Entrep

Module 2

RECOGNIZE A POTENTIAL MARKET

Entrepreneurial Ideas 1. Changes in the
The creation of an entrepreneurial ideas environment - Entrepreneurial
leads to the identification of entrepreneurial ideas arise when changes happen in
opportunities, which in tum results in the the external environment. A person
opening of an entrepreneurial venture. with an entrepreneurial drive views
these changes positively. External
The entrepreneurial process of creating a
environment refers to the physical
new venture is presented in the diagram
environment, societal environment,
below. (Aduana, 2017)
and industry environment where the
business operates.
1.1 The physical environment includes
a. Climate - the weather conditions.

Essentials in Entrepreneur's Opportunity b. Natural resources - such as minerals,

Seeking forests, water, and fertile land that occur in
nature and can be used for economic gain.
These are the basic foundation that the
entrepreneur must have in seeking c. Wildlife - includes all mammals, birds,
opportunities: reptiles, fish, etc., that live in the wild.
1.2 The Societal environment includes the
Entrepreneurial mind frame -
various forces like
allows the entrepreneur to see things in a
very positive and optimistic way in the a. Political forces - includes all the laws,
midst of difficult situation. Being a risk rules, and regulations that govern business
taker, an entrepreneur can find solution practices as well as the permits, approvals,
when problems arise. and licenses necessary to operate the
business.
Entrepreneurial heart flame -
Entrepreneur's driven passion, they are b. Economic forces - such as income level
attracted to discover satisfaction in the act and employment rate.
and process of discovery. Passion is the c. Sociocultural forces - customs,
great desire of an entrepreneur to achieve lifestyles and values that characterize a
his/her goals. society.
Entrepreneurial gut game - refers to d. Technological environment - New
the ability of the entrepreneur of being inventions and technology innovations.
intuitive. This also known as intuition. The
1.3 The industry environment of the
gut game also means confidence in one's self
business includes
and the firm believes that everything you
aspire can be reached. a. Competitors
Sources of Opportunities b. Customers
There are many ways to discover c. Creditors
opportunities. Looking at the big picture
d. Employees
some have noticed the emerging trends and
patterns for business opportunities. While e. Government
others are trying to find out their target
market. Some are the following sources of f. Suppliers
opportunities:
For example, one factor in the physical For example an accountant who has learned
environment that can easily change is the the appropriate accounting and management
climate. The temperature is very high during skills and techniques in a prominent
summer but very low during the rainy accounting firm can start his/her business
season. An individual with entrepreneurial venture by opening his/her own accounting
drive can be extremely imaginative and firm.
inventive in identifying opportunities.
Forces of Competition Model
He/she can venture a business that responds
to the needs of the people during summer It is also known as the "five forces of
and rainy season. competition," An industry environment is a
competitive environment. Regardless of
2. Technological discovery and what product or services you have,
advancement competition is always present.
- A person with entrepreneurial interest sees Competition - it is the act or process of
possibility of business opportunities in any trying to get or win something.
new discovery or because of the use of latest
For example, the prices are lower when
technology.
there is a competition among the stores.
For example, an individual with knowledge
These are the five forces competing
in repair and installation of a machine
within the industry:
engine discovers that additional engine parts
that considerably reduce fuel  Buyers
 Potential new entrants
consumption. (Al, apps)
 Rivalry among existing firms
3. Government's thrust,  Substitute products
 Supplier
programs, and policies
- The priorities, projects, programs, and 1. Buyers
policies of the government are also good - The buyers are the one that pays cash in
sources of ideas. exchange to your goods and services.
For example, the use of firecrackers to For example, the influenced of the price or
celebrate New Year's Eve is strictly in the bargaining strategy. The buyer has a
prohibited. People without entrepreneurial strong and magnified bargaining power. The
interest will view the ordinance as a plain threat of its bargaining power will be less if
restriction. However, for an entrepreneur, it the following factors notice:
is a business opportunity to come up with a
new product that will serve as a substitute a. There are several suppliers available in
for firecrackers. the market.
b. The buyer has the potential for backward
4. People's interest
integration.
- The interest, hobbies, and preferences of
c. The cost of switching the supplier cost is
people are rich source of entrepreneurial
minimal.
ideas. Like the increasing number of Internet
Café at present could be lead to the strong d. The product represents a high percentage
attachment of young people to computers. of the buyer's cost.
(turning passions into business)
e. The buyer purchases large portions of the
5. Past experiences seller's product or services.

- The expertise and skills developed by a 2. Potential New Entrants

person who has worked in a particular field
- A new entrant is defined as the one who
may lead to the opening of related business
enters something. For example, the level of
enterprise.
capital requirements, if the business requires
huge capital, new entrants should decline to
join the business. This gives a threat to the e. The price of substitute product is
business. This can be notice if there is the substantially lower.
presence of the following factors:
5. Suppliers
a. Substantial capital requirement.
- The Suppliers are the one that provide
b. Strict government policy. something that is needed or wanted. For
c. Difficulty in accessing distribution example if the supply and services being
channels. offered is unstable or keep. The intensity of
the threat is strong in this kind of the
d. Economies of scale. competitive force in the industry. This can
e. High cost of product differentiation. be notice if there is the presence of the
following factors:
f. High switching cost
a. The supplier has the ability for forward
3. Rivalry among Existing Firms integration.

- Rivalry is a state or situation in which b. Suppliers in the industry are few, but the
people or groups are competing with each sales volume is high.
other. For example it depends on the
c. Substitute products are not readily
Marketing strategy of your competitor, like
available in the market
giving freebies and special offers. The
intensity of rivalry among existing firms is d. The switching cost is very high.
characterized to the following factors:
e. The product or service is unique.
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 means anything that takes the
place or function of another. 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 notice:
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.