Department of Education

National Capital Region

SCHOOLS DIVISION OFFICE
MARIKINA CITY

ENTREPRENEURSHIP
Screen the Proposed Solution Based on Viability,
Profitability, and Customer Requirements
First Quarter-Module 4 Part 1

Writer: Richelle C. Requinala, MBA, LPT

Cover Illustrator/ Writer: Sheila Mae A. Malesido, MBA, LPT

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 This module was designed and written with you in mind. It is here to help you
develop knowledge, skills, and attitudes in the course of Entrepreneurship. The
scope of this module permits it to be used in many different learning situations.
The language used recognizes the diverse vocabulary level of students. The
lessons are arranged to follow the standard sequence of the course. But the
order in which you read them can be changed to correspond with the textbook
you are now using.

The module is divided into two lessons, namely:

• Lesson 4 – Select the best product or service that will meet the market need.
After going through this module, you are expected to:
1. Screen the proposed solution/s based on viability, profitability, and
customer requirements
1.1. identify the environment of the entrepreneurial venture
1.1.1. Physical environment
1.1.2. Societal environment
1.1.3. Industry environment

Identify the following by choosing the answer in the box below. Write your answer
on the space provided before the number.
Customers Suppliers Legal Forces Cultural Forces
PESTEL analysis Environmental scanning Societal environment
Physical environment Industry Environment Physical resources

_____________1. It refers to individual persons or companies that provide the

required materials, parts, or services to the business.
_____________2. These are the buyers of goods or services produced or rendered
by the business.
_____________3. These are the elements and bodies that are directly involved in
the legislation and interpretation of laws and ordinances directly
affecting business.
_____________4. It refers to the integrated characteristics of a group of people or
ethnic group in a particular society.
_____________5. It refers to the tabular framework of the trends and developments
in the different forces in the external environment.

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 _____________6. It refers to the gathering, critical evaluation, and utilization of
information on events and activities and their relationships with
physical, societal and industry environments.
_____________7. It is generally composed of social, political, cultural, economic,
legal, and technological forces.
_____________8. It is the natural environment that is composed of the natural
elements inherent in the Earth.
_____________9. This refers to the external environmental layer where the trends
and changes are easily and immediately felt by the business.
_____________10. The availability of raw materials is another major factor that
can influence the success or failure of the business venture.

Screen the Proposed Solution Based

Lesson
4
on Viability, Profitability, and
Customer Requirements

An entrepreneurial venture is created out of the business opportunities which

the entrepreneur should seek to exploit. These business opportunities emerge from
the entrepreneurial ideas that arise from the changes in the environment,
government policy or technological advancements.

The entrepreneur needs to possess the necessary entrepreneurial character

traits, skills, and competencies before exploiting the business opportunities.
Likewise, segmenting the market is necessary to clearly identify and define the
customers of his/her proposed business venture.

Thus, in venturing for a certain business, an entrepreneur must evaluate and

analyze the business environment. The environment where the business venture will
operate is an important factor to consider in opening a new business.

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 Mamang Sorbetero
Singer: Celeste Legazpi

Mamang sorbetero, anong ngalan mo?

Tinda mong ice cream, gustong-gusto ko
Init ng buhay, pinapawi mo
Sama ng loob, nalilimutan ko

CHORUS:
Mamang sorbetero, tayo’y sumayaw
Kalembang mong hawak, muling ikaway
Batang munti, sa ‘yo’y naghihintay
Bigyang ligaya ngayong tag-araw

Masdan ang ulap sa himpapawid

Korteng sorbetes sa pisngi ng langit
Mata ng dalaga’y nananaginip
Mayro’ng sikretong nasasaisip

[Repeat CHORUS]

Mainit na labi, nagbabagang mata

Sunog na pag-ibig, parang awa mo na
Mamang sorbetero, o, nasaan ka
Init ng buhay, pawiin mo na…

La la la la la…

Note: * The song/lyrics used in this learning module is subject to “Fair Use” based on the Copyright Law of the
Philippines.

Guide Questions:

1. In the song Mamang sorbetero, how can you relate the song into the
concepts of entrepreneurship?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

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 2. Why is the consumer painstakingly waiting for the ice cream of Mamang
Sorbetero?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. If you will be Mamang Sorbetero, what are the factors to consider in
selling ice cream? Explain.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

THE ENVIRONMENT OF THE ENTREPRENEURIAL VENTURE

1. Physical environment is the first layer of the environment. It is composed of

the natural elements that are inherent in the earth.

a. Climate

The entrepreneur must consider the prevalent climatic conditions of the

area where he/she intends to open the business to determine whether it
can withstand or is fit to the climatic condition in the local area.

b. Physical Resources

The entrepreneur must critically assess the availability of raw materials in

the locality before opening a new business. He/she must evaluate if the
available raw materials to be used for the proposed business are sufficient
for a long-term operation.

c. Wildlife

The entrepreneur must ensure that his/her business contributes to the

preservation and not the destruction of the ecological system of the local
community and our country in general. He /she must not open a business
venture that will destroy the wildlife reserve. It is an entrepreneur’s task
to become a model of social responsibility and environmental awareness.

2. Societal environment is generally composed of social, political, cultural and

economic, legal, and technological forces.

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Studies reveal that there is a positive relationship between the evaluation of
the societal environmental and the favorable operating performance of the
entrepreneurial venture.

a. Social Forces are elements in society resulting from human interactions

that can influence the thoughts, behavior, attitude, actions, and even the
beliefs and customs of the people. Social forces include the following:

1. Values
2. Traditions
3. Literacy level
4. Consumer psychology
5. Time orientation
6. Lifestyle patterns
7. Professional career roles

b. Political Forces are various elements usually comprising of the political

parties, political systems, and other related political groups that
substantially influence the political stability of the country. Political forces
include the following:

1. Trade regulations
2. Taxation
3. Government stability
4. Unemployment
5. Workers benefits
6. Election practices

c. Cultural Forces refers to the integrated characteristics of a group of

people or ethnic group in a particular society.

Cultural forces include the following:

1. Religion
2. Language
3. Beliefs
4. Customs
5. Education

d. Economic Forces are factors that are primarily caused by changes or

movements in the Philippine economy that have direct or indirect effects
on the entrepreneurial venture.

Economic forces include the following:

1. Interest rates
2. Inflation rates
3. Fiscal policies
4. Monetary policies
5. Income
6. Exchange rates
7. Employment
8. Consumer confidence

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e. Legal Forces are elements and bodies that are directly involved in the
legislation and interpretation of laws and ordinances directly affecting the
business.

Legal forces include legislations on the following:

1. Product control, pricing, and labeling

2. Health and safety of the workers
3. Administration of election process
4. Advertising and promotion
5. Exercise of profession
6. Education administration and fees

f. Technological forces refer to the trends and developments in computer

and information technology that have impact on business.

Technological forces include the following:

1. Internet
2. Social media
3. E-commerce
4. Technological advancement
5. Technological infrastructure

Environmental scanning is the critical evaluation and thorough study of the

environment where the business operates. It is the gathering, critical
evaluation, and utilization of information on events and activities and their
relationships with the physical, societal, and industry environments.

Environmental scanning is very important for the following reasons:

1. It clearly portrays the trends, activities, and developments happening in

every environmental layer including the interrelated relationships between
the various forces in the environment.
2. It identifies the expected threats and opportunities existing in the
environment.
3. It points out the possible factors that will determine the success of the
entrepreneurial venture.
4. It helps define the future path of the business.
5. It assists in the formulation of the most appropriate entrepreneurial
strategies.

In scanning the societal environment, the entrepreneur may use the following
analytical approaches:

1. PESTEL analysis is a tabular framework of the trends and developments

in the different forces in the external environment. The acronym PESTEL
stands for Political, Economic, Sociocultural, Ecological, and Legal Forces.

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 Political Economic Sociocultural Technological Ecological Legal
Forces Forces Forces Forces Forces Forces
Instability of High Low level of Readily Abundant Frequently
the interest education available raw changed
Philippine rates given among public internet and materials tax laws
Government by school social media
commercial graduates
banks

Table 1.1. Template of PESTEL Analysis

2. Environmental Forces Matrix is a modified version model of the issue priority

matrix adopted by Wheelen and Hunger. It broadly classifies the various
environmental forces into their frequency of occurrence and level of effect to the
existing or proposed business. The type of rating used for this matrix is high,
moderate, or low. In the process of evaluating the different environmental forces,
the entrepreneur must give preferential attention to the forces that have high
frequencies and effects or those considered high environmental forces.

Level of Effect on Entrepreneurial Venture

High Moderate Low
High Moderate
High
Frequency of Occurrence

High Environmental Environmental Environmental

Force Force Force
Moderate

Moderate Low
High Environmental Environmental Environmental
Force Force Force
Moderate Low Low
Low

Environmental Environmental Environmental

Force Force Force

Table 1.2. Template of Environmental Forces Matrix

3. Industry environment is the external environmental layer where the trends and
changes are easily and immediately felt by the business. The industry environment
is considered the immediate environment of the business where it conducts its
various operational activities.

Industry forces include the following:

1. Government refers to the system or institution that handles the affairs of a

particular country. Since the government usually has jurisdiction over the major
activities happening within its territory, including international trade relations,
the type of government system operating in a particular country highly
influences the business. The Philippine government is both presidential
republican and democratic. It promotes entrepreneurial ventures through its
thrusts, programs and priorities.

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2. Suppliers refers to individual persons or companies that provide the required
materials, parts, or services to the business. They play a crucial role in the
production of goods and services. They can adversely affect the production
process by delaying the delivery of the required raw materials and supplies or
services, or by providing defective materials or inefficient services.

The entrepreneur must define the criteria in the process of selecting the supplier,
such as the quality of the goods or services, terms of payment, stability, ability
to respond to urgent needs, and proximity of the location.

3. Customers are the buyers of goods or services produced or rendered by the

business. The business realizes profit from its transactions with the customers.
It must constantly evaluate and study the behavior, tastes, preferences,
inclinations, and even future activities of the customers. It must protect its
customers in order to win their loyalty, and to attract new patrons.

4. Competitors are the forces existing in the industry environment that produce,
sell or render products or services which are similar to those of the business.
Competitors can be classified as direct or indirect. Direct competitors produce
and sell similar products or services, while indirect competitors produce and sell
substitute products.

For example. Coca Cola Bottling Company is a direct competitor of Pepsi Cola
Philippines. On the other hand, companies that manufacture and sell fruit juices
are indirect competitors of Coca Cola and Pepsi Cola.

5. Employees are the workers of the business who are highly responsible for the
production if goods or delivery of services to the consumers. They help ensure
the quality and quantity of products or services provided to the customers. They
help ensure the quality and quantity of products or services provided to the
customers. They are the backbone of the business.

6. Creditors refer to banks, financial institutions, and financial intermediaries

engaged in the lending of money to the borrower usually for a free or charge in
the form of interest. Creditors usually provide the much-needed funds by
extending credit to the business. Banks and other financial institutions are the
major players in the economy in terms of credit extension. They are likewise the
regulatory arm for the flow of money in the economy. In the Philippines, banks
and other types of financial institutions are highly regulated by the national
government.

The entrepreneur must know the different financial services provided by the
banks and other financial institutions. Maintaining favorable financial records
and business image with them provides favorable advantage to the entrepreneur
in times of financial needs.

INDUSTRY ANALYSIS SCANNING TOOLS

In scanning the industry environment, the entrepreneur can use the following
environmental scanning tools:

1. SWOT model is the popular tool to evaluate the internal environment.

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2. Forces of competition model otherwise known as the “five forces of
competition,” was popularized by Michael Porter, a prominent figure in
competitive strategy formulation. The industry environment is a competitive
environment. The business, therefore, cannot do nothing else but to compete.

The five forces competing within the industry are as follows:

a. Potential new entrants

New entrants refers to one competitive force in the industry. It is a threat to

the business. The intensity of its threat will be affected by the presence of the
following barriers:

▪ strict government policy

▪ substantial capital requirement
▪ economies of scale
▪ high cost of product differentiation
▪ high switching cost
▪ difficulty in accessing distribution channels

b. Buyers

The buyer has a strong and magnified bargaining power in the industry.
However the threat of its bargaining power will be less if the following
factors exist.

▪ The buyer has the potential for backward integration

▪ The cost of switching the supplier cost is minimal
▪ The buyer purchases large portions of the seller’s product or
services
▪ There are several suppliers available in the market
▪ The product represents a high percentage of the buyer’s cost

c. Substitute products

The substitute products can pose great threats in the industry

environment if the following factors are present:

▪ The price of the substitute product is substantially lower

▪ Preferences and tastes of customers easily change
▪ The quality of substitute products dramatically improves
▪ Switching cost is low
▪ Product differentiation is hardly noticeable

d. Supplier

The intensity of the threat of the suppliers is strong if the following factors
hold true:

▪ The product or service is unique

▪ The switching cost is very high
▪ Suppliers in the industry are few, but the sales volume is high

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 ▪ Substitute products are not readily available in the market
▪ The supplier has the ability for forward integration

e. Rivalry among existing firms

The intensity of rivalry among existing firms in the industry is attributable

to the following factors:

▪ Number of competing firms

▪ Rate of industry growth
▪ Characteristics of the products or services
▪ Amount of fixed cost
▪ Increased capacity
▪ Diversity of rivals

Threats of
potential new
entrants

Bargaining Bargaining
power of Rivalry among power of
suppliers existing firms the buyer

Threats of
substitute
products

Table 1.3. The Five Forces of Competition Model in the Industry Environment

3. Competitive Forces Matrix can be used by the entrepreneur to plot when

after all the competitive forces have been identified by which the entrepreneur
can view the total perspective of the competition within the industry where the
business operates. The possible effects and the intensity of the threat of the
competitive forces can be high, moderate or low.

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Classify the macro environment of the following elements and forces by putting a
check mark in the appropriate column.

Elements/Forces Physical Societal Industry

Technological forces
Climate
Wildlife
Social forces
Competitors
Economic forces
Physical Resources
Legal forces
Suppliers

Answer the following questions briefly. Write your answer on the spaces provided.

1. Discuss briefly the three environmental layers of the external or macro

environment of the entrepreneurial venture.

Physical environment______________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
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Societal environment _____________________________________________________
___________________________________________________________________________
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Industry environment ____________________________________________________
___________________________________________________________________________
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 ___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

2. Define environmental scanning. Name some reasons why environmental

scanning is important.
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

Your output will be rated by using the scoring rubric below:

Areas of Unsatisfactory Needs Satisfactory Outstanding

Assessment Improvement
(2) (3) (4) (5)
Ideas and Content is Major points Major points Major points
Content incomplete or are addressed are stated are stated
not clear but not well clearly and
supported are well
supported

Perform the following:

A. Paste a picture in a bond paper that generally describes your local community.
It may show a heap of garbage, a dirty canal, a busy street, rice paddies, farm
animals, farmers, employees, and buildings, among others.
B. By your chosen strand/track, list down all the possible business opportunities
that you can identify in your community based on the picture that you had
pasted. Write all the ideas that come into your head. There are no right and
wrong answers.
C. From the different possible business opportunities that you have identified,
pick out the

1. most creative 3. most costly, and

2. most difficult 4. most common

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 D. Observe the climatic conditions in your local community for one week. Take
note also of the raw materials that are present in your locality. Based on your
observations, determine the most appropriate business venture to open in
your community that is integrated in your chosen SHS strand or track.
Explain your answer.

Choose the best answer by writing the letter on the space provided before each
number.
________1. It refers to the first layer of the environment that is composed of the
natural elements that are inherent in the earth.

a. Physical environment c. Industry environment

b. Societal environment d. Environmental scanning

________2. It is the external environmental layer where the trends and changes are
easily and immediately felt by the business.
a. Physical environment c. Industry environment
b. Societal environment d. Environmental scanning

_________3. It is an external environment layer that generally composed of social,

political, cultural and economic, legal, and technological forces.

a. Physical environment c. Industry environment

b. Societal environment d. Environmental scanning

_________4. It refers to the gathering, critical evaluation, and utilization of

information on events and activities and their relationships with the
physical, societal, and industry environments.

a. Physical environment c. Industry environment

b. Societal environment d. Environmental scanning

__________5. Social forces: Values: Political forces: ______________

a. Taxation b. Time orientation c. Religion d. Income

__________6. Technological forces: E-commerce: Economic forces: __________

a. Language b. Exchange rates c. Internet d. Values

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__________7. PESTEL stands for ________________.

a. Political, Economical, Sociocultural, Technological, Ecological,

Legal Forces
b. Political, Economic, Social, Technological, Ecological, Legal Forces
c. Political, Economic, Sociocultural, Technological, Ecological, Legal
Forces
d. Political, Economical, Social, Technological, Ecological, Legal Forces

__________8. Which of the following is the direct competitor of Nescafe ?

a. Lipton b. Kopiko c. Tang d. Sprite

__________9. The following are direct competitors of Jollibee except for _________.

a. McDonalds b. Mang Inasal c. Wendys d. Tropical Hut

__________10. Which of the following statements are true

I. The primary objective in scanning the industry environment is

to determine the strategic position of the business.
II. Environmental scanning helps define the future path of the
business
III. The entrepreneur must evaluate if the raw materials to be used
for the proposed business are sufficient for a short-term
operation

a. I and II only c. II and III only

b. I and III only d. I, II, and III only

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 Offline Activity

Propose a business for your local community that is based on you strand/track. Out
of the proposed business, make a PESTEL analysis.

Political Economic Sociocultural Technological Ecological Legal forces

forces forces forces forces forces

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Book
Aduana, Nick L. Entrepreneurship in Philippine Setting for Senior High School, 2017,
C & E Publishing Inc., Quezon City
Baltazar, William B., et. al. In Depth: A Guide to Successful Business Planning,
2017, Unlimited Books Library Services & Publishing Inc., Manila

Go, Josiah. Fundamentals of Marketing in the Philippine Setting, 2010, Josiah and
Carolina Go Foundation, Inc.

Online

https://www.tagaloglang.com/mamang-sorbetero-lyrics-recording/

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 Development Team of the Module

Writers: Sheila Mae A. Malesido MBA, LPT (SEHS)

Richelle C. Requinala MBA, LPT (CIS)
Internal Reviewer: Dunhill Jan E. Elmido (NHS)
Eva Montaña (MHS)
Sylvette G. Sabaupan (NHS)
Emily C. Santos ( Public Schools District Supervisor)
External Reviewer: Kervin Rey G. Torente, Ateneo De Manila University
Cover Illustrator/ Layout Artist: Sheila Mae A. Malesido MBA, LPT (SEHS)

Management Team:
Sheryll T. Gayola
Assistant Schools Division Superintendent
OIC, Office of the Schools Division Superintendent

Elisa O. Cerveza
Chief, Curriculum Implementation Division
OIC, Office of the Assistant Schools Division Superintendent

Emily G. Santos
Public Schools District Supervisor

Ivy Coney A. Gamatero

EPS– Learning Resource Management and Development System

For inquiries or feedback, please write or call:

Schools Division Office- Marikina City

Email Address: sdo.marikina@deped.gov.ph

191 Shoe Ave., Sta. Elena, Marikina City, 1800, Philippines

Telefax: (02) 682-2472 / 682-3989