challenge.
Hence, they are encouraged to explore market
Chapter 3 – Business Opportunities
Business opportunities are everywhere as long as there are
people with money, and they are willing to satisfy their needs.
However, there are more business opportunities for individuals who
are creative, resourceful and risk-takers because they create
opportunities instead of waiting for opportunities to come. These are
the real entrepreneurs.
There are factors to take into account in searching for business
opportunities. These are resources, skills, interests and economic
needs. The resources, skills and interests of the entrepreneur should
match the social and economic needs of the community. For instances,
are you really interested in such kind of business? Are you willing and
able to sell a certain product or service? Is there a demand for such
product or service? Do you have the resources and skills to undertake
such business?
Likewise, the resources, skills and technologies available in the
community are to be evaluated. If these are not fully or efficiently
utilized, then these are good sources of business opportunities. Fame
and fortune always favors the innovators and risk-takers. They can
create new products/services, or new ways of doing things. Thus, new
and more business opportunities are discovered.
This chapter discusses entrepreneurial activities in the
community, resources in the community, and the needs of the people
in the community. In addition, exploring market opportunities is
explained.
Desired Learning Outcomes
1. Discuss entrepreneurial activities in the community.
2. Enumerate needs of people in the community.
Entrepreneurial Activities
Business activities are concentrated in cities and other urban
communities. The primary reasons are that more buyers, more incomes
and more facilities are located in the said heavily populated areas.
Apparently, there are more business competitors in the cities. This
means it would be very difficult for a newcomer to penetrate the
markets. But for real entrepreneurs, such difficult situation provides a
opportunities.
It is natural for buyers to look for goods and services which
offer better quality, lower price and more conveniences. Precisely,
these are the basic features of consumer satisfaction which
entrepreneurs can develop. In our country, there are several marketing
innovations of goods and services, like the express teller of banks, 24-
hour service of some grocery stores, and home delivery service of food
items.
The Sears story
In the United States, Sears, Roebuck Corporation introduced
mail-order selling. The farmers comprised its first market. Julius
Rosenwald studied the specific needs of the farmers in 1895. At that
time, the American farmers were isolated from the channels of
distribution of goods and services. Since individual farmers had low
purchasing power, and were very far from trading centers, they were
neglected by businessmen. And Sears, Roebuck rose to the occasion.
To Sears, Roebuck, the untapped buying potential of the
farmers as a group was a rich market. To reach the farmers, Sears,
Roebuck used the mail-order selling. It produced the goods that
satisfied the needs of the farmers. These were delivered to them in
large quantities at low prices, and with guarantee of regular supply.
And Sears made a policy of “your money back and question asked” if
farmers were not satisfied.
Gradually Sear, Roebuck became successful. From a retail
store, it expanded to other industries until it has acquired international
reputation and customers all over the world.
Business Opportunities in Rural Communities
Our rural areas are abundant with cheap raw materials and
labor force. Yet these are underdeveloped and have greatly contributed
to poverty in the rural communities. Many rural folks are unemployed
or underemployed. This results to low level income among the people.
The productive resources in the rural sector are sleeping
business potentials. Our raw farm products can be a good source of
agri-business. Other raw materials can be transformed into toys, hats,
bags, slippers, decors, etc.
 Senate President Neptali Gonzales has learned during his
political campaigns throughout the country that entrepreneurs in
Davao are exporting cut flowers to Singapore; artisans in Cebu have
elevated local stone craft to world-class status; pina-cloth weavers in
Aklan have attracted the attention of international fashion designers;
the goldsmiths of Bulacan have created jewelry that are admired even
in a place as far as Dubai; and the automotive tinsmiths of Pampanga
get job orders from California. There are other small entrepreneurs
who have succeeded in selling their products to foreign markets.
In a graduation speech before college students in Pampanga,
Senate President Gonzales cited the importance of entrepreneurship:
“In a feudal society such as ours, social status means a lot. And the
college diploma is a status symbol. It is perceived as a key to a door
leading to a white-collar job. But the harsh realities say otherwise. A
diploma does not guarantee employment… Has it ever occurred to us
that there are more profitable opportunities in self-employment than in
white-collar jobs? Have we bothered to think seriously that there are
many untapped potentials in the country sides? Have we given
sufficient thought that there is a bright future in agriculture,
particularly agribusiness activities?”
Resources in the Community
Business opportunities and successes greatly depend on people.
The efforts of an entrepreneur are useless if he does not get the full
support and cooperation of efficient workers and others who are linked
with the operations of the business enterprise. Any business firm is not
an island. It depends on employees, customers, suppliers and others
who contribute to its success. In short, people are the most important
resources. It is the people who organize and manage other productive
resources, such as money, materials, machines and manpower.
In discovering business opportunities, the following factors or
resources have to be evaluated:
1. Markets. The number of prospective buyers, the presence of
competitors, and the prices and quality of goods and services has to
be analyzed. Are the needs of the consumers fully satisfied? If not,
then business opportunities exist in areas where consumer
satisfaction is weak or incomplete.
2. Individual interests. Business interests of individuals vary. There
are those who are interested in agriculture. Others are inclined to
industries. Not a few like to be employees. Interests should match
business opportunities. For example, if there is a good business
opportunity for poultry or piggery, one should be interested in such
fields.
3. Capital. Money is very important in putting up a business
enterprise. The availability of funds should fit the type of business
to be organized. One who has a limited capital should start with a
micro business. Many unschooled individuals started with such
business. And some of them are now big shots in the business
world.
4. Skills. The entrepreneur should have the proper skills in the
business he is going to undertake. For instances, if he is interested
in food processing, like tocino, longaniza, ham or corn beef, it is
much better if he has the skills in such food processing. If it is a
travel business, the entrepreneur should have the experience or
working knowledge about such business. It is not advisable to
depend completely on the services of assistants or employees.
5. Suppliers of inputs. It is not enough that there are sufficient buyers
of goods and services. It is equally important that there are steady
suppliers of raw materials and other inputs of the business.
Obviously, if there are no materials to be used in production, a
businessman has nothing to produce and sell. If production is
delayed due to lack of materials, then it is not good for the
businessman. His business is likely to lose customers.
6 . Manpower. The success of any business enterprise primarily
deposits on the efficiency of its employees. In putting up a
business, make sure that experts or trained personnel are available.
This is an essential requirement to make the business feasible. For
instance, a basket-weaving enterprise needs workers who are good
in such type of work.
7 . Technology. Tastes and preferences of consumers are not
permanent. These are heavily influenced by innovations. And
innovations are the products of technology. New products and new
services represent improvement which is intended to improve
consumer satisfaction. Entrepreneurs should be aware of the
presence of technology, particularly new technology. This is an
opportunity for them to avail of such technology to improve the
 Opportunities of a Product or Service

SWOT Analysis  Big demand for the product/service

 Favorable government policy/support
There is always a need to evaluate business opportunities, whether
 Scarcity of the product/service
these are really economic opportunities and whether these are profitable.
 Poor quality of existing product
To be able to translate business opportunities into profits, the SWOT
 Absence of product/service
analysis is applied. It studies the financial resources, physical facilities,
 Possibilities of good profits
management capabilities, the market, production process, information
system, sources of supply and social environment. SWOT analysis is a toil of Threats
evaluating the strengths , weakness, opportunities and threats associated
with a particular product or service. SWOT is the acronym of strengths,  Shortage of raw materials at a given time
weakness, opportunities and threats. Here are indicators of SWOT:  Entry of many competitors
 Increasing costs of production
Strength of a Product or Service  Expectation of unfavorable government laws, such as taxes
 Deteriorating peace and order
 Cheap and abundant raw materials
 Emergence of unfair demands of workers through labor union
 Sufficient funds
activities
 Availability of technology
 Presence of skilled workers Linkages of Resources
 Management and technical expertise of the entrepreneur
 Good quality/service Enterprises which have established a strong growth future can
 Ease of production increase their efficiency or profitability through backward and forward
 Small capital integration. This is also called backward and forward linkages.

Backward integration is the ownership or control of the inputs of

production by the enterprise. For instance, a poultry business is a heavy
Weakness of a Product or Service user of feeds which consist of a mixture of palay, corn, fish and ipil-ipil
leaves. To ensure a steady supply of feeds at a lower price, better quality of
 High price
the right quantity, the owner of the poultry business puts up his own feeds
 Poor quality/service
production. This is another business opportunity, especially if such business
 Weak management
is profitable. Thus, he achieves two business objectives; he ensures the
 Lack of skilled workers
efficiency of his poultry business, and he gets additional profits from his
 Irregular supply feeds business.
 Unattractive design
 High costs of production In the case of forward integration, it is the ownership or control of
the marketing system by the enterprise. Using the same example, the
poultry owner sets up his own distribution system instead of depending on
middlemen to market his poultry products. In short, the owner owns and
controls the entire operations of his poultry business, from production of
feeds to marketing of poultry products. All the profits belong to him. The
point here is that the entrepreneur can create business opportunities by
exploiting backward and forward integration, aside from ensuring the
efficiency of his original business.
Clearly, backward and forward integration provides business
opportunities to more innovative and hardworking entrepreneurs. In fact,
when the business has already become big, it may resort to horizontal
integration. This means it buys or controls some of its competitors.
However, this is considered an unfavorable business behavior from the
point of social interest because the enterprises reduces or eliminates
competition which is not good for the customers. As a matter of policy, the
government discourages the creation of business monopolies, except in
certain areas of business.
Product Life Cycle
Products have their own life cycles. Each product life cycle is
composed of four stages; introduction, growth, maturity, and decline. Some
products have long product life cycle while others have short ones. Here are
the descriptions of the various stages of a product, particularly its sales
volume and profits.
1. Introduction. Consumer awareness and acceptance of the product
are low. However, sales gradually increase due to promotion and
marketing activities. But at the start, costs of development and
marketing activities. But at the start, costs of development and
marketing are high. This makes profit low or even incurs loss. There
are relatively few competitors, and the price is usually high. Buyers
are individuals who want to be the first in the community to own
the product.
2. Growth. Sales rise rapidly as the product becomes popular. Due to
competition and lower average cost of production, prices fall.
However, profits for the firm and industry increase. To meet
growing demand, product distribution is expanded. Promotion still
plays a vital role in the marketing of the product.
3. Maturity. Sales are still rising at the beginning of this stage. But the
rate of increase has declined. At the later partner part, the sales
curve reaches its peak while profits begin to fall. Price competition
increases which forces inefficient competitors to get out from the
industry.
4. Decline. There is a sharp fall in sales volume while profit curve,
becomes almost flat or horizontal. There is also a decline in the
number of competitors. The only survivors are those who specialize
in the marketing of the product. Once the product is no longer
profitable, it is eliminated from the market.
Entrepreneurs should be aware of the duration of each stage of the
product life cycle of their products. If maturity is long, a new product may
be introduced between the peaks of the profit and sales curves. If such
stage is expected to remain for a short time, the new product should be
introduced earlier. Obviously, excellent knowledge about the product life
cycle of the products provides entrepreneurs business opportunities to
continuously stay in business.
The Needs of the Community
The ultimate objective of the business is profit. This is only possible
if it can satisfy the needs of consumers in a community. However, there are
enterprising businessmen who can create consumer needs for their own
business interests. To some, such manipulation of human weakness through
advertising is immoral. Businessmen are presumed to be honest and sincere
in dealing with consumers.
 Entrepreneurs who are seeking business opportunities have to Market research is the process of systematically gathering,
explore the economic and social conditions prevailing in the community. recording and evaluating data regarding a specific marketing problem. The
Such conditions reflect the needs of the community, such as food, clothing, steps in market research are:
housing, health, education and recreation. The needs that are not properly
satisfied are areas of business opportunities. Assuming that these needs are 1. Defining the problem.
2. Making a preliminary investigation.
adequately met, it does not mean that there is no more room for business
opportunity. 3. Planning the research.
4. Gathering the data.
Entrepreneurs, by their very nature, are innovative. They are 5. Analyzing the data.
capable of creating new products or new ways of selling products. 6. Reaching a conclusion/decision.
Considering that people have unlimited satisfaction or needs, entrepreneurs 7. Implementing and evaluating decisions.
can still exploit the unsatiable nature of human beings. Business opportunity
Uses of Market Research
exists as long as there is improvement in human satisfaction in terms of
price, quality and service. So, what is very important for a businessman is to Through market research the entrepreneur can be guided in
identify the needs of the people in the community, and then maximize the identifying the following:
satisfaction of such needs. A simple market research may be used in
identifying the needs of the community, the competitors and existing 1. Profitable markets
resources. 2. Saleable products/services
3. Strengths and weaknesses of competitors
4. Available resources
Market Research 5. Business risks
6. Trends in consumer tastes and preferences
Planning business prospects and strategies requires complete and 7. Better marketing strategies
correct information potential customers, competitors and market 8. Proper business location
characteristics. This can only be done in a systematic manner through 9. New market opportunities
market research. Entrepreneurs must be future-oriented. They must 10. Realistic business objective
anticipate future changes in the market to be able to adjust their business.
Hence the need for a continuous market research.
Location of the Business
The best way to evaluate business opportunities is to conduct a
market research. This is systematic and scientific. An entrepreneur can only The location of the enterprise is a vital factor in the success of a
make the right decisions if he has the right data about the needs and business. A prime location is a great competitive advantage. All other things
resources in the community. being equal, the one with a better business location gets the maximum
business. To be able to make the right choice of location. It requires a
market survey. Low rents and attractive leaseholds may be a trap in the
proper selection of a good location. There are many factors to consider in The production aspect describes the technology that will be used in
selecting a good location. However, location of the customers may be the making the product. It includes product specification (mechanical, chemical
most critical factor. Here are the more basic factors in selecting a business and physical properties), description of equipment and raw materials to be
location: used and the process involved. It also includes a study on the plant location,
layout and other facilities vital to the operation.
1. Population trends
2. Income trends Financing
3. Consumer Characteristics
The financial aspect is meant to determine the cost of the project
4. Retail sales trends
5. Competition and cash requirement and the source and cost of financing the project.
Financial projections are made over a period of at least five years. Financial
6. Transportation facilities
7. Government policies analysis is presented showing returns on investments, return on equity,
breakeven sales and price sensitivity test.
8. Environment (health and sanitation)
9. Electricity
10. Water supply
11. Communication facilities
12. Peace and order
13. Fire protection
14. Parking space

Basic Phases of Business

Management

The management aspect is aimed at designing the form of

ownership (for new ventures) although in most cases this is already
predetermined, as well as the internal structure for managing the project.
The project time-table may also be presented in this section.

Marketing

The market study is aimed at determining and analyzing the

demand and supply for the product/service in the past and making
projections of demand and b

Production