UNIT I: DEVELOPING A BUSINESS PLAN Module 2: Recognizing the Potential MarketRee eee nH Pm RCM MLTR LTCC CMO CCLRC O Identify the market problem to be solved or the market to be met. © Propose solutions in terms of products and services that will meet the need using techniques on seeking, screening, and seizing opportunities. Analyze the market need. Determine the possible products or services that will meet fence c. Screen the proposed solutions based on viability, profitability,and customer requirements. d. Select the best products or service that will meet the market need.y Wee Cad O Discuss the proper and efficient ways of starting a business. O Introduce the entrepreneurial process. O Familiarize with the marketing environment. © Teach you to apply the techniques of seeking, screening, and seizing opportunities. © Let you deal with analyzing the need of the market, think of the potential set of products or services that will meet the need, assess the feasibility of the solution, and select the best product or service that will address the need.The Entrepreneurial Process 1. Opportunity Spotting and Assessment Va BT-a7-a (oye) velea-Wshiyeelecwm atv 3. Determining the Capital Needed 4. Running the BusinessSCANNING THE MARKETING ENVIRONMENT Olt is the starting point of any venture that involves understanding and knowing the intricacies of the Anco) Cem sana tweyaveet sonia OThrough environmental scanning, entrepreneur can recognize various opportunities and at the same time understand thoroughly the arena where the future business will operate.IMPORTANCE OF ENVIRONMENTAL SCANNING O It clearly portrays the trends, activities, and development happening both in the macro and micro environment including the interrelated relationships between the SC WCOCe eee mURoNuteo noua O It identifies the expected threats and opportunities existing in the environment. O It points out the possible factors that will determine the PSI Ca ome) me CM OLeeS Tet R UT TaE Ta O It helps define the future path of the business. O It assists in the formulation of the most appropriate DUS tes ee es oeOGeneral Rule: Wie Mas Amey )eLOMAULT LA am TLRS LOK MOO) TTT) with a new product or service in the future”.SEEKING, SCREENING, and SEIZING 3S of Opportunity Spotting and Assessment Ois the framework that most of the promising entrepreneurs use to finally come up with the ultimate product or service suited for specific opportunity. Opportunity QO is an entrepreneur's business idea that can potentially become a commercial product or service in the future.RYE CCU SIO) ae eRe Opportunity Seeking Ois the first step and is the most difficult process of all due to the number of options that the entrepreneur will have to choose from.RSE CIC SIO) ee eRe Ue O it involves the development of new ideas from various sources as follows: OChanges in the environment OExternal/Macroenvironment OlInternal/Microenvironment OTechnological discovery and advancement OGovernment’s thrust, programs, and policies © People’s interests OPast experiencesRSE CIC SIO) ee eRe Ue pea aM Ce MAROTTA O it involves the larger societal forces that influence the microenvironment. a. PESTEL - Political, Economic, Socio-cultural, Technological, Ecological, Legal b. Industry Environment -- Government, Suppliers, Customers, Competitors, Employees, CreditorsRSE CIC SIO) ee eRe Ue PESTEL a1, Political Factors Oare mostly induced by government policies and administrations, which can have a strong effect in the entrepreneur's business. © a2. Economic Factors Qare factors which are primarily caused by changes or movements in the Philippine economy that have direct or indirect effects on the entrepreneurial venture.RSE CIC SIO) ee eRe Ue a3. Socio-cultural Factors Orepresent a general view of a locality’s traditions, customs, beliefs, norms, and perceptions. a4, Technological Factors Obasically refer to the trends and developments in computer and information technology that have impact yim eles teleRSE CIC SIO) ee eRe Ue a5. Environmental/Ecological Factors Oshould be given much importance especially when the world has already suffered severely from human- induced calamities. a6. Legal Factors Oare the elements and bodies that are directly involved TM eim(4EI Col e-lLeB nieces eae-lulO ime @EM NAT LiTel ordinances directly affecting the business.RSE CIC SIO) ee eRe Ue Industry Environment © bi. Government tees seme eN comm ielateley mime meee eno a particular country. O Five Types/Classifications of Government: Odemocracy Oautocracy Orepublic Omonarchy OdictatorshipRSE CIC SIO) ee eRe Ue b2. Suppliers O refer to individual persons or companies that provide the required materials, parts, or services to the business. CoN aeRO Sar MEAN ey) aed Oquality of the goods or services Oterms of payment Ostability Oability to respond to urgent needs Oproximity of the locationRSE CIC SIO) ee eRe Ue 53. Customers O are the buyers of goods or services produced or rendered by the business. O it must constantly evaluate and study the behavior, tastes, preferences, inclinations, and even future activities of the customers. mR aed O are the forces existing in the industry environment that produce, sell, or render products or services which are similar to those of the business. O Direct Competitors - produce and sell similar products or services. O Indirect Competitors - produce and sell substitute products.RSE CIC SIO) ee eRe Ue Le aod Oare the workers of the business who are highly responsible for the production of goods or delivery or services to the customers. O They help ensure the quality and quantity of products or services provided to the customers. O They are the backbone of the business EOS ey O refer to banks, financial institutions, and financial intermediaries engaged in the lending of money to the Lote MehiVcrmmURS tC) Nao) mec BX Rel meet eT mon (meer me) mbnaRSE CIC SIO) ee eRe Ue Internal / Microenvironment O refers to the environment within the business. a. Business Resources O are assets or properties owned or controlled by the business. O can either be tangible or intangible. O Tangible Resources - are assets of the business that have physical appearance and form. OCurrent Resources - are used, applied, or consumed AWA Ta rome) ole) a mola lele meme R Ure ONoncurrent or fixed Resources - are properties whose usefulness or benefits extend beyond one year.RSE CIC SIO) ee eRe Ue O Intangible Resources - are assets of the business that do not have physical appearance of form. © A business without resources cannot exist and a business with insufficient resources cannot sustain the operation. b. Business Culture O is a collection of values, beliefs, principles, and expectations learned and shared by employees, founders, stakeholders, and members of the management. © reflects the overall image of the business to the community. © reflects the identity of the employees but not dependent on the culture of dominant employees in the business.RSE CIC SIO) ee eRe Ue * Types of Cultures operating in the Internal Environment: O Culture of the Business or Organization O Individual Culture of the Employees * The entrepreneur has the primary responsibility to handle the level of cultural acceptance and cultural integration among Filipino workers in the business. © Cultural Acceptance - refers to the degree by which the employees accept the culture of the unit or business. O Cultural Integration - refers to the degree by which all units across the business accept and share a common culture.RSE CIC SIO) ee eRe Ue ros shit a 1 * refers to the formal organizational arrangement of the business in terms of hierarchy of positions, flow of communication, relationship of functional areas, and production and marketing processes + the complexity of the business structure depends on the type of business, nature of operation, capital base requirement, leadership style, and scope of operation.RSE CIC SIO) ee eRe Ue METHODS OFGENERATING IDEAS 1. Focused Group Discussion (FGD) O is conducted by an entrepreneur with the assistance of a moderator to gather the views of selected consumers on certain issues related to their buying behavior. 2. Brainstorming O is an activity similar to an FGD, that allows the participants to share creative ideas using the following rules: (a) no destructive criticism or judgement is allowed; (b) wider ideas are accepted; (c) more ideas are preferred; and (d) improvement of others’ ideas is allowed. In short, eT coer vice MMe Melecaee ye mY Teew (elope atomRSE CIC SIO) ee eRe Ue 3. Brainwriting or Internet brainstorming O is exactly the same as brainstorming except that the channel used is not face-to-face, but in writing or online. 4, Problem inventory analysis O is similar to the FGD except that the participants are already given an inventory of product or service problems. O participants will just identify from the list given the compelling problem(s) of a potential product or service instead of generating the ideas from them.$2: SCREENING THE OPPORTUNITY Oj Rea aoe Zot) « is the process of cautiously selecting the best opportunity. fom ammo (eo me memo nace cotatmcmeiicoei rl intent and the external intent which will address the compelling needs of the target market. © Risk Appetite - refers to the entrepreneur’s tolerance of DoTes bem aren OThe crafting of a business plan starts only when entrepreneurs already said no to many opportunities and said yes to one forceful opportunity, to which they will devote their time and resources.$2: SCREENING THE OPPORTUNITY The entrepreneur should say no to an opportunity if it does not contain any of these business opportunity elements: © Has superior value to customers © Solves a compelling problem, issue, a need, or a want O Is a potential cash cow O Matches with the entrepreneur's skills, resources, and risk appetite$2: SCREENING THE OPPORTUNITY © Opportunity Screening Matrix (OSM) aims to assist entrepreneur concretize the evidence that the chosen opportunity (or opportunities) is well worth pursuing. The 12 Rs of Opportunity Screening © Relevance to vision, mission, and objectives of the nmngeaoncitid COW ela OR © Reinforcement of Entrepreneurial Interests © Revenues - determine the sales potential of the products or oaslem eM ic limcene icon$2: SCREENING THE OPPORTUNITY © Responsiveness to customer needs and wants. © Reach - attainment of rapid growth © Range - potentially lead to a wide range of possible product or service offerings O Revolutionary Impact - “next big thing” or a game-changer that will revolutionize the industry © Returns - high returns on investment O Relative Ease of Implementation - easy to implement O Resources Required - fewer resources is better than those requiring more resources O RisksCriteria Rating |. RELEVANCE, ). RESONANCE 3. REINFORCEMENT OF INTREPRENEURIAL INTERESTS. ¢. REVENEUS 5. RESPONSIVENESS, 5. REACH 7. RANGE 3, REVOLUTIONARY IMPACT . RETURNS, 10, RELATIVE EASE OF MPLEMENTATION Rating 11, RESOURCES REQUIRED 12, RISKS Total Score Very High Average Low VeryLow High Opportunity Screening Grid for each Opportunity 5 4 3 2 1 v v v v v v v v v v 1 2 3 4 5 v ¥ Sample Weight Weight 2 1 1 Score Score* 10 4 4 10 20 80© *Rating x Weight = Score © Note: Criteria numbers 1 to 10 are positive indicators; UCLA OKO) CL O Criteria number 11 and 12 are negative indicators; meaning, the less of them, the better. © Hence, the rating system is reversed for the negative tale eee © Weight will range from 1 to 4 depending on the weight or importance of the criteria.S3: SEIZING THE OPPORTUNITY Opportunity Seizing O is the last step in opportunity spotting and assessment. O the “pushing through” with the chosen opportunity. Innovation O is the process of positively improving an existing product or service, O it is a key driver for economic growth.S3: SEIZING THE OPPORTUNITY © Three (3) types of Innovations according to the degree OSKeleneaiH Dee CK LLLeeLL © may also include inventions, occur infrequently as these establish the platform on which future innovations in an area are developed. © must be protected by patent, a trade secret, or a copyright. © Examples: Internet, computer, or airplaneS3: SEIZING THE OPPORTUNITY 2. Technological innovation © occur more frequently than breakthrough innovations. O are technological advancements of an existing product or service. These innovations need to be protected too. O Examples: wireless fidelity or Wi-Fi, laptop, and jet EV w ellosS3: SEIZING THE OPPORTUNITY 3. Ordinary innovations © occur ordinarily as the name implies. Lo B-Tecmool TOMO IAT Lel Twine emit lU CMTC ATETILel technology pull instead of a technology push. O This means that the market has a strong influence in the implementation of an innovation. © Examples: unlimited Internet plans of telecommunications companies, a wireless mouse, and airbus for economical feel leS3: SEIZING THE OPPORTUNITY OThe last process, called the seizing process, involves refining and developing this opportunity. The refining process is called product or service planning and development process.S3: SEIZING THE OPPORTUNITY Four (4) stages: O Idea stage - in this stage, the entrepreneur determines what are the feasible products and/or services that will perfectly suit the yearn PoRU Eta mca loly PoP Ue UCRU a Can Duel eRe ray os) CP arinreC Rome Tyree vestry Acoag Cas © Concept stage - the developed idea will undergo a consumer Eau ole Tomer eM UML mio Ccwe cal emeNTeeT Bua eC) Oe the primary target market and the distribution channel. pe Roe ee auc)S3: SEIZING THE OPPORTUNITY O Product development stage - in this stage, the ootancyel crite co dcectomeloMMUC MTU Ce)uniELeC exc oeclereB inet the prospective customers via the concept stage. CoD Poeun ente mcrae ee ice) prospective customers Yoon Mesenetnea cn tel O Test marketing stage - this stage validates the work done from the first three stages to measure success in the commercialization of the product or service. LoPitentc vec MopacOOnce the 3S of opportunity spotting and assessment have been diligently done, the entrepreneur should now be ready to prepare a comprehensive business plan that covers marketing, operations, and financial plans.