero listing- means all business ideas generated and listed were eliminated.
Final selection is applied status quo list, or shorter list, whichever is produced by screening stage. A new set
of criteria adapted so the best among those listed can be determined.
Organizational Culture and Creativity
Effective innovation assures the continuous survival and growth of enterprise, but innovation can only thrive in a creative organization with a culture characterized by the following:
1. encouragement of creativity and risk-taking
2. rewards for creativity
3. open communication
4. allowance for errors
5. a climate of participation
6. structural mechanisms that aid creativity 7. training in the creative process
8. flexibility
Encouragement of creativity and risk-taking
Creativity refers to activities involve in finding solutions to problems that hinders the achievement of the firm’s objectives. It is the proactive way of solving problems. In a creative environment solution to problems are expected to come by more easily. If this is true, innovation may will thrive an organization that encourages creativity.
Rewards for Creativity
When an activity is rewarded there is an assurance that such activity will continue existing. Creativity is no exception.
Open Communication
The three flowing exchange of ideas between the members of an organization as referred to as “open communication”. Communication flows through the vertical and horizontal relationships in the organizations structure. An important advantage of open communication is that problems directed to persons with the ability to offer solutions.
Allowance for errors
Innovation thrives in an environment that provides allowance for errors. It’s not right to expect any activity to be devoid of imperfections. When an error is detected a move should be made to correct it. When this is done, creative individual is not discouraged from pursuing his creative endeavors. In the end, it is the company that benefits.
Climate of Participation
When somebody feels that the organization espouses participation, that person will not hesitate to make contribution to the creative efforts of the organization. The firm will benefit from the good effects of employee participation. This is so because there is a chance that more bright ideas will be generated if employees feel free to participate in the creation of solutions to problems. Moreover, an employee who participates in the creative effort feels committed to the exercise and as a result, he is more inclined to support the idea that is chosen.
Structural Mechanisms that Aid creativity
The urge to create solutions to problems would be heeded by the innovative person more easily if there are structured mechanisms within the organization to support the exercise. The person in charge of the unit is usually qualified to manage such activities as creativity.
Training in the Creative Process
Creative pursuits are a bit complicated and it will help if those expected to performs such function are properly trained. Although some persons have natural talents for generating business ideas, those who are not considered as such would benefit from acquiring the required skills through training.
Flexibility
One of the distinct characteristics of the creative organizations is flexibility. The creative employee is allowed to engage in creative activities on hours most convenient to him and to the company. Whenever possible, his working hours are adjusted to accommodate the time that he is most creative. Apart from adjustment in the time schedule, flexibility may also be applied to the place of work, like allowing the creative employee to work in the place where he feels he can be more creative.
ANSWER THE FOLLOWING:
1. Briefly discuss 10 new ideas and/or concepts you learned in this chapter. Write two paragraphs consisting introduction and body only explaining each new idea and/or concept. Please don’t use bullets or numbers just paragraph form only
2. Write your reflection about a specific topic discussed in this chapter. Your reflection can include the reasons why you are interested in the subject matter, your prior knowledge about the topic,