BUSINESS ENTERPRISE

SIMULATION
QUARTER 3 – MODULE 1 –
LESSON 1:
IDENTIFYING POTENTIAL BUSINESS
OPPORTUNITIES
 AFTER GOING THROUGH THIS MODULE, YOU
ARE EXPECTED TO:

• IDENTIFY THE NEEDS AND WANTS OF THE COMMUNITY

THROUGH AN INTERVIEW;
• USE THE IDENTIFIED NEEDS AND WANTS TO GENERATE
POTENTIAL BUSINESS IDEAS;
• DEFINE AND CITE EXAMPLES OF ENVIRONMENTAL FACTORS
THAT MAY AFFECT THE MARKET
 LESSON 1: IDENTIFYING BUSINESS
OPPORTUNITIES THROUGH MARKET
SCANNING
• BUILDING A BUSINESS ENTERPRISE IS NOT EASY. MOST
SUCCESSFUL BUSINESS PEOPLE START FROM SCRATCH AND
WORKED THEIR WAY TO THE TOP. THEY UTILIZED BUSINESS
SKILLS AND EXPERIENCE TO MAKE SOUND DECISIONS THAT
HELPED THEM ACHIEVE THEIR BUSINESS GOALS. HOWEVER,
BEFORE YOU START THE BUSINESS, YOU SHOULD BE ABLE TO
FIRST SCAN THE MARKET AND IDENTIFY THE BUSINESS
OPPORTUNITIES PRESENT FOR YOU TO CAPITALIZE ON.
 NEEDS AND WANTS:
BUSINESS OPPORTUNITY
“TWO FACTORS THAT AFFECTS BUSINESS OPPORTUNITIES”
 EVERYONE HAS HIS OR HER OWN NEEDS AND WANTS.
HOWEVER, THESE NEEDS AND WANTS ARE CONSIDERED
DIFFERENTLY BY US. WE HAVE DIFFERENT CONCEPTS OF
THE THINGS THAT WE NEED AND WE WANT. HOWEVER, IT
IS IMPORTANT TO BE ABLE TO IDENTIFY AND CLASSIFY AS
TO WHICH ARE OUR NEEDS AND WANTS AS KNOWING THIS
MAY PRESENT A GOOD BUSINESS OPPORTUNITY.
 BASIC NEEDS ARE THINGS THAT ARE
ESSENTIAL FOR US AND OUR WELLBEING.
THESE ARE THE THINGS THAT WE CANNOT DO
WITHOUT. THESE INCLUDE:
• BASIC COMMODITIES FOR CONSUMPTION,
• CLOTHING AND OTHER PERSONAL BELONGINGS,
• SHELTER, SANITATION, AND HEALTH,
• EDUCATION AND SKILLS-GENERATION,
• RELAXATION AND LEISURE
 WANTS ARE DESIRES, LUXURY, AND EXTRAVAGANCE THAT SIGNIFY
WEALTH AND AN EXPENSIVE WAY OF LIVING. WANTS OR DESIRES
ARE CONSIDERED ABOVE ALL THE BASIC NECESSITIES OF LIFE. FOR
INSTANCE, EVERY INDIVIDUAL HAS AN EAGERNESS OR PASSION FOR
NON-BASIC NEEDS SUCH AS:
• FASHION ACCESSORIES, SHOES, CLOTHING,
• TRAVELLING AROUND THE WORLD,
• EATING IN AN EXCLUSIVE RESTAURANT,
• WATCHING MOVIES, CONCERTS, AND PLAYS,
• HAVING LUXURIOUS CARS,
• WEARING EXPENSIVE JEWELRY, PERFUME,
• LIVING IN IMPRESSIVE HOMES
 THE NEEDS AND WANTS OF PEOPLE ARE THE BASIC
INDICATORS OF THE KIND OF BUSINESS THAT YOU MAY
ENGAGE INTO. THE KNOWLEDGE FOR THE NEEDS AND
WANTS CAN SERVE AS A MEASURE FOR THE SUCCESS
OF YOUR BUSINESS IDEA AS YOU WILL HAVE AN IDEA
WHICH PRODUCT OR SERVICE WILL GENERATE MORE
DEMAND FROM YOUR TARGET MARKET.
GENERATING IDEAS FOR
YOUR BUSINESS
 YOU CAN ALSO GENERATE SOUND IDEAS FOR YOUR
BUSINESS BY CONSIDERING DIFFERENT FACTORS SUCH
AS THE KIND OF PEOPLE THAT YOU WANT TO CATER,
THEIR NEEDS AND WANTS, LIFESTYLE, CULTURE AND
TRADITION, AND SOCIAL ORIENTATION THAT THEY
BELONG. THERE ARE DIFFERENT WAYS BY WHICH YOU
MAY GENERATE IDEAS FOR YOUR BUSINESS. THESE
INCLUDE:
1. EXAMINE THE EXISTING GOODS AND SERVICES.
IMPROVING AN EXISTING GOOD OR SERVICE MAY GENERATE
A GOOD BUSINESS OPPORTUNITY FOR YOU. YOU CAN
IMPROVE THE MATERIALS USED IN PRODUCING THE
PRODUCT. YOU CAN ALSO INTRODUCE NEW WAYS ON HOW
THE PRODUCT CAN BE USED, MAKING IT MORE USEFUL AND
ADAPTABLE TO THE CUSTOMERS’ MANY NEEDS. IMPROVING
OR ENHANCING AN EXISTING PRODUCT OR SERVICE IS
KNOWN AS INNOVATION. YOU CAN ALSO INVENT A NEW AND
IMPROVED PRODUCT OR SERVICE TO REPLACE THE EXISTING
ONES.
IT ANSWERS THE QUESTIONS;
• ARE YOU SATISFIED WITH THE PRODUCT/SERVICE?
• WHAT DO OTHER PEOPLE WHO USE THE PRODUCT
OR SERVICE SAY ABOUT IT?
• HOW CAN IT BE IMPROVED?
2. EXAMINE THE PRESENT AND FUTURE NEEDS. LOOK
AND LISTEN TO WHAT CUSTOMERS INSTITUTION, AND
COMMUNITIES ARE MISSING IN TERMS OF GOODS AND
SERVICES. SOMETIMES, THESE NEEDS ARE ALREADY
OBVIOUS AND RECOGNIZED IMMEDIATELY. OTHER NEEDS,
ON THE OTHER HAND, ARE NOT AS OBVIOUS SINCE THEY
CAN ONLY BE IDENTIFIED IN THE FUTURE AND IN THE
EVENT OF CERTAIN DEVELOPMENTS IN THE COMMUNITY.
3. EXAMINE HOW THE NEEDS ARE BEING SATISFIED.
NEEDS FOR THE PRODUCTS AND SERVICES ARE
REFERRED TO AS MARKET DEMAND. TO SATISFY THESE
NEEDS IS TO SUPPLY THE PRODUCTS AND SERVICES THAT
MEET THE DEMANDS OF THE MARKET. THE TERM
MARKET REFERS TO WHOEVER WILL USE OR BUY THE
PRODUCT OR SERVICE, AND THESE MAY BE PEOPLE OR
INSTITUTIONS SUCH AS OTHER BUSINESSES,
ESTABLISHMENTS, ORGANIZATIONS, OR GOVERNMENT
AGENCIES.
THERE IS A VERY GOOD BUSINESS OPPORTUNITY
WHEN THERE IS ABSOLUTELY NO SUPPLY TO A
PRESSING MARKET DEMAND. BUSINESSES OR
INDUSTRIES IN THE LOCALITY ALSO HAVE NEEDS
FOR GOODS AND SERVICES. THEIR NEEDS FOR RAW
MATERIALS, MAINTENANCE, AND OTHER SERVICES
SUCH AS SELLING AND DISTRIBUTION ARE GOOD
SOURCES OF IDEAS FOR BUSINESS.
4. EXAMINE THE AVAILABLE RESOURCES AROUND YOU.
OBSERVE WHAT MATERIALS OR SKILLS ARE AVAILABLE IN
ABUNDANCE IN YOUR AREA. A BUSINESS CAN BE STARTED OUT OF
AVAILABLE RAW MATERIALS BY SELLING THEM IN A RAW FORM
AND BY PROCESSING AND MANUFACTURING THEM INTO FINISHED
PRODUCTS. THE WORK AND EXPERIENCE THAT YOU MAY HAVE
WILL PROVIDE YOU WITH BUSINESS OPPORTUNITIES TO ACQUIRE
THE NEEDED SKILLS WHICH WILL EARN FOR YOU EXTRA INCOME,
SHOULD YOU DECIDE TO ENGAGE IN INCOME-GENERATING
ACTIVITIES. WITH YOUR SKILLS, YOU MAY ALSO TINKER AROUND
WITH VARIOUS THINGS IN YOUR SPARE TIME AND INVENT NEW
PRODUCTS.
5. READ MAGAZINES, NEWS ARTICLES, AND OTHER
PUBLICATIONS ON NEW PRODUCTS AND TECHNIQUES OR
ADVANCES IN TECHNOLOGY. THE INTERNET ALSO SERVES
AS A LIBRARY WHERE YOU MAY BROWSE AND SURF ON
POSSIBLE BUSINESSES. IT WILL ALSO GUIDE YOU ON HOW
TO PUT THE RIGHT PRODUCT IN THE RIGHT PLACE, AT THE
RIGHT PRICE, AT THE RIGHT TIME. LISTING OF POSSIBLE
BUSINESSES TO SET UP IN AN AREA MAY ALSO BE
AVAILABLE FROM BANKS AND LOCAL NON-GOVERNMENT
ORGANIZATIONS.
“SELECTING THE RIGHT
BUSINESS IDEA”
 ACCORDING TO BAUTISTA (2014), ONCE YOU
HAVE STARTED IDENTIFYING THE BUSINESS
OPPORTUNITIES WITHIN YOUR REACH, YOU CAN
EVENTUALLY SEE THAT THERE ARE VARIOUS
POSSIBILITIES AVAILABLE FOR YOU. HOWEVER, IT
VERY UNLIKELY THAT YOU WILL HAVE ENOUGH
RESOURCES TO PURSUE ALL OF THEM AT ONCE.
 HENCE, YOU HAVE TO KNOW WHICH ONE TO
CHOOSE. YOU HAVE TO SELECT THE MOST
PROMISING ONE FROM AMONG HUNDREDS AND ONE
IDEAS. IT WILL BE GOOD TO DO THIS IN STAGES.
IN THE FIRST STAGE, YOU SHOULD SCREEN YOUR
IDEAS TO NARROW THEM DOWN TO ABOUT FIVE
CHOICES. IN THE NEXT STAGE, TRIM DOWN THE FIVE
CHOICES TO TWO OPTIONS. IN THE FINAL STAGE,
CHOOSE BETWEEN THE TWO AND DECIDE WHICH
BUSINESS IDEA WORTH PURSUING (BAUTISTA, 2014).
 HENCE, YOU HAVE TO KNOW WHICH ONE TO
CHOOSE. YOU HAVE TO SELECT THE MOST
PROMISING ONE FROM AMONG HUNDREDS AND ONE
IDEAS. IT WILL BE GOOD TO DO THIS IN STAGES.
IN THE FIRST STAGE, YOU SHOULD SCREEN YOUR
IDEAS TO NARROW THEM DOWN TO ABOUT FIVE
CHOICES. IN THE NEXT STAGE, TRIM DOWN THE FIVE
CHOICES TO TWO OPTIONS. IN THE FINAL STAGE,
CHOOSE BETWEEN THE TWO AND DECIDE WHICH
BUSINESS IDEA WORTH PURSUING (BAUTISTA, 2014).
BAUTISTA (2014) STATED THAT IN SCREENING YOUR IDEAS,
EXAMINE EACH ONE IN TERMS OF THE FOLLOWING
FACTORS:

• HOW MUCH CAPITAL IS NEEDED TO PUT UP THE BUSINESS?

• HOW BIG IS THE DEMAND FOR THE PRODUCT/SERVICE? DO MANY PEOPLE NEED THIS
PRODUCT/SERVICE AND CONTINUE TO NEED IT FOR A LONG TIME?
• HOW IS THE DEMAND MET? WHO ARE PROCESSING THE PRODUCTS/SERVICES TO MEET THE
NEED (COMPETITION OR DEMAND)? HOW MUCH OF THE NEED IS NOW BEING MET (SUPPLY)?
• DO YOU HAVE THE BACKGROUND AND EXPERIENCE NEEDED TO RUN THIS PARTICULAR
BUSINESS?
• WILL THE BUSINESS BE LEGAL, NOT GOING AGAINST ANY EXISTING OR FORESEEABLE
GOVERNMENT REGULATION?
• IS THE BUSINESS IN LINE WITH YOUR INTEREST AND EXPERTISE?
 SCANNING THE MARKET
ED CROWLEY (2007) DEFINED MARKET SCANNING AS THE
PROCESS OF CONTINUALLY AND ACTIVELY MONITORING THE
EXTERNAL ENVIRONMENT IN ORDER TO IDENTIFY CUSTOMER
NEEDS, ANTICIPATE COMPETITIVE ACTIONS, AND, IDENTIFY
TECHNOLOGICAL CHANGES WHICH WILL PROVIDE NEW MARKET
OPPORTUNITIES OR MARKET DISRUPTIONS. YOU MUST CONSTANTLY
BE PROBING AND EXPLORING THE EXTERNAL ENVIRONMENT TO
IDENTIFY SIGNIFICANT CHANGES AND EXPLORE COMPETITIVE
ACTIVITY.
 SCANNING THE MARKET
THE FOLLOWING LIST FROM JOBBER ACADEMY
(N.D.) PROVIDES A NON-EXHAUSTIVE OVERVIEW OF
THE DIFFERENT FACTORS ONE MUST CONSIDER IN
THE MARKET SCANNING. THESE FACTORS ARE
KNOWN AS THE PESTLE FACTORS:
 SCANNING THE MARKET
• POLITICAL FACTORS USUALLY INVOLVE THINGS THAT IMPACT YOUR
BUSINESS FROM A GOVERNMENT OR LEGAL STANDPOINT. POLITICAL IS
SIMILAR TO LEGAL AND SOCIAL, BUT IS A BIT DIFFERENT, AS POLITICAL
FACTORS SEEM TO CHANGE MORE OFTEN. SOME EXAMPLES ARE:
O INCOME TAX AND OTHER TAXES
O MINIMUM WAGE LAWS
O UNION INFLUENCES
O NATIONAL AND LOCAL POLICIES
 SCANNING THE MARKET
• ECONOMIC FACTORS ARE FINANCIAL FLUCTUATIONS THAT ARE
TYPICALLY OUT OF YOUR CONTROL. FOR EXAMPLE, INTEREST RATES GO
DOWN MEANING YOUR BUSINESS LOAN COST MORE LAST YEAR THAN IT
WILL THIS YEAR. SOME OTHER EXAMPLES INCLUDE:
O GDP LOSS OR GROWTH
O INFLATION RATES
O COMPANY DEBT
O INCOME OF POTENTIAL CUSTOMERS IN YOUR AREA
O EMPLOYEE SALARY TRENDS IN THE SERVICE BUSINESS INDUSTRY
 SCANNING THE MARKET
• SOCIAL FACTORS REFER TO THE CULTURAL NORMS AND ATTITUDES OF YOUR TARGETED
DEMOGRAPHIC AND THAT OF YOUR EMPLOYEES, PARTNERS, COMPETITORS, ETC. FOR
EXAMPLE, AN INCREASE IN DEMAND OF ‘GREEN ENERGY’ USE CAN AFFECT THE ENERGY
SOURCE YOU USE TO POWER YOUR EQUIPMENT AND VEHICLES. OTHER FACTORS ARE:
O CUSTOMER AGE
O CULTURAL NORMS AND TRADITIONS
O POPULATION GROWTH OR DECLINE
O SERVICE CAREER ATTITUDES
O DIVERSITY O RELIGIOUS INFLUENCES
O PUBLIC HEALTH AND SAFETY
 SCANNING THE MARKET
• TECHNOLOGICAL FACTORS HAVE A DIRECT IMPACT ON THE COST OF DOING BUSINESS
AND THE EFFICIENCY OF YOUR BUSINESS. FALLING BEHIND ON TECHNOLOGICAL TRENDS,
USING OUTDATED EQUIPMENT OR SOFTWARE, AND EXAMINING THE TECHNOLOGICAL
BARRIERS YOUR BUSINESS FACES TO ENTER A NEW MARKET ALL FALL WITHIN THIS
CATEGORY. OTHER FACTORS TO CONSIDER INCLUDE:
O AUTOMATION
OPPORTUNITIES
O TECHNOLOGY INCENTIVES, LIKE TAX CREDITS
O BETTER EQUIPMENT COMING ON THE MARKET
O SERVICE BUSINESS SOFTWARE UPDATES
O IMPROVEMENTS TO MOBILE DEVICES AND OTHER COMMUNICATIONS
 SCANNING THE MARKET
• LEGAL FACTORS WILL DIRECTLY INFLUENCE THE
COMPANY’S OPERATIONS OF YOUR SERVICE BUSINESS RIGHT
NOW. SOME LEGAL FACTORS CAN ALSO DETERMINE YOUR
FINAL COST OF DOING BUSINESS AND IMPACT DEMAND FOR
YOUR COMPANY’S SERVICES. THESE LEGAL FACTORS
INCLUDE:
O CONSUMER PROTECTION LAWS
O VARIOUS INSURANCE LAWS AND MANDATES
 SCANNING THE MARKET
• ENVIRONMENTAL FACTORS REFER TO ANYTHING THAT CAN IMPACT YOUR
BUSINESS FROM AN ECOLOGICAL OR ENVIRONMENTAL STANDPOINT. THIS PART OF
THE ANALYSIS WILL MATTER MORE FOR SOME INDUSTRIES THAN OTHERS. FOR
EXAMPLE, IF YOU OWN A LANDSCAPING BUSINESS, YOU’LL NEED TO CONCERN
YOURSELF WITH THE WEATHER EVERY SINGLE DAY, WHILE PLUMBERS CAN WORK
INDOORS. OTHER ENVIRONMENTAL FACTORS MAY INCLUDE:
O ENVIRONMENTAL IMPACT OF SERVICE BUSINESS PRACTICES
O GEOGRAPHY
O ACCESS BY ROAD, RAIL, AIR
O WASTE MANAGEMENT
O LOCAL ATTITUDES TOWARDS POLLUTION