ENTREPRENEURSHIP

MODULE 2
 4. EDICRRSTO ________________ 9. IMCLTEA ________________
5. SUTEMOSRC ________________ 10. NTERTSAN ________________

Lesson
Recognize
What is It a Potential Market
1

Entrepreneurial Ideas
What’s In
The creation of an entrepreneurial idea leads to the identification of
entrepreneurial opportunities, which in turn results in the opening of an entrepreneurial
In the previous lesson, you already know about the difference between a
venture. and an entrepreneur. Knowing all the entrepreneurial concepts will not
businessman
assure a person of becoming a successful entrepreneur and not all business people
are entrepreneurs. Some say being an entrepreneur is a calling; a lot of qualities must
CO_Q1_Entrepreneurship S
4 sustainable. So, if you are given a
be possessed to be considered successful and
Module 2
great opportunity to venture into the field of entrepreneurship, it may be a long process
to undertake and you must have the willingness to take a risk. Also, you’re not only
School, 2017, C&E publishing page 46, Aduana, 2017).

Creation of Identification of Opening of

entrepreneurial entrepreneurial entrepreneurial
Ideas Opportunities Venture

Figure 1. The Entrepreneurial Process of Creating New Venture

Essentials in Entrepreneur’s Opportunity – Seeking
These are the basic foundation that the entrepreneur must have in seeking
opportunities:
Entrepreneurial mind frame. This allows the entrepreneur to see things in a
very positive and optimistic way in the midst of difficult situation. Being a risk - taker,
an entrepreneur can find solutions when problems arise.

Entrepreneurial heart flame. Entrepreneurs are driven by passion; they are

very positive and optimistic way in the midst of difficult situation. Being a risk - taker,
an entrepreneur can find solutions when problems arise.

Entrepreneurial heart flame. Entrepreneurs are driven by passion; they are

attracted to discover satisfaction in the act and process of discovery. Passion is the
great desire of an entrepreneur to achieve his/her goals.
Entrepreneurial gut game. This refers to the ability of the entrepreneur of
being intuitive. This also known as intuition. The gut game also means confidence in
one’s self and the firm belief that everything you aspire can be reached.
Sources of Opportunities
There are many ways to discover opportunities. Looking at the big picture,
some have noticed the emerging trends and patterns for business opportunities. While
others are trying to find out their target market. The following are some sources of
opportunities:
one’s self and the firm belief that everything you aspire can be reached.
Sources of Opportunities
There are many ways to discover opportunities. Looking at the big picture,
some have noticed the emerging trends and patterns for business opportunities. While
others are trying to find out their target market. The following are some sources of
opportunities:

1. Changes in the environment

Entrepreneurial ideas arise when changes happen in the external environment.
A person with an entrepreneurial drive views these changes positively. External
environment refers to the physical environment, societal environment, and industry
environment where the business operates.
1.1 The Physical environment includes

CO_Q1_Entrepreneurship
 a. Climate – the weather conditions.
b. Natural resources – such as minerals, forests, water, and fertile land
that occur in nature and can be used for economic gain.
c. Wildlife – includes all mammals, birds, reptiles, fish, etc., that live in
the wild.
1.2 The Societal environment includes the various forces like
a. Political forces – includes all the laws, rules, and regulations that
govern business practices as well as the permits, approvals, and
licenses necessary to operate the business.
b. Economic forces – such as income level and employment rate.
c. Sociocultural forces – customs, lifestyles and values that
characterize a society.
d. Technological environment – new inventions and technology
innovations.
1.3 The Industry environment of the business includes:
a. Competitors
b. Customers
c. Creditors
d. Employees
e. Government
f. Suppliers
For example, one factor in the physical environment that can easily change
is the climate. The temperature is very high during summer but very low during the
rainy season. An individual with entrepreneurial drive can be extremely imaginative
and inventive in identifying opportunities. He/she can venture on a business that
responds to the needs of the people during summer and rainy season.
 rainy season. An individual with entrepreneurial drive can be extremely imaginative
and inventive in identifying opportunities. He/she can venture on a business that
responds to the needs of the people during summer and rainy season.

2. Technological discovery and advancement

A person with entrepreneurial interest sees possibility of business opportunities
in any new discovery or because of the use of latest technology.
For example, an individual with knowledge in repair and installation of a
machine engine discovers additional engine parts that considerably reduce fuel
consumption.

6 CO_Q1_Entrepreneurship
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3. Government’s thrust, programs, and policies
The priorities, projects, programs, and policies of the government are also good
sources of ideas.
For example, the use of firecrackers to celebrate New Year’s Eve is strictly
prohibited. People without entrepreneurial interest will view the ordinance as a plain
restriction. However, for an entrepreneur, it is a business opportunity to come up with
a new product that will serve as a substitute for firecrackers.

4. People’s interest
The interest, hobbies, and preferences of people are rich sources of
entrepreneurial ideas, like the increasing number of Internet Cafés at present could
lead to the strong attachment of young people to computers.
lead to the strong attachment of young people to computers.

5. Past experiences
The expertise and skills developed by a person who has worked in a particular
field may lead to the opening of a related business enterprise.
For example, an accountant who has learned the appropriate accounting and
management skills and techniques in a prominent accounting firm can start his/her
business venture by opening his/her own accounting firm.

Forces of Competition Model

It is also known as the “five forces of competition”. An industry environment is
a competitive environment. Regardless of what product or services you have,
Forces of Competition Model
It is also known as the “five forces of competition”. An industry environment is
a competitive environment. Regardless of what product or services you have,
competition is always present.
Competition – it is the act or process of trying to get or win something.
For example, the prices are lower when there is a competition among the
stores.
These are the five forces competing within the industry:
Buyers
Potential new entrants
Rivalry among existing firms
Substitute products
Supplier
1. Buyers
The buyers are the ones that pay cash in exchange for your goods and services.
One example is the influence of the price or in the bargaining strategy. The buyer has
a strong and magnified bargaining power. The threat of its bargaining power will be
less if the following factors are noticed:
a. There are several suppliers available in the market.
b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
e. The buyer purchases large portions of the seller’s product or services.
2. Potential New Entrants
A new entrant is defined as companies or businesses that have the ability to
 e. The buyer purchases large portions of the seller’s product or services.
2. Potential New Entrants
A new entrant is defined as companies or businesses that have the ability to
penetrate or enter into a particular industry. For example, in the level of capital
requirements, if the business requires huge capital, new entrants should decline to join
the business. This gives a threat to the business. This can be noticed if there is the
presence of the following factors:
a. Substantial capital requirement
b. Strict government policy
c. Difficulty in accessing distribution channels
d. Economies of scale
e. High cost of product differentiation
f. High switching cost
3. Rivalry among Existing Firms
 f. High switching cost
3. Rivalry among Existing Firms
Rivalry is a state or situation wherein business organizations are competing
with each other in a particular market. For example, it depends on the marketing
strategy of your competitor, like giving freebies and special offers. The intensity of
rivalry among existing firms is characterized to the following factors:
a. Diversity of rivals
b. Number of competing firms
c. Characteristics of the products or services
d. Increased capacity
e. Amount of fixed costs
f. Rate of industry growth
4. Substitute Products
Substitute is one that serves the same purpose as another product in the
market. For example, the consumers decide to use margarine as a substitute for
butter. In case the price of butter increases, preferably the consumer will gradually
switch to margarine.
A substitute product can give a big threat in the industry environment if the following
factors are noticed:
a. Switching cost is low
b. Preferences and tastes of the customers easily change
c. Product differentiation is highly noticeable
d. The quality of substitute products dramatically improves
e. The price of substitute product is substantially lower
5. Suppliers
 e. The price of substitute product is substantially lower
5. Suppliers
The Suppliers are the one that provide something that is needed in business
operations such as office supplies and equipment. In an example where supplies and
services being offered is unstable the intensity of the threat is strong in this kind of the
competitive force in the industry. This can be noticed if there is the presence of the
following factors:
a. The supplier has the ability for forward integration
b. Suppliers in the industry are few, but the sales volume is high
c. Substitute products are not readily available in the market
d. The switching cost is very high
e. The product or service is unique
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