Module No.

GEE6
ENTREPRENEURIAL MIND

1ST Semester – 2022-2023

Prepared by:
ZIEDWRICK A. DICAR

Adapted by:
AILYN G. RANDOLPH
Asst. Professor I

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OPPORTUNITY
SEEKING,
SEI ZING
 Entrepreneurs are innovative opportunity seekers. They have endless curiosity to
discover new or different ideas and see whether these ideas will work in the marketplace.
This is what separates entrepreneurs from the ordinary businessman whose main objective
is simply to earn profits from producing, buying, and selling goods.

Entrepreneurs create value by introducing new products or services or finding better

ways of making them. These may include innovation in terms of product design or addition
of new product features to existing ones. They may also tinker on improving their operational
capability by employing new technologies that will bring them greater efficiency, better
economies, and even enable them to reach unparalleled superiority. They may also consider
expanding their reach by creating new markets or maximizing existing market reach.

At the highest level, entrepreneurs may totally change the prevailing business
paradigm by rendering it obsolete through the introduction of disruptive technologies,
processes, and systems.

At the end of this chapter, you can:

1. discuss the different sources of opportunity;
2. identify types of industries participating in a market;
3. make a diagram of a product chain and a value-added chain;
4. create a pre-feasibility study
5. interpret basic financial ratios and measurements;
6. evaluate an opportunity subject for screening;
7. craft a positioning statement;
8. conceptualize a product; and
9. design a product.

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TRUE or FALSE (Direction: Write “T” if the statement is correct. If not, write “F”.
Write your answer on the box before each number. Two (2) points each.)

1. Entrepreneurs create value by introducing new products or services or finding

better ways of making them in terms of product design or addition of new product
features to existing ones.
2. The entrepreneurial mind frame allows the entrepreneur to see things in a very
positive and pessimistic light in the midst of crisis or difficult situations and able
to use problematic situations as inspiration in creating something innovative.
3. Entrepreneurial gut game refers to the ability of the entrepreneur to sense without
using the five senses also known as intuition.
4. The macro-environment refers to the "macro forces" that influence how business
should be conducted, how consumers will behave, how supply and demand will
move, how different competitors would position themselves, and how the cost of
doing business will proceed.
5. The socio-cultural environment includes the demographics and cultural
dimensions that govern the relevant entrepreneurial endeavor.
6. Rivals or competitors in a particular type of business are those competing for the
different markets.
7. Value-added chain is a way of defining an industry by tracing the industry from
its most basic raw material down to its various consumer applications and mainly
focuses on the volume produced or converted at each link of the chain.
8. Micro-market refers to the unspecified target customers that represent the
immediate customers of an enterprise, meaning those who are currently buying
the goods or services offered by the enterprise and its direct competitors.
9. Consumer preferences refer to the tastes of particular groups of people. Some
examples are the clothes people wear, the food they eat, the music they listen to,
and the movies they watch.
10. Consumer piques refer to the things that irritate customers.
11. Market potential is based on the estimated number of possible customers who
might avail of the product or service.
12. The capacity of operations is mainly determined by the number of products
needed to be produced.
13. The quality specifications demanded dictates the quality of input, quality
assurance process in transforming input to output, quality output that meet the
operations, and the quantity of outcomes for the customers looking for specific
results.
14. Production Facilities Investment refers to the long-term investment for the actual
business establishment, including investment in land, buildings, machinery,
equipment, computers, software, furniture, vehicles, etc.
15. Working Capital Investment includes the investment needed to operationalize the
business, composed of cash, accounts receivable, and inventories (raw materials,
work-in-process, and finished goods).

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16. The financial forecasts which refer to the past monetary transactions that the
business is engaged in will indicate the feasibility of the enterprise.
17. Assets represent all the investments in the enterprise including cash (on hand and
in bank), accounts receivable, inventory of goods, equipment and machinery,
facilities, vehicles, etc.
18. Payback period is the measure of how long will it take for the investor or the
entrepreneur to get back what he/she has invested in the enterprise.
19. If the entrepreneur is interested to know the return on the investments made,
which come in the form of equity, then he or she can compute for the return on
assets (ROA) or return on investments (ROI).
20. Opportunity Screening is a stage which the entrepreneur must be able to
determine the critical success factors that enable other players in the same
industry to succeed and the factors that cause other businesses to fail.
21. A concept is an idealized abstraction of the product or service to be offered to the
preferred market of the entrepreneur.
22. Designing means that the entrepreneur must render the concept and translate it
into its very physical and very real dimensions (measurement) that entails
building a prototype of the product that will be ready for actual testing.
23. The entrepreneur must not begin with the end in mind, or his/her desired end
results, for the chosen opportunity.
24. A positioning statement is meant to be used as an external tool to align marketing
efforts with the brand and value proposition.
25. Positioning statements are used to describe how your product or service fills a
need of your target market or persona.
26. Customer pains are the problems or issues your target audience is experiencing.
Your product or service will aim to address a customer pain and provide a
solution.
27. Brand identity is the personality of the business and includes both visible factors
and values or voice that will set an entrepreneur apart from competitors and help
gain recognition from target audience.

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OPPORTUNITY
SEEKING

At the end of this lesson, you can:

1. discuss the different sources of opportunity;
2. identify types of industries participating in a market; and
3. make a diagram of a product chain and a value-added chain.

Upon receipt, you are expected to accomplish this

module in a period of three days.

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 OPPORTUNITY SEEKING
Entrepreneurs are innovative
opportunity seekers. They have endless curiosity
to discover new or different ideas and see
whether these ideas will work in the marketplace.
This is what separates entrepreneurs from the
ordinary businessman whose main objective is
simply to earn profits
from producing, buying, and selling goods.

Entrepreneurs create value by introducing new products or

services or finding better ways of making them. These may include innovation in terms
of product design or addition of new product features to existing ones. They may also
tinker on improving their operational capability by employing new technologies that will
bring them greater efficiency, better economies, and even enable them to reach
unparalleled superiority. They may also consider expanding their reach by creating new
markets or maximizing existing market reach.

At the highest level, entrepreneurs may totally change the prevailing business
paradigm by rendering it obsolete through the introduction of disruptive technologies,
processes, and systems.

Entrepreneurial Mind Frame, Heart Flame, and Gut Game

Essential to an entrepreneur’s opportunity seeking are the entrepreneurial mind

frame, heart flame, and gut game.

The entrepreneurial mind frame allows the

entrepreneur to see things in a very positive and optimistic
light in the midst of crisis or difficult situations. Instead of
being discouraged, the entrepreneur is able to use these
problematic situations as inspiration in creating something
innovative. In fact, in Chinese writing, the word crisis is
composed of two characters. The first character means danger
while the second character means opportunity.

If there is one commonality between an inventor and an entrepreneur; it is their surging

passion or the entrepreneurial heart flame. Driven by passion, they are drawn to find
fulfillment in the act and process of discovery.

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 Passion is that great desire to attain a vision or fulfill a mission. It is about wanting thing
so much that a person would be willing to totally devote one’s‘ self to the quest. Despite several
setbacks or disappointments, the entrepreneur is not easily
disheartened, but is rather driven to preserve even more.

The heart flame is also about emotional intelligence

or EQ, which is often manifested in the entrepreneur’s
efforts to nurture relationships with customers,
employees, and suppliers. The entrepreneur also looks after the
interests of his or her people by motivating and encouraging them
to be the best they can, become. This creates a caring culture
within the organization that brings about synergy among the
people working toward a common vision.

The final ingredient is the entrepreneurial gut game. This

refers to the ability of the entrepreneur to sense without using the five
senses. This is also known as intuition.

Somehow, the entrepreneur just knows whether something

will work or not without necessitating logical, systematic, and
sequential thinking. The gut game also connotes courage or, in the
local dialect, "Iakas ng Ioob” (strong intestinal fortitude). It is simply
confidence in one’s self and the firm belief that everything is within
reach so long as you aspire for it.

THE SOURCES OF OPPORTUNITIES

There are many ways to uncover or discover opportunities. Some have to do with looking
at the big picture and noticing emerging trends and patterns. Others have to do with finding out
what specific customer segments are being targeted in the marketplace. Still, others come from
new technologies and new knowledge. These different sources of opportunity are discussed in
this lesson.

1. Macro Environmental Sources of Opportunities.

The macro environment refers to the "big or macro forces" that affect the area, the
industry, and the market, which the enterprise belongs to. They influence how business should
be conducted, how consumers will behave, how supply and demand will move, how different
competitors would position themselves, and how the cost of doing business will proceed.

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 The macro environment forces can be divided [into five categories composed of the
Social, Political, Economic, Ecological, and Technological dimensions or SPEET. The
macro environment forces create their own opportunities for the enterprise to exploit,
and their own threats for the enterprise to counteract.

a. Socio-Cultural Environment

The socio-cultural environment includes

the demographics and cultural dimensions that
govern the relevant entrepreneurial endeavor.
Taking this aspect into consideration helps the
entrepreneur assess the trends and dynamics of
the bigger consumer population, their beliefs,
tastes, customs, and traditions. It looks at social
structure and shifts in social status and behavior.

b. Political Environment

The political environment defines the

governance system of the country or the local area of
business. It includes all the laws, rules, and
regulations that govern business practices as well as
the permits, approvals, and licenses necessary to
operate the business. Specifically, it regulates the use
of natural resources; the disposal of wastes; the
taxation of income; the importation of goods and
services; the accounting and reporting of business
financial statements; public and private education;
health programs; use of public funds; and other
such concerns. It includes the establishment of vital infrastructures, logistical access, and
interventions that affect the cost of doing business. These factors are important
influencers in evaluating the attractiveness of any political domain where the
entrepreneur intends to locate and do business in.

c. Economic Environment

Supply and demand forces mainly drive the macro-

economic environment. They are the same factors that drive
the interest and foreign exchange rates that fluctuate with the
movement of the market forces. In any country, the income
levels and the purchasing power of its people as well as the
competitiveness (or competitiveness) of its industries and
enterprises are sources of opportunities.

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 However, in any opportunity, there is always a threat that lurks behind it. In this
case, the entrepreneur must be able to think critically through each and every single
economic event that impacts his or her enterprise. For example, a very fast- growing
demand for housing may lead to the overbuilding of houses. This threat is what house
financing institutions are afraid of.

d. Ecological Environment

The ecological environment includes all natural resources and the ecosystem,
habitat of men, animals, plants, and minerals. There is a growing awareness in the world
today that will make this factor more and more important for countries, industries, and
businesses. The
threats of ecological degradation have
generated countless opportunities
such as smoke and spill detectors,
filters and screens, pollution"
counters, and energy- saving devices.
Opportunities abound for greener,
cleaner, and healthier products, whose
objectives are to save the planet and
prolong lives.

e. Technological Environment

New scientific and technological discoveries, which often lead to the launch and
commercialization of new products with superior attributes or to rendering the old ones
obsolete, are the entrepreneur's nightmares. In such cases, the entrepreneur is
left with no choice but to invest in new
technologies in order to keep up with
competition. Technology does not only come
in the form of advanced machinery or
equipment, but it can also be in the form of
new systems, new processes, or new products.

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 Table 1 shows examples of opportunities and threats that are present within the
macro environment of fast-growing fast food chain offering chicken meals and other
Filipino favorites.

Table 1. Example of Relevant Opportunities and Threats to Fast Food Chain

Factors Opportunities to the Threats to the

Enterprise Enterprise
1. Social • Increased customer base
• Increasing double income for the food chain
earners in the family (i.e • More healthy product
mother and father are both offerings are demanded
working by customers
• Trend toward healthier food
choices
2. Political • Increased purchasing
• Tax exemption for 13th month power of the consumers
pay and other bonuses leading to higher retail
up to sales
Php70,000.00 passed by
congress
3. Economic • Opportunity for the Smaller suppliers’
• ASEAN Integration in 2015 enterprise to expand to difficulty coping with
(countries that belong to other ASEAN markets greater competition
ASEAN trading at zero tariff) posed by foreign rivals;
might lose small but
reliable suppliers
4. Ecological • Opportunity to start an Additional cost incurred by
• Increased usage of eco bags advocacy toward a new packaging may
and environment-friendly ‘greener’ operation (not decrease profitability
containers limited to usage of eco-
friendly
container/packaging
5. Technological • Greater usage of apps to Potential for online
• Increased usage of place delivery orders via customer
smartphones to disseminate smartphones, which disappointments and
important information (e.g. may help increase e netizen Bashing due to
news weather, traffic market reach poor product/ service
updates) delivery brought about by
intermittent technical
glitches

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2. Industry Source of Opportunities

After the macro environment, the next biggest sources of opportunities are the
industry and the market. One of the most difficult aspects about industry analysis is
defining what constitutes an industry in the first place. The proper classification of what
industry the enterprise is competing in is important if the entrepreneur’s intention is to
define who are the relevant customers; who are the direct and indirect competitors and
what are the critical characteristics of the market as to the quality of products or services
to be delivered.

Participants in an industry include:

1. Rivals or competitors in a particular type of business. (e.g.,

Iollibee vs. McDonald's, Coca-Cola vs. Pepsi, Samsung
Galaxy vs. Apple's iPhone, etc.). True rivals or competitors
are those competing for the same 0r similar" markets.
2. Suppliers of input (e.g., fuel, electricity, raw materials) to
rivals as well as suppliers of machinery and equipment,
suppliers of manpower and expertise, and supplies of
merchandise.
3. Consumer market segments being served by rivals or
competitors.
4. Substitute products or services, which customers shift or
turn to.
5. All other support and enabling industries.

After identifying the participants, it would help the entrepreneur to determine the
logic of the industry. How do these participants in the industry make or lose money?
What critical factors drive the industry’s success? What critical factors lead to failures?

A thorough analysis of industry structure and dynamics yields opportunities for

the clever entrepreneur. Situating his or her enterprise within the realm of an industry
provides many profitable opportunities for the entrepreneur. There are several ways of
defining an industry. The most common way of defining an industry is according to
product types or according to the functions of the product or service. Classic examples of
these industries include the computer industry [Microsoft vs. Apple), beer industry (San
Miguel Beer vs. Beer na Beer), fast food industry (McDonald's vs. Jollibee), and cola
industry (Coca-Cola vs. Pepsi Cola).

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 Another way of defining an industry is by tracing the industry from its most basic
raw material down to its various consumer applications, otherwise known as product or
value-added chain. The difference between the product and value-added chain is the
focus of the analysis. Product chain focuses on the volume produced or converted at each
link of the chain. On the other hand, the value-added chain focuses on the economic
rather than the volume aspect of the chain.

To illustrate the tracing of a product chain, a good example would be the coconut
industry. The coconut tree, regarded as the ‘tree of life,’ is useful for different purposes.
Its trunk, shell, meat, husk, and leaves find their way to all types of products such as oils,
soap, handicraft, oleo chemicals, furniture, wallboards, coir, etc. Looking at this value
chain alone presents many potential opportunities for the entrepreneur.

However, defining an industry with a narrower scope presents a threat because of

its limiting effect. For example, to simply classify all those using coconuts in their
production process as being in the coconut industry per se might not be too useful. The
reason is that most of the coconuts harvested are processed into coconut oil, which is just
one of the many substitutes in the fats and vegetable oils industry traded worldwide.

The value-added chain follows the

product chain, but concentrates on the
“value” added from one stage of the
product to the other—a value that is given
by the market price differential between
stages of production. The differential
would include the additional costs of
processing the product from one stage to
the next and the profit margins added on
each stage by the processor (or
distributor). A good example of the value-
added chain would be a cup of designer coffee. At farm gate prices, one would get a few
pesos out of a bag of freshly picked coffee beans.

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 The coffee beans will then get processed and packaged by the coffee
manufacturer. Cost and profit margins are added before selling the product to
distributors. Once it gets in the hands of the distributors, the latter will have to market
and sell the finished product to coffee shops for a few more pesos added to cover for the
logistical and transportation costs incurred. The coffee shops will then proceed to
concoct their own versions of designer coffees. The fancier the coffee gets, the more
expensive a cup of designer coffee becomes.

The entrepreneur may discover weak links in the chain that need strengthening
or gaps in the whole chain that need filling. Sometimes, the opportunity lies not in
finding gaps and weaknesses but in assailing the strongest links where there may be a
concentration of bargaining power. In this case, the entrepreneur should determine
which players produce the most volume of goods, which ones control the flow of those
goods, which ones make the most profits, and which ones push the most volume through
the market channels all the way to the final customers. These processes may uncover
strategic opportunities for industry intervention. The entrepreneur should always be
alert in detecting windows of opportunities emanating from shifts in the industry power
equation or changes in the industry rules of the game.

3. Market Sources of Opportunities

The entrepreneur must also be able to measure the actual demand and supply as
well as the potential demand and supply of the industry that the enterprise belongs to.
Equally important is the monitoring of the prevalence of product substitutes and their
market impact on the existing players in the industry. Market trend analysis is also
conducted by determining the critical variables, which would most likely affect the
future directions of the industry. Lastly, market traits, characteristics, and behavior are
identified in order to match these customer traits with the product offerings of the
enterprise.

Market sources of opportunities can be discovered from increased or decreased

demand as well as higher or lower supply. An example of this is the battle of the
value/combo meals, otherwise known as "more-for-less” strategy in the fast food
restaurant industry. The
demand for more
affordable but filling meal is
continuously growing
VS. particularly for the working
population.

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 This, in turn, creates an increased demanding the items that come with the value/
combo meal such as rice, chicken, pasta, sidings {e.g. mashed potato, buttered corn,
'French fries, etc.) and beverage/drink.

Although smaller in portions, the volume served is more, particularly during peak
hours (lunch and dinner}. It also opens up the opportunity of offering breakfast items
and strengthening this time-ah the-day segment. More and more consumers are
resorting to having their breakfast near their workplaces or along the way to work in
order to avoid getting stuck in the rush hour traffic. However, the threat of price war
remains strong such that the industry players are compelled to strengthen their supply
chain for better leverage.

4. Micro-market

Micro market refers to the specific target market segment of a particular

enterprise. These are the target customers that represent the immediate customers of an
enterprise, meaning those who are currently buying the goods or services offered by the
enterprise and its direct competitors. It likewise pertains to a clearly defined location or
specific customer group that an enterprise wishes to serve.

The need for segmentation would be crucial in micro market analysis because the
definition of value for money differs from group to group. If they do not differ, then the
entrepreneur is better off by aggregating rather than segmenting. For example, the
Makati office crowd has several choices where to eat. Observing the behavior of
customers during lunch would indicate what groups of customers prefer fast food
establishments, what group brings their own pack lunches, and what group goes for
casual dining. Several opportunities can be spotted by the entrepreneur, such as opening
up a new food outlet or offering food delivery-services to a particular office crowd.

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5. Consumer Preferences, Piques, and Perceptions

Consumer preferences refer to the tastes of particular groups of people. Some

examples are the clothes people wear, the food they eat, the music they listen to, and the
movies they watch. The consumers’ age, culture, and status affect their preferences. In
contrast, consumer dislikes refer to the things that irritate customers. Either way, the
entrepreneur can explore opportunities brought about by consumer preferences or
dislikes.

For example, if consumer trends show a rising preference for “fast

casual” dining, then this would be an opportunity worth exploring. If
customers show great annoyance at standing in long queues in fast food
outlets, then sit-down “fast casual” dining could be a great opportunity.

There are times when the product is not changed by the enterprise
but what changes is the way consumers perceive the product. A classic
example is Listerine mouthwash. It was first offered as a surgical
antiseptic and, later, a cure for athlete’s foot during the war.

6. Other Sources of Opportunities

As an opportunity seeker, the entrepreneur will surely discover other sources of

opportunities. Unexpected successes (or failures) can lead to good opportunities.
Another potential source of opportunity is the entrepreneur’s own set skills or expertise,
or hobby. New knowledge as well as new technology can be the source of highly
innovative opportunities.

A. Customer Preferences change over

time.

Example: The prevalence of sugar-free products is

now becoming the new normal, particularly to
products that used ‘to be sugar-full like soft drinks
and desserts. Cola manufacturers have long
introduced their respective sugar-free cola drinks
as healthier alternatives to their regular cola
drinks. This caters to the health-conscious
consumers who have shifted due to fear of obesity
and diabetes.

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 B. People “tastes in clothes,
music, shoes, entertainment,
dance, sports, hobbies, and
even careers have evolved over
the years.

Example The 1980s could ‘be best

described as the era that gave birth to
music-television or MTV. This era was all
about image that went with the popular
artists at that time such as Michael
Jackson and Madonna. These artists had
become iconic because of their talent, fashion styles and persona, which defined the 80s
decade, Hip-hop, New wave, and hair metal were the musical genre that emerged.

C. What piques customers is a great source of opportunities.

Example: Government-related
services are now made more
available to the public because they
have opened up satellite offices in
major malls. Before, people had no
choice but to go to the main office,
line up for hours, to apply or renew
their licenses, clearances,
passports, etc. Now, with these satellite services closer to the public, more people are
encouraged to transact with these government agencies because it has become more
convenient.

D. Before the customer is won over, there is first a battle for the mind.
Next, there is a battle for the heart. Finally, there is a battle for the
wallet.

Example: When the new smartphones came out, customers

were being convinced by the different competitors on what was
the best choice to make. This is the battle ' for the mind. When
customers got attracted to the features and brand image of one
competitor; it had won the battle of the heart. Finally, when
customers lined up to buy their preferred smartphone, the
competitor had won the battle for the wallet.

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 E. The longer the customer wants to use the product, the greater the
chances of creating lasting loyalty.

Example: Among Filipinos, there is this old

adage of “nakasanayan na” (got used to it)
especially when it comes to loyalty to certain
products. This is true in the case of Jollibee,
which has captured the hearts of the Filipinos.
Jollibee has been so successful due to the
“Filipino taste” of their products such as its
Spaghetti which is a little sweeter than many of
its Italian counterpart. Kids got used to the taste
of Jollibee spaghetti and became repeat
customers over and over again.

F. Opportunities abound in shaping

consumer perceptions or occupying spaces in
their minds or places in their hearts that have
not yet been filled g spaces

Example: A television commercial of a supplementary

drink for diabetics instills 'fear of death' in the minds
and hearts of its potential consumers. The product is
meant to aid in controlling the blood sugar level of
diabetics, together with the proper diet and a healthy
lifestyle. The commercial ad instills fear that shapes
the consumer's perception about what is good or bad
to drink.

G. New inventions, new systems and work processes, new insights about
the human psyche, new applications for old knowledge, new
revelations about how the physical world works, etc.

Example: Due to the advancement of technology applied to the medical field, open
surgery has become a thing of the past when
removing smaller cysts or tumors. This was made
possible by the invention of laparoscopy, one of the
technological breakthroughs in medicine.
Laparoscopy is a type of surgical procedure that allows
surgeons to access the inside of the abdomen and
pelvis without having to make large incisions on
the skin. This is a go—to procedure for people who want to avoid the surgeon's knife.
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 H. Determining personal preferences and
competencies lay the foundation for a
new business venture.

Example: The mushrooming of culinary schools

indicates the booming interest of students in
pursuing their love for cooking and/ or baking. One
of the career tracks offered by these culinary schools
is enabling the student to put up his or her own
restaurant or pastry shop. Several weekend markets
and food bazaars have also opened up to showcase
the talents of these young culinary students.

I. Unexpected occurrences in both the external and internal

environment of the enterprise indicate that significant changes are
happening and opportunities are sprouting.

Example: Who would have thought that

videos taken by closed-circuit
televisions (CCTV) would make waves
in the news headlines as one of the best
evidences in a crime? Installed
practically everywhere, the use of
CCTVs has created a tremendous
opportunity for entrepreneurs,
particularly those already engaged in
the safety and ' security industry. In
fact, there are cities and municipalities that have already issued ordinances requiring the
installation of CCTVs before renewing or issuing business permits.

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ACTIVITY 1. Make a diagram showing a product chain of a certain product as well
as a value-added chain of it. Explain briefly each step of the process and cite the
differences between each chain. Which among the two do you consider as better than
the other one? Why?

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ACTIVITY 2. From what have discussed in this chapter, what do you think are the
opportunities and threats that you see from the macro environment, industry,
market, micro-market, and consumer perspective of the business you intend to
pursue or already are pursuing? Using the matrix below, write these opportunities
and threats relative to your business endeavor.

Trends Opportunities Threats

Macro environment

Industry

Market

Micro-market

Consumer

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 TEST I – TRUE or FALSE “Correct me if I’m wrong!” (Direction: Write “T” if the
statement is correct. If not, write “F” and the word that will make the statement correct.
Write your answer in the box before each number. Two (2) points each.)

1. Entrepreneurs create value by introducing new products or

services or finding better ways of making them in terms of
product design or addition of new product features to existing
ones.
2. The entrepreneurial mind frame allows the entrepreneur to
see things in a very positive and pessimistic light in the midst
of crisis or difficult situations and able to use problematic
situations as inspiration in creating something innovative.
3. The macro-environment refers to the "micr-orces" that
influence how business should be conducted, how consumers
will behave, how supply and demand will move, how different
competitors would position themselves, and how the cost of
doing business will proceed.
_____ : ___________________ 4. The socio-cultural environment includes the demographics
and cultural dimensions that govern the relevant
entrepreneurial endeavor.
5. Value-added chain is a way of defining an industry by tracing
the industry from its most basic raw material down to its
various consumer applications and mainly focuses on the
volume produced or converted at each link of the chain.
6. Micro-market refers to the unspecified target customers that
represent the immediate customers of an enterprise, meaning
those who are currently buying the goods or services offered
by the enterprise and its direct competitors.
7. Consumer preferences refer to the tastes of particular groups
of people. Some examples are the clothes people wear, the
food they eat, the music they listen to, and the
movies they watch.
8. Consumer piques refer to the things that irritate customers.
9. Entrepreneurs may totally change the prevailing business
paradigm by rendering it absolute through the introduction of
disruptive technologies, processes, and systems.
10. The heart flame is about emotional intelligence which is
manifested in the entrepreneur’s efforts to nurture
relationships with consumers, employees, and suppliers.
11. Entrepreneurial gut game is simply confidence in oneself and
the firm belief that everything is within reach as long as you
aspires for it also known as intrusion.
12. The macro environment influence how business should be
conducted, how consumers will behave, how supply and
demand will move, how different competitors would position
themselves, and how the cost of doing business will proceed.

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: 13. The macro environment forces can be divided into five
categories: the Social, Political, Economic, Ecological, and
Technical dimensions or SPEET.
14. The political dimension defines the governance system of the
country or the local area of business that includes all the laws,
rules, and regulations that govern business practices as well as
the permits, approvals, and licenses necessary to operate the
business.
15. Technology comes in the form of advanced machinery or
equipment, new systems, new processes, or new products.
16. Participants in an industry include: Rivals or competitors
competing for the different markets, Suppliers of input,
Consumer market segments being served, Substitute products
or services, which customers shift or turn to and all other
support and enabling industries.
17. The value-added chain follows the product chain but
concentrates on the value added from one stage of the product
to the other.
18. Market sources of opportunities can be discovered from
increased or decreased demand as well as higher or lower
supply.
19. Micro-market pertains to a clearly defined location or specific
customer group that an enterprise wishes to serve.
20. Opportunities abound in shaping consumer perceptions or
occupying spaces in their minds or places in their hearts that
have been filled.

TEST II–DISCUSSION (Direction: Answer briefly the question below.)

1. Given the potential and actual supply and demand situation, will there be a lot of
opportunities open for your existing or envisioned enterprise in the future? What
are they? How attractive are these opportunities?

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Note: Use another page if necessary.

OPPORTUNITY
SCREENING

At the end of this lesson, you can:

1. create a pre-feasibility study;
2. interpret basic financial ratios and measurements; and
3. evaluate an opportunity subject for screening.

Upon receipt, you are expected to accomplish this module

in a period of three days.

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 OPPORTUNITY SCREENING
After Opportunity seeking comes the rigorous process of Opportunity Screening.
Because of the many opportunities possible for the entrepreneur, it is important to come
up with a short list of a few very promising opportunities, which could be scrutinized in
detail.

The Personal Screen

In screening opportunities, the entrepreneur first has to

consider his or her preferences and capabilities by asking three
basic questions:

1. Do I have the drive, to pursue this business opportunity to

the end?
2. Will I spend all my time, effort, and money to make the
business opportunity work?
3. Will I sacrifice my existing
lifestyle, endure emotional
hardship, and forego my usual
comforts to succeed in this business opportunity?

If "YES" is your answer to all of the above, then you can begin
your earnest pursuit of that opportunity. At the simplest level, the
entrepreneur may want to make a risk-return grid (table 2) shown
as follows:

Table 2. Risk-Return grid for screening opportunities

Risk/Return Low Risk Medium Risk High Risk

High Return Best Good Fair

Medium Return Good Fair Bad

Low Return Fair Bad worst

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The 12 R’s of Opportunity Screening

1. Relevance to vision, mission, and objectives of the

entrepreneur. The opportunity must be aligned with what
you have as your personal Vision, mission, and objectives
for the enterprise you want to set up.

2. Resonance to
values. Other than vision, mission, and objectives,
the opportunity must match the values and
desired virtues that you have or wish to impart.

3. Reinforcement of Entrepreneurial
Interests. How does the opportunity resonate with
the entrepreneur’s personal interests, talents, and
skills?

4. Revenues. In
any entrepreneurial endeavor, it is important to
determine the sales potential of the products or
services you want to offer. 15 there a big enough
market out there to grab and nurture for growth?

5. Responsiveness to customer needs and wants. If

the opportunity that you want to pursue addresses the
unfulfilled or underserved needs and wants of
customers, then you have a better chance of succeeding.

6. Reach. Opportunities that have good chances of

expanding through branches, distributorships, dealerships, or
franchise outlets in order to attain rapid growth are better
opportunities.

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7. Range. The opportunity can potentially lead to a
wide range of possible product or service offerings,
thus, tapping many
market segments of the
industry.

8. Revolutionary impact. If you think that the

opportunity will most likely be the "next big thing" or
even a game-changer that will revolutionize the
industry, then there is a big potential for the chosen
opportunity.

9. Returns. It is a
fact that products with low costs of production and
operations but are sold at higher prices will definitely
yield the highest returns on investments.
Returns can also be
intangible; meaning,
they come in the form
of high profile
recognition or image projection.

10. Relative Ease of Implementation. Will the

opportunity be relatively easy to implement for the
entrepreneur or will there be a lot of obstacles and
competency gaps to overcome?

11. Resources Required. Opportunities

requiring fewer resources the entrepreneur
may be more favored than those requiring
more resources.

12. Risk. In an entrepreneurial endeavor, there will always

be risks. However, some opportunities carry more risks than
others, such as those with high technological, market,
financial, and people risks.

These 12 criteria can be better managed if quantified and formed into a matrix
to help the entrepreneur concretize the evidence that the chosen opportunity (or
opportunities) is well worth pursuing.

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 The Pre-Feasibility Study
The ultimate goal of doing the opportunity screening matrix is to narrow down the
many opportunities into one or two most attractive ones. The next step is to conduct a
pre-feasibility study to ascertain the viability of the opportunity. The idea is to focus on
a few key items that could make or break the business concept. This time, the
entrepreneur must go down to the details and take time to consider the following factors
that are contained in a pre-feasibility study:

• Market potential and prospects

• Availability and appropriateness of technology
• Project investment and detailed cost estimates
• Financial forecast and determination of financial feasibility

I. Market Potential and Prospects

Market potential is based on the

estimated number of possible customers who
might avail of the product or service. For a
more realistic number, it would help to narrow
down your estimation to the relevant
population or target customers in the area
where you want to operate your business.

For entrepreneurs who are entering a business that caters to the basic customer
needs, such as food, clothes, beverages, furniture, appliances, housing, schooling and the
like, there would usually be demand and supply statistics available from government
institutions, industry associations, and research firms. In addition, the entrepreneur
must take note that the total market for these products is usually not the issue. Basic
needs tend to be commodities or "commoditized." Customers have the luxury of choosing
among many suppliers. That is why these suppliers try very hard to differentiate
themselves from one another by dividing the huge market into many customer segments.

The customers would, oftentimes, make the final choice on what to buy according
to several factors such as:

(1) their purchasing power or disposable income;

(2) proximity or accessibility to the goods or services;
(3) their individual desires and preferences:
(4) their age or generational grouping;
(5) their social, cultural, or ethnic background;

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(6) their peer group preferences;
(7) their gender;
(8) the season of the year;
(9) their personal identification with trend setters;
(10) their educational attainment;
(11) their technical proficiency and product expertise;
(12) their motivational impetus;
(13) their lifestyle preferences;
(14) their susceptibility to certain advertising and promotional appeals, and many
others.

Segmenting the Market

Market estimation is the most

difficult task of the entrepreneur
because of the many ways customers
can be divided and segmented.
However, the most common way
resorted to by most entrepreneurs
are through the use of demographics
such as income (class A, B, CD, and
E), age (infants, toddlers, Six to 12
years, teenagers, young adults,
adults, middle agers. and senior
citizen?) sex, (male- female), level of
education, and locational proximity.

In a pre-feasibility study, the entrepreneur should, at the very least, determine

and quantify the market potential according to these broad customer classifications.

Keep in mind that some general statistics for these demographics can be found
online. If you want to go into more details, then you might have to look into other specific
classifications that are - relevant to the market you are targeting such as the
psychological profiling and lifestyle preferences of the different customer ‘segments’.

In this regard, the entrepreneur must be able to do actual field research like
surveys, focus group discussions, in-depth interviews, observation techniques, etc.

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Assessing Competition

Market potential is also affected

by the number of establishments
supplying and serving your target
customers. This process would
determine how saturated the market is
in the given area of coverage. The more
suppliers and competitors there are
within a confined area, the greater the
level of saturation.

On the one hand, it would be best for the entrepreneur to keep out of a market?
Where competition is fierce. On the other hand, some entrepreneurs prefer to enter the
biggest, richest, and most competitive markets in order to achieve high visibility and
growth potential. However, this is a high-risk proposition unless the entrepreneur is very
confident that he or she has a superior product or service that is at par (if not superior)
to others in the marketplace.

In order to assess one's strengths and weaknesses, there must be a comparison

made with the closest competitors. Profiling these competitors will help the entrepreneur
gauge their respective strengths and weaknesses and, therefore, enable the entrepreneur
to craft a strategy.

By doing so, the entrepreneur would be able to get an idea of whether he or she
can compete with the existing competitors if not, the entrepreneur should change
strategy by moving to a different location or by shifting to a less competitive target
segment in order to avoid competition. Alternatively, the product or service offering can
be improved to enhance its competitiveness.

Estimating Market Share and Sales.

After estimating the number of potential target market or segment, the next thing
that the entrepreneur should assess is the potential market share he or she can
attract. Conservatively, the entrepreneur
can go for a small market share unless the
entrepreneur has a very superior product
or service that can immediately command
a large market share.

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 In a Pre-feasibility study the
most important task is to quantify the
market potential in a systematic way.
The first thing that the entrepreneur
must do is to define the market
coverage or reach he/she wants to
serve. The area could be as big as a
country (or even a continent) and as
small as a neighborhood. The
area would define the total population being targeted. Second, the entrepreneur must
determine the broad market segments within this area or total targeted population in a
first level attempt at quantifying the market, the entrepreneur could select such broad
categories like gender, age, and income class.

In the assessment of market potential, the entrepreneur should evaluate the

relative strength of the various supplier or competitors in the marketplace by asking
the following questions:

• Who has dominance?

• Who has greater bargaining power?
• Which segments of the total market are saturated and over served
and which ones are relatively underserved?
• Are there market segments which are more attractive than others
for the entrepreneur, either because of past expertise in the segment
or weaker competition in the segment?

The final task of the entrepreneur in this portion of

the pre-feasibility study is to determine what slice or share
of the targeted market segment he or she wants to carve out.
Without a very definite product formulation or service
proposition, this requires some "educated guessing" or
intuitive insightfulness. Alternatively, the entrepreneur
could work out the other portions of the pre-feasibility
study first (such as the investment requirements and costs of production) and then ask
himself or herself what market would be necessary to earn a decent return on the product
or service. Given this market share threshold, the entrepreneur could assess whether this
would be achievable based on the study of the market potential.

Having determined the forecast or derived market share, the entrepreneur should
then estimate potential sales. The sales forecast can be computed using e following
formula: (Estimated Sales Volume x Estimated Price).

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 II. Technology Assessment and Operations Viability,

In order to get the

enterprise going, the
entrepreneur must go
through the intricacies of
detailing the operations that
would be required by the
business, which also
includes technology
assessment. By going
through this process, the entrepreneur would be able to determine whether the product
or service offering will meet customer demand or not. There are at least four target
customer expectations affecting the scale and complexity of an enterprise’s operations:

1. Quantities demanded. This would determine the needed capacity of

operations.
2. Quality specifications demanded. This would dictate the following: (a)
quality of input or raw materials; (b) quality assurance process in transforming
input to output; (c) quality output that meet the operations, standards set; and
(d) quality outcomes for the customers who will be looking for specific results.
3. Delivery expectations. Knowing how much, how frequent, and when to deliver
to customers.
4. Price expectations. The selling price of the product or service would be
evaluated by the customers according to the value they would receive (in terms of
quality, delivery, and quantity) and this value added should be matched against
competitors.

III. Investment Requirements and Production/Servicing Costs

Now comes the challenging part, the entrepreneur needs to

determine how much money is needed to start the business
opportunity with consideration to the technologies and
operating levels required. In this respect, there are three
investments that need to be funded:

1. Pre-Operating Costs. These are the costs related to the preparation for the launch
of the business. These include the pre-feasibility study, in-depth feasibility study, market
research, product development, organizational development, and initial promotional
costs.

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2. Production/Service Facilities
Investment. This refers to the long-
term investment for the actual business
establishment, including investment in
land, buildings, machinery, equipment,
computers, software, furniture, vehicles,
etc. If the business would be renting or
leasing space, the leasehold
improvement (or renovation) would also be part of the facilities investment.

3. Working Capital Investment. This includes the investment needed to

operationalize the business, composed of cash, accounts receivable, and inventories (raw
materials, work-in-process, and finished goods). The entrepreneur must see to it that he
or she has enough cash to cover the inventories to be purchased (or manufactured), the
accounts receivable to accommodate customers, and the operating expenses to be
incurred. These operating expenses would include the following:

a. Employee salaries, wages, and

benefits.
b. Rent and lease expenses
c. Utilities
d. Transportation
e. Fees and licenses
f. Commissions
g. Office supplies, etc.

In effect, this part of the pre-feasibility study ask two questions:

1. Do I have enough resources to cover the necessary investment?
2. Would my sales estimates be significantly higher than my monthly production/
service cost in order to produce profits?

IV. Financial Forecasts and Determination of Financial Feasibility

Upon completing the first three parts of the

pre—feasibility study, the entrepreneur should now
be able to proceed in constructing his or her
enterprise’s financial forecasts for the business. The
financial forecasts refer to the monetary
transactions that the business is expected to engage
in. Ultimately, the end result of the financial
forecasts will indicate the feasibility of the enterprise.

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 Financial forecasting calls for the creation of the four critical financial
statements: namely, (1) income statement; (2) balance sheet; (3) cash flow statement;
and (4) funds flow statement. The marketing strategy and action program should
translate into revenue 3 or sales forecasts. The operations strategy and the production
or service delivery program should translate into forecasts of costs of goods produced.
The rest of the Enterprise Delivery System should translate into forecasts of operating
and non-operating expenses. Together, they comprise the income statement forecasts.
The resources mobilized and held by the enterprise are translated into forecasts of the
balance sheet (which show the investments in the form of assets and their
corresponding financing in the form of liabilities).

The flow of resources should be translated into funds and cash flow statements.
For a better understanding, this discussion will concentrate on preparing a simple
income statement and balance sheet.

Income Statement

The income statement is a financial

statement that measures an enterprise's
performance in terms of revenue and
expenses over a certain period. Simply put,
the formula is:

REVENUES — EXPENSES =
INCOME 0R PROFIT (LOSS)

From revenues forecasted

(quantities sold times the prices they are
sold for), the entrepreneur must subtract
the estimated cost of goods sold
corresponding to the forecasted sales. This
should give the gross profit. From the gross
profit.

The operating expenses must be

deducted to arrive at the operating profit.
Then, the taxes due are subtracted to derive
the net profit after taxes. If the enterprise
has non-operating revenues and expenses,
these should be added or subtracted from
the operating profit before the taxes are
computed.

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Balance Sheet

Creating the balance sheet is a bit more complicated because one has to look at
three different things: assets, liabilities, and equities.

Assets represent all the investments in the enterprise including the initial
investments that you considered in the pre-feasibility study (investment requirements).
These include cash (on hand and in bank), accounts receivable, inventory of goods,
equipment and machinery, facilities, vehicles, etc.

Financing the assets or investments are the liabilities and equity. Liabilities
represent the enterprise's debts to suppliers, to banks, to government, to employees, and
other financiers. Stockholders’ equity represents the investors’ investments in the stock
(or shares) of the business.

The balance sheet equation is:

ASSETS = LIABILITIES + EQUITY

The above equation means that the resources invested into the enterprise in the
form of liabilities and stockholders' equity must be equal to the total value of the assets
or the enterprise itself. An example of a simple balance sheet is,

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Financial Ratios and Measurements
In any business endeavor, the investor or the entrepreneur himself or herself will
always be interested in knowing the payback period or how long will it take for him or
her to get back what he or she has invested in the enterprise.
However, payback period is just one of the many financial computations one can take a
look at in considering a particular business opportunity. But this will only be possible if
the entrepreneur can come up with financial Statements. The income payback period can
be computed as follows:
PAYBACK PERIOD = TOTAL INVESTMENT_
ANNUAL NET INCOME AFTER TAXES
To compute for the income payback period based on ABC Company's financial
statements, which specify investments of P1,500,000 and net income after taxes of P1,
500,000 year, we can conclude that it would take around 3 years for the company to
recover the investment.
INCOME PAYBACK PERIOD = 1,500,000 = 3 years
500,000
In the Cash Payback Period, the entrepreneur should add back the non-cash
deductions from the income statement, which is the depreciation expense. Thus, if the
depreciation expense is P250,000 a year, the net income after taxes plus depreciation
would amount, to P750,00 a year. This would then represent a cash payback period of
two years only.
In effect, the faster you are able to earn back the money invested, the better it is
for the entrepreneur and the more attractive the business opportunity becomes. There is
also the return on sales (ROS) ratio where the entrepreneur calculates how much profit
the enterprise is earning for each peso sold. The formula is as follows:
ROS = NET PROFIT AFTER TAXES
SALES
Substituting, the variables into ABC Company‘s estimated figures:
RETURN = 500,000 =10%
5,000,000
Furthermore, if the entrepreneur is interested to know the return on the
investments made, which come in the form of assets, then he/she can compute for the
return on assets (ROA) or return on investments (ROI) shown by the formula:

ROA or ROI = NET PROFIT AFTER TAXES

TOTAL ASSETS/INVESTMENTS
Again, substituting the variables using ABC Company's estimated figures:
ROA or ROI = 500,000 = 33%
1,500,000

The above ratios are but a few of the frequently used financial measurements.
Should the resulting figures for all three ratios be favorable, this means that the business
opportunity is quite promising.

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The Feasibility Study

For bigger projects that entail

millions of pesos worth of investment,
a full-blown feasibility study might be
required more than the pre-feasibility
study. As compared to a pre-
feasibility study, a feasibility study is
more comprehensive and detailed. It
requires a more rigorous approach. A
feasibility study is prepared to
convince bankers and investors to
put money into the business opportunity. In writing the feasibility study, the
entrepreneur should take into consideration the following:

1. A more in-depth study of market potential to ensure that the business proposal
will reach the forecasted sales figures;
2. Proof that the product or service being offered has; the right design, attributes,
specifications, and preferred features;
3. Proof that the entrepreneur and his or her team have the necessary experience,
skills, and capabilities to maximize the venture's chances of success;
4. Legal visibility;
5. More detailed costing on the different assets and more justification for the
production and operating expenses; and
6. More thorough analysis of the technology and its sustainability.

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 ACTIVITY 1. Opportunity Screening; Based on your identified opportunities from the
activity in lesson 1, choose one (1) that you think is the best to engage to and subject it
to “12 R’s of Opportunity Screening Test” using the matrix below:

Opportunity:

12 R’s Yes No Remarks

1. Relevance

2. Resonance

3. Returns

4. Responsiveness

5. Revenues

6. Revolutionary
Impact

7. Reinforcement

8. Reach

9. Resources
Required

10. Risk

11. Relative Ease of

Implementation.

12. Range

Note: Use another sheet if necessary.

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 ACTIVITY 2. Pre-Feasibility Study: Make a pre-feasibility study for the
opportunity you have chosen in the Activity 1 based on the following guidelines:

Options:
a) Work on your pre-feasibility alone; or
b) Form a group (four members) and work together.

Format:
Paper size: A4
Margins: 1.0 inch all sides
Spacing: 1.5
Font style: Georgia
Font size: 12
Alignment: Justified

Contents:

CHAPTER I - Introduction
- Brief Description
- Objectives

CHAPTER II - Market Potential and Prospects

- Products/Services
- Market Segmentation
- Competition Assessment/SWOT Analysis
- Market Share and Sales.

CHAPTER III - Technology Assessment and Operations Viability

- Technology Requirements
- Equipment and Machineries needed

CHAPTER IV - Investment Requirements and Production/Servicing Costs

- Source of Capitalization
- Pre-Operating Costs.
- Production/Service Facilities Investment
- Working Capital Investment.

CHAPTER V - Financial Forecast and Determination of Financial Feasibility

- Initial Capital Requirement
- Financial Statements
- Return on Investment

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TEST I – TRUE or FALSE “Correct me if I’m wrong!” (Direction: Write “T” if the
statement is correct. If not, write “F” and the word that will make the statement correct.
Write your answer in the box before each number. Two (2) points each.)

1. Market potential is based on the estimated number of possible

customers who might avail of the product or service.
2. The capacity of operations is mainly determined by the number of
products needed to be produced.
3. The quality specifications demanded dictates the quality of input,
quality assurance process in transforming input to output, quality
output that meet the operations, and the quantity of outcomes for
the customers looking for specific results.
4. Production Facilities Investment refers to the long-term investment
for the actual business establishment, including investment in land,
buildings, machinery, equipment, computers, software, furniture,
vehicles, etc.
5. Working Capital Investment includes the investment needed to
operationalize the business, composed of cash, accounts receivable,
and inventories (raw materials, work-in-process, and finished
goods).
6. The financial forecasts which refer to the past monetary
transactions that the business is engaged in will indicate the
feasibility of the enterprise.
7. Assets represent all the investments in the enterprise including cash
(on hand and in bank), accounts receivable, inventory of goods,
equipment and machinery, facilities, vehicles, etc.
8. Payback period is the measure of how long will it take for the
investor or the entrepreneur to get back what he/she has invested
in the enterprise.
9. If the entrepreneur is interested to know the return on the
investments made, which come in the form of equity, then he or she
can compute for the return on assets (ROA) or return on
investments (ROI).
10. The ultimate goal of doing the opportunity screening matrix is to
narrow down the many opportunities into one or two most
attractive ones. The idea is to focus on many key items that could
make or break the business concept.
11. The resources mobilized and held by the enterprise are translated
into forecasts of the balance sheet which show the investments in
the form of liabilities and their corresponding financing in the form
of assets.
12. In effect, the longer the company is able to earn back the money
invested, the better it is for the entrepreneur and the more attractive
the business opportunity becomes.
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TEST II – MATCHING TYPE (Direction: Identify the ‘R’ of Opportunity Screening
that is being described in each item. Choose from the box and write in CAPITAL the
letter that corresponds to your answer on the space provided before each number. Any
form of erasures/corrections will be considered wrong.)

A. Relevance B. Resonance C. Returns D. Responsiveness

E. Revenues F. Revolutionary Impact G. Reinforcement H. Resources Required
I. Reach J. Risk K. Range L. Remarkable

1. The opportunity echoes with the entrepreneur’s personal interests, talents, and
skills.
2. The opportunity can potentially lead to a wide range of possible product or
service offerings, thus, tapping many market segments of the industry.
3. The opportunity has sales potential of the products or services to be offered and
there is a big enough market out there to grab and nurture for growth.
4. The opportunity addresses the unfulfilled or underserved needs and wants of
customers.
5. The opportunity matches the values and desired virtues that you have or wish
to impart.
6. The opportunity will most likely be the "next big thing" or even a game-changer
that will revolutionize the industry.
7. The opportunity is aligned with the personal Vision, mission, and objectives for
the enterprise wanted to set up.
8. The opportunity is relatively easy to implement for the entrepreneur.
9. The opportunity requires fewer resources for the entrepreneur to implement the
venture.
10. The opportunity carries lower threats than others, such as in technological,
market, financial, and people.
11. The opportunity has low costs of production and operations but are sold at higher
prices will definitely yield the highest returns on investments.
12. The opportunity has good chances of expanding through branches,
distributorships, dealerships, or franchise outlets in order to attain rapid growth
are better opportunities.

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TEST III.i: Compute for the Payback Period (in Philippine setting) being asked in
following and briefly explain the indication of the answers:

Total Investment Annual Net Income After Taxes

1. P 345,000.00 87,098.00 QR
2. Ś 96,801.00 P 986,050.00
3. P 4,673,900.540.00 S 11,950,603.00
4. ¥ 87,000,560,523.00 € 84,690.00
5. £ 123,153.00 98,132,00 SAR

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TEST III.ii: Compute for the Return on Investment (in Philippine setting) being
asked in following and briefly explain the indication of the answers:

Total Investment Net Profit After Taxes

6. P 364,000.00 87,078.00 SAR
7. Ś 99,601.00 P 876,040.00
8. P 4,613,900.540.00 S 11,930,603.00
9. ¥ 87,010,560,523.00 £ 84,680.00
10. € 123,183.00 98,162,00 QR

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OPPORTUNITY SEIZING

At the end of this lesson, you can:

1. craft a positioning statement;
2. conceptualize a product; and
3. design a product.

Upon receipt, you are expected to accomplish this module in

a period of three days.

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 OPPORTUNITY SEIZING
After Opportunity Seeking and Screening, the entrepreneur is ready for
Opportunity Seizing, the final Stage. By now, the entrepreneur has an idea as to where
he or she will locate the business and how he or she will market the product or service.
At this stage, the entrepreneur must be able to determine the critical success factors that
enable other players in the same industry to succeed while, at the same time, be vigilant
about those factors that cause other businesses to fail.

The question for the entrepreneur in Opportunity Seizing is

“Will I be able to manage, to my advantage, the critical success
factors and avoid the critical failure factors?” The critical factors
may change depending on what market segment the enterprise is
addressing. If the market segment wants very high quality products
and can tolerate higher prices, the critical success or failure factors
here would be different from a market segment that is very price
conscious but is not too demanding on quality.
Thus, it is important for the entrepreneur to establish the positioning of the business
enterprise in the marketplace, what market segment would be best for the enterprise to
enter into?

Crafting a Positioning Statement

A positioning statement is a brief description of a product or service and target

market, and how the product or service fills a particular need of the target market. It's
meant to be used as an internal tool to align marketing efforts with the brand and value
proposition.
Positioning statements are used to describe how your product or service fills a
need of your target market or persona. They're a must-have for any positioning strategy
and create a clear vision for brand positioning.
The positioning statement acts as a way to convey the value proposition to the
brand's ideal customers while calling out
the brand's identity, purpose, and
distinguishing features.
To craft your positioning
statement, you'll need to get crystal clear
on these aspects of your business:
Who you serve;
What you offer them;
How you offer it; and
Why you do what you do.

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Positioning Statement vs. Mission Statement
Your mission or vision identifies the goals or objectives of the brand and can be a
valuable part of positioning as a whole. However, the positioning statement is something
else altogether.
Unlike a mission statement or vision statement, a positioning statement is not a
public-facing tagline. At its core, it's broader than that, summarizing the value
proposition, mission, and other positioning factors in a clear and concise way.

Value Proposition vs. Positioning Statement

The value proposition and positioning statement are both key elements in a
business' marketing strategy, however, there are differences between these two. A
value proposition describes what sets your product or service apart from competitors.
It gives a big picture overview of the benefits a product or service provides.
Positioning statements are broader, and they're created after you've developed
your business' value proposition. It also identifies the primary customer benefits and
points of competitive differentiation.

The Core Elements of Strategic Market Positioning

As mentioned earlier, if you want to craft your positioning statement, you must
first have a good understanding of your positioning as a whole. This includes defining
the following core elements:

1. Target Audience. Your target

audience is the "who" aspect of your
positioning. Simply defined, it's the
group of consumers you're targeting
with your product or services. They
say that "the riches are in the niches,"
which comes down to the idea that,
even if anyone can use your product or service, you should still be targeting
specific buyers so that your messaging can resonate. One of the best ways to define
a solid target audience is by thinking through it in terms of a "buyer persona" or
ideal customer.
2. Market Category. A market is comprised of buyers and sellers, and a category
defines a specific segment of that market. In essence, it is where you're competing
with other providers for the share of the category's buyers. Whether your market
category is developed and robust or you're part of an emerging
market or need, you'll need to define
who the buyers are in the space, where
they're searching for goods and
services, and who currently has their
attention. You'll want to define what
your competition offers and how you
can position your brand against
that competition.

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3. Customer Pains. Customer pains are the
problems or issues your target audience is
experiencing. Your product or service will
aim to address a customer pain and provide
a solution.

4. Brand Promise. Your brand promise is

ultimately what the target audience or buyer persona
stands to gain from using your product or service; it's
what success looks like to them if their pain or problem
is resolved in a way that's satisfying to them.

5. Brand Identity. Brand identity is the

personality of your business and includes
both visible factors (such as logo design)
and less visible ones (such as values or
voice). Brand identity is one aspect that
will set you apart from competitors and
help you gain recognition from your
target audience.

6. Values. Values are the "how you do it" aspect

of your brand and serve to create the culture of
your organization and leave an impression with
your target audience. They are the intangible
methods with which you execute your mission
and vision.

7. Mission. Your mission is the "why you do

it" aspect of your brand. Your mission
encompasses your organization's goals,
objectives, and approach. Once you have a
solid understanding of identity and
positioning, you can pivot to crafting the
positioning statement itself.

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How to write a positioning statement
When writing and evaluating your positioning statement, keep the following
tips in mind:

1. Keep it brief. Your brand’s positioning statement should

be concise and to the point. Aim for no more than three to
five sentences, if possible.

2. Make it unique and memorable. This statement

should be unique to your company and the problems you
aim to solve. When crafting your positioning statement,
be sure to emphasize the distinctive qualities of your
brand.

3. Remain true to your business’ core values. Your

brand’s positioning statement should accurately reflect
the core values of your business.

4. Include a credible
promise of what the brand delivers to consumers.
Who does your company serve? How does your company
serve this group? Clearly state who your customer is and
how you help them in your positioning statement.

5. Communicate how your business is

different from the competition. An
effective positioning statement should
articulate what differentiates a brand from
its competition. Highlight your company’s
unique qualities and how those qualities
help serve your customers.

6. Keep it clear enough for use as a

guideline to evaluate whether or not
business decisions align with the brand. In
almost any circumstance, your team should be
able to align key business decisions with your
brand’s positioning statement.

The positioning statement shouldn't be stagnant — make sure your statement

provides room for growth as your business matures and products change.

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Positioning Statement Examples

Coca-Cola Positioning Statement:

For individuals looking for high-quality
beverages, Coca-Cola offers a wide range of the
most refreshing options — each creates a positive
experience for customers when they enjoy a Coca-
Cola brand drink. Unlike other beverage options,
Coca-Cola products inspire happiness and make a
positive difference in customers' lives, and the
brand is intensely focused on the needs of
consumers and customers.

Nike Positioning Statement:

For athletes in need of high-quality,
fashionable athletic wear, Nike provides
customers with top-performing sports apparel
and shoes made of the highest quality materials.
Its products are the most advanced in the athletic
apparel industry because of Nike's commitment
to innovation and investment in the latest
technologies.

Apple Positioning Statement:

For individuals who want the best
personal computer or mobile device, Apple leads
the technology industry with the most innovative
products. Apple emphasizes technological
research and advancement and takes an
innovative approach to business best practices —
it considers the impact our products and
processes have on its customers and the planet.

McDonald's Positioning Statement:

For individuals looking for a quick service
restaurant with an exceptional customer
experience, McDonald's is a leader in the fast
food industry, with its friendly service and
consistency across thousands of convenient
locations. McDonald's' dedication to improving
operations and customer satisfaction sets it
apart from other fast food restaurants

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Conceptualizing the Product or Service Offering

After making an assessment of the competing

products, the entrepreneur must then conceptualize his
or her own products. A concept is an idealized
abstraction of the product or service to be offered to the
preferred market of the entrepreneur.

Case Example: COZY COCOON PRODUCT CONCEPT

Here is an example of a product conceptualization. This is a furniture concept for the Cozy
condominium cocoon.

After noticing the trend toward condominiums, condotels, townhouses, apartment lofts,
second homes, and vacation houses among the upper middle to the high—income segments, a
furniture maker scanned the competitors' product offerings.

Upon closer observation, there seemed to be more and more L-shaped sofas, sofa beds, pullout
beds, adjustable dining tables, lighter chairs, stackable chairs, compact kitchen furniture and
complete bathroom sets being offered in the market.

Since these dwelling places cost anywhere between four to twelve million pesos each, they
cannot be “cheapened” by low-end furniture. Otherwise, the value of the place would get
diminished. Also, since the units are relatively small, the owners can spend a little bit more per
piece of furniture.

Given these motivations, the furniture has to be of the right size to fit the dimensions of the
unit. To make the furniture flexible in size, function, and appearance, they can .come in
modular, rearrange able designs. The furniture must be light and appear light for easier
movement and to project a roomier image. The furniture has to be comfortable and appear
warm to create that “cozy cocoon" feeling. If plastics or light metals are to be used, they must
be ergonomically engineered and creatively styled so as not to be hard, on the body and stiff to
look at. Colors and curves can do the trick The furniture has 'to be multifunctional, like an
ottoman that serves as a “coffee table: a kitchen counter that serves as a dining place, a sofa
and a bed at the same time, and a working desk, entertainment cabinet, and bookshelf rolled
into one.

To appeal to his chosen customer segment, the furniture maker decided to display the furniture
in “matched showcases" where the buyer could easily “visualize" their final arrangement in his
or her unit.

To make the display area more attractive to customers, the entrepreneur added lamps, lighting
fixtures, home accessories and decorations, kitchen appliances for the kitchen display area,
wallpaper and coverings, and flooring materials to complete the display ensembles.

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 The concept must be compelling
and unique to the customer targeted,
meaning that the product should
contain the attributes or features
desired by the targeted market that
make up the product's main value
proposition.
In order to come up With the
Product or service concept, the following options or directions may be considered by the
entrepreneur:
1. The first is to create a concept similar to the winning products in the marketplace
and ride with the obvious market trends
2. The second is to find a market niche that has not been filled by the competitors.
(Market niche means small segments of the market where discriminating
customers are searching-for special product/service features and attributes.)
3. The third is to conceptualize a product in a positioning category where the
participants are rather weak.
4. The fourth is to conceptualize a product that would change the way Customers
think, behave, and buy, thus making existing products “obsolete” and “old- '
fashioned."

Designing, Prototyping, and Testing the Product

From conceptualization; the entrepreneur

proceeds to the design, Prototyping: and, testing of
the concept. Designing means that the entrepreneur
must render the concept and translate it into its
very physical and very real dimensions
(measurement). This entails building a prototype
of the product that will be ready for actual testing
by the entrepreneur and then, later on, subject to
testing by potential customers through forms group
discussions (FGD), surveys, product demonstration
sessions, and the like.
The entrepreneur must be able to ‘perfect’ the product or service as it goes
through the above processes while the product or service is continuously subjected to
testing and improvement.
The next thing the entrepreneur must do is to assess how much resources are I
available in order to seize the opportunity and what kind of organizational set-up will
work best for this kind of opportunity.

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Implementing, Organizing, and Financing

Good planning and good programming are essential to have good

implementation. The entrepreneur must begin with the end in mind, or his/her desired
end results, for the chosen opportunity. End results refer to the final outcomes of the
business, such as highly satisfied customers, huge sales realized, large profits generated,
etc.
A good planner and programmer must
make several important Choices to achieve the
desired end results.
First is to choose the correct technology,
the one that would produce the output that would
meet the quality specification of the
customers.

Second is to choose the right people who can

perform the technical and the managerial functions
necessary to realize the desired end result.

Third is to design the operating

workflow that would assure the effective,
economical, and efficient production of the
output.

Fourth is to specify the systems and procedures

that would govern the enterprise, motivate and
discipline the work force and satisfy the customers.

Fifth is to design the organizational architecture

that would allow the people to function at their best.

Given the above considerations, the entrepreneur must be diligent in taking the
necessary steps toward determining the required resources. These resources include
people resources, physical resources, and peso or—money resources.
People and physical resources, are dictated by the sales volume targeted, the
technology to be utilized, and the capabilities needed by the workforce. The sales volume
would then determine the quantities of materials, supplies, power, space, people,
operating expenses, and other requirements. Technology would define the capital
expenditures and work processes necessary to get things done. The capabilities of the
people would calibrate the salaries and wages, benefits and allowances, travel and
transportation, and other people-related expenses. The peso or money resources would,
in turn, depend on the people and the physical resources, plus other financial
requirements related to establishing and nurturing a business.

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Activity 1: Craft a positioning statement for the product/business you have chosen in
lesson 2. Use of graphic illustrations is highly encouraged.

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Activity 2: How will it looks like?: Conceptualize the projected product/service
that you are planning to offer and present below the design you came up with. From
that, discuss the factors you have considered in conceptualizing and designing the
product/service.

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TEST I – TRUE or FALSE “Correct me if I’m wrong!” (Direction: Write “T” if the
statement is correct. If not, write “F” and the word/words that will make the statement
correct. Write your answer in the box before each number. Two (2) points each.)

1. Opportunity Screening is a stage which the entrepreneur

must be able to determine the critical success factors that
enable other players in the same industry to succeed and
the factors that cause other businesses to fail.
2. A concept is an idealized abstraction of the product or
service to be offered to the preferred market of the
entrepreneur.
3. Designing means that the entrepreneur must render the
concept and translate it into its very physical and very real
dimensions (measurement) that entails building a
prototype of the product that will be ready for actual
testing.
4. The entrepreneur must not begin with the end in mind, or
his/her desired end results, for the chosen opportunity.
5. A positioning statement is meant to be used as an external
tool to align marketing efforts with the brand and value
proposition.
6. Positioning statements are used to describe how your
product or service fills a need of your target market or
persona.
7. Customer pains are the problems or issues your target
audience is experiencing. Your product or service will aim
to address a customer pain and provide a solution.
8. Brand identity is the personality of the business limited to
the visible factors and disregarding the values or voice that
will set an entrepreneur apart from competitors and help
gain recognition from target audience.
9. End results refer to the final outcomes of the business, such
as highly satisfied customers, unrealized sales, large profits
generated, etc.
10. The entrepreneur must be diligent in taking the necessary
steps toward determining the required resources including
the human resources, physical resources, and peso or—
money resources.
11. Technology would define the capital expenditures and work
processes necessary to get things done.
12. Value positioning describes what sets the product or service
apart from competitors and gives a big picture overview of
the benefits a product or service provides.

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 13. Brand Promise is ultimately what the target audience or
buyer persona stands to gain from using the product or
service.
14. Values are the intangible methods with which you execute
your mission and vision.
15. The mission encompasses the organization's goals,
objectives, and approach. Once you have a solid
understanding of identity and positioning, you can pivot to
crafting the positioning statement itself.
16. Market niche means small segments of the market where
discriminating customers are searching-for special
product/service features and attributes.)

TEST II – DISCUSSION (Direction: Answer the question below.)

1. What factors are more likely to trigger you to seize an opportunity? Why?

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Morato, E. A. Jr. (2016) Entrepreneurship (1st ed.). Rex Book Store Inc.
Asor, W.T. (2009) Entrepreneurship in the Philippine Setting (1st ed.).
Rex Book Store Inc.
Gilles, A. and Mondejar, R. (2008) Guide to Entrepreneurship (2nd
ed.). Sinag Tala Publishers Inc.
Pizaňa, A. D. (2020). Earth Science: Chapter 4 – Water Resources.
College of Education.
https://blog.hubspot.com/sales/positioningstatement#:~:text=What%
20is%20a%20positioning%20statement,the%20brand%20and%
20value%