LESSON 1: FINDING BUSINESS OPPORTUNITY

Finding the right business opportunity can be downright challenging and at times frustrating.

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What may seem like a perfect business idea may turn out to be a dud. Moreover, as budding
entrepreneur, you will likely encounter problems – failures, even – in your business ventures. For
instance, your customers might shift to a competitor or problems in your operations might adversely
affect the business. Hence, venturing into business can be considered a leap of faith, with risks and
SENIOR HIGH challenges that will surely test your skills, knowledge, and will.

SCANNING THE MARKET

The entrepreneurial process – or simply, the process of venturing into business formally begins
with a scan of the market to find business opportunities from macro environmental sources and within
the realms of the entrepreneur’s community or locality. The first step is for the new entrepreneur to
list down, ideally, five business opportunities which he or she can possibly venture into.

External Sources of Business Opportunities

There are numerous external sources of business opportunities. These external sources are
the external forces in the budding entrepreneur’s environment. Among them are the following:
 Sociocultural factors
 Technological advancements
 Economic growth or decline
 Politics and legal factors
 Industry trends
 New discovery or new knowledge
 Futuristic or unexpected opportunities
 Consumer preferences, including preferences of digital customers
 Competitors
 Societal problems or irritants in the marketplace
 Physical location of the entrepreneur

2nd SEMESTER
__________________________________________________
Name of Student

__________________________________________________
Strand/Year & Section

Prepared by: Shirly S. Cañete

Subject Teacher
Business Enterprise Simulation Module 1

Case 1
Mr. Antonio Castañeda is a graduate of information Technology (IT) who is currently living
in Makati City. He worked at an IT company for five years. Mr. Castañeda has no prior
entrepreneurial experience, but he strongly believes that he can venture into business and succeed.
Recently, he read from a 2015 international magazine that Makati City is the selfie capital
of the world. The magazine mentioned that 70 percent of the Internet traffic from the Makati City
originates from mobile devices such as tablets and smartphones. Mr. Castañeda also found out that
nearly every resident in Makati City owns a smartphone, and that on average, a smartphone owner
spends at least three hours per day using his or her gadget.
In addition, Mr. Castañeda learned that by 2020, Makati City will have more than 1,000,000
smartphones users who will use their devices not only to take and post selfies on social networking
accounts, but also to access mobile banking, shop online, listen to music, watch videos, and read
news and other texts. Additionally, Mr. Castañeda’s research revealed that smartphones after
approximately two years need some form of repair or enhancement already.
Mr. Castañeda is now interested to explore business opportunities in Makati City
considering all the details he has learned. His initial idea is to establish a business in mall in the
Central Business District of Makati. While Mr. Castañeda believes that he can be a successful
entrepreneur, he remains wary of the risks of putting up a business, particularly for a first timer like
him.
Study the case. Note, however, that the data in these cases are fictitious only. For each case,
the goal is to identify at least two most compelling external sources of opportunities and at least two
potential businesses.
External Source of Business Specific External Source of Potential Business
Opportunity Business Opportunity Opportunity
Internal Sources of Business Opportunities
There are also various internal sources – the entrepreneur’s strengths or assets that drive him
or her to pursue a potential business – of business opportunities. These internal sources are the
following:
 Talents, hobbies, skills, expertise, or academic background
 Financial capacity
 Processes/operational capacity
 Leadership and people management skills
 Entrepreneurial attitude/character
 Vision and strategy
Identifying business opportunities from internal sources is easier to accomplish because at the onset,
the entrepreneur already knows his/her strengths, so he/she can list these down without devoting too
much time.
Case 2
Mr. Carl Aquino has a degree in literature and has been into poetry ever since he was a
kid. He is a tremendous talented poet who specializes in composing love poems during the college
fair. In their booth were a netbook, specialty paper, envelopes, and a printer. He was pleasantly
surprised when several couples proceeded to their booth and asked him to compose love poems.
He charged P100 for each love poem. He typed each poem on his netbook using free desktop
publishing software. He added designs and graphics – sometimes pictures of the couples
themselves passed on through a flash drive or via Bluetooth – to the poem before printing it on
specialty paper. Carl felt appreciated every time a couple came by their booth to ask for a poem.

 Sociocultural factors In Makati City, smartphones are  Smartphone/tablet

 Technological Advancement
 Industry trends
 Physical location of the
entrepreneur
 Consumer preferences,
including preferences of
digital customers
 Irritant in the marketplace
used to take selfies, access mobile
banking, shop online, listen to
music, and watch videos, and read
news and other texts. A
smartphone owner in Makati City
spends an average of three hours
per day using his or her gadgets.
Smartphones work fine for
approximately two years.
Thereafter, they need some form
of repair or enhancement.
distribution business
 Smartphone/tablet
accessories business.
Smartphone/tablet repair
business (service)
At least two compelling internal sources of opportunities and at least two potential businesses
for Case 2, presented:
Internal Sources of Business
Opportunity
 Hobbies and Skills
 Processes or operational
capacity
Specific Internal Sources of Business
Opportunity
 Carl Aquino has been into
poetry ever since he was a kid.
He is a talented poet who
specializes in composing love
poems.
 He has a netbook, a printer,
and specialty paper.
Potential Business
Opportunity
 Poem store (in parks,
school, offices)
 Alternative business:
digital poem store

Business Enterprise Simulation Module 2

Choosing the Right Product or Service for the Market
After scanning the external and internal markets for business opportunities, the next step to
validate id, indeed, the initial business opportunities you have listed are really feasible or doable. As
you have learned in your entrepreneurship course, a compelling business opportunity must contain
four important element:
1. Market Potential – The business presents superior value to customers
2. Financial feasibility – The business is a potential cash cow.
3. Competitive advantage - The business solves a compelling problem, issue, need or want.
4. Entrepreneur’s resources – The business match the entrepreneur’s skills, resources, and risk
appetite.
To find out if your potential business venture satisfies the four elements, you can make an OAM. The
OAM as its title suggest, details the ‘attractiveness,” feasibility, or viability of an opportunity in terms of
market potential, financial feasibility, competitive advantage, and entrepreneur’s resources. The term
attractiveness is synonymous with business feasibility or business viability.
In preparing the OAM, all the important components must be listed and weighed accordingly by the
entrepreneur. The components of the OAM differ from one type of business to another; nevertheless,
the high level opportunity attractiveness factors remain the same: the market potential, financial
feasibility, competitive advantage, and entrepreneurial resources. The components must be graded
based on the degree of its attractiveness as follows:
5 – Highest Potential
4 – High Potential
3 – Neutral
2 – Low Potential
1 – Lowest Potential
The next step is to devise a strategy plan for competitive advantage. A strategy plan for competitive
advantage deals with the competitive environment where the entrepreneur will participate. The plan
will show how competitive strategies base on the scan of the competitive environment can be devised.
This step is extremely important because entrepreneur will be able to easily specify how the business
will deal with the opportunities and threats in the competitive environment, including the competitors
and how you, as the budding entrepreneur, will use your innate strengths to your advantage.

Business Enterprise Simulation Module 3

LESSON 2: PREPARING THE BUSINESS PLAN INDUSTRY ANALYSIS
The most practical way to conduct an industry analysis to test its attractiveness is to follow
The Competitive Environment Porter’s Five Forces Model of Competition, a framework developed in the 1980s by American academic
A competitive environment is the dynamic external system in which a business competes and Michael E. Porter.
functions. Therefore, the entrepreneur will have adjust to the state of the competitive environment
where the business operates. In order to scrutinize this competitive environment, the entrepreneur has
to conduct industry analysis and competitive analysis.
An industry analysis is the examination of the industry where the entrepreneur’s business will
participate in, usually in the next three to five years. It encompasses the opportunities and threats in
the industry as well as the major trends that could affect the growth and decline of the industry. It is
important to analyze the industry first before going directly to the competitive analysis because the
industry analysis will help you evaluate if it is, indeed, worth it to venture into the potential business
you have identified already. A competitive analysis, on the other hand, is the examination of what the
direct and indirect competitors are doing and what they can possibly do in the future. It also shows the
driving forces and the rationale on why the competitors are doing what they are doing.
Below is the format of a Strategy Plan for Competitive Advantage (SPCA):

A. Executive Summary
B. The Competitive Environment
1. Industry Analysis (Porter’s Five Forces Model of Competition)
2. Competitive Analysis (Competitive Profile Matrix)
C. Competitive Strategies

Poter’s Five Forces Model

Business Enterprise Simulation Module 4

COMPETITIVE ANALYSIS
One of the most practical tools to analyze competition is to prepare a Competitive Profile
Matrix (CPM). A CPM is an essential strategic management tool that compares the entrepreneur’s
business with the major players in the industry. It encompasses both external and internal factors in
evaluating the overall position of the business.
These factors are more clearly defined as critical success factors (CSF) and are the bases for
the CPM score. Critical success factors encompass all important elements to achieve business
objectives, including how to ultimately provide value to target customers. Each CSF is assigned a
specific weight depending on the compelling industry factors present at the time of CPM preparation.
These CSFs are scored according to the following scale:
4 – Major Strength
3 – Minor Strength
2 – Minor Weakness
1 – Major Weakness

COMPETITIVE STRATEGIES
After assessing and evaluating the competitive strength and position of your business against
the competitors, you, as the entrepreneur, have to come up with competitive strategies to counter the
challenges posed by the competition. Aside from his Five Forces Model of Competition, Michael E.
Porter also devised three generic competitive strategies – collectively called Porter’s Generic
Competitive Strategies – that can be applied in any business: cost leadership strategy, differentiation
strategy, and focus strategy. Refer to the following chart.

Business Enterprise Simulation Module 5

LESSON 3: PREPARING A MARKETING PLAN C. The 7Ps of Marketing (Marketing Mix)
You have learned in the previous level that the 4Ps or marketing mix is a widely accepted
A marketing plan is a business document outlining your marketing strategy and tactics, it is strategic marketing tool, But aside from the original 4PS of product, place, price, and promotion
often focused on a specific period of time – for over the next year, for instance – and includes a variety you should also consider the new 3Ps of people, packaging, and process for service businesses in
of marketing factors including costs, goals, and action steps. formulating marketing strategies and tactics for a product or service.
Below is a sample simple format of a marketing and sales plan. These 7Ps are combined until the entrepreneur finds the right combination that will most
effectively serve the customers’ needs and wants and at the same time help achieve the
A. The Product or Service Offering profitability objective of the business.
B. The Value Proposition and Unique Selling Proposition  Product
C. The 7Ps of Marketing (Marketing Mix)
 Place
1. Product
 Price
2. Place
 Promotion
3. Price
4. Promotion  People
5. Packaging  Packaging
6. People  Process
7. Process
D. Sales Forecast D. Sales Forecast
A sales forecast is a projection of potential sales that the business will generate as a result of the
marketing efforts to be implemented and the general condition of the industry to where the business
A. Product or Service Offering belongs. It also provides the entrepreneur a production forecast, a projection of the potential number
Strategic marketing efforts are made based on the nature of the product or service that will be of products to be manufactured based on the sales forecast, and prepares the capacity – materials,
offered. Product or service offering refers to the value that the business will give to a customer. manpower, machine, and methods for operations – needed to produce the sales.
The marketing strategy also influences the target customers’ decision-making process whether to
 The sales will increase by 10% in year 2.
patronize your product/service or those of the competitors.
 The sales will increase by 15% in year 3.
In offering a product or service, there are specific questions that you need to answer in order
to ne certain in terms of what you will offer and what the customer will expect from you. These  The sales will increase by 20% in year 4.
questions are as follows:
 Will you offer a product, a service, or a hybrid (product and service)?
 What is your product/service mix (i.e., business that offers more than one good or
service)?
 What is the depth of your offering (i.e., number of products or services available in each
product line?)
 What is the width of your offering (i.e., the number of lines available in your offering)?

B. The Value Proposition and Unique Selling Proposition

Value Proposition (VP) refers to a definitive statement which promotes the benefits or value that a
product or service can cater to the customers. It is made to create a customer perception about the
value that the product/service will offer to the customer.
The Unique Selling Proposition (USP) refers to a statement that promotes the most compelling
attribute of a product or service and what makes it different from the rest of its competitors. It is made
to differentiate an attribute of a product or service.

Business Enterprise Simulation Module 6

LESSON 4: THE OPERATIONS PLAN II. MANPOWER
Manpower is basically the labor force needed in business operations. It is a vital part of an operations
The operations plan is a plan that contains the specific details of a business operation, plan. Getting the right people with the required skills, good attitude, and exceptional character will help
including production or manufacturing, inventory, and distribution, to name a few. the business reach its full potential.
An operations plan has four aspects – methods, manpower, machines, and materials A. Job Description
(collectively called 4Ms of Operations). These four Ms are equally important to produce efficient and B. Employee Qualification
effective operations. C. Employee Development
Below is the format of an operations plan:
III. MACHINES
Machines are equipment (soft or hard) needed to manufacture a product.
A. Methods A. Equipment and other Physical Facilities (Hard Machines)
A. Manufacturing/Sourcing of Goods or Service Delivery Process B. Telecommunication and Information Technology
B. Distribution Methods IV. MATERIALS
C. Payment Process Materials are inputs or ingredients needed to manufacture a product.
B. Manpower A. Suppliers
A. Job Description B. Logistics
B. Employee Qualification
C. Employee Development
C. Machines
A. Equipment and other Physical Facilities
B. Telecommunication and Information Technology
D. Materials
A. Suppliers
B. Logistics

I. METHODS
Methods are simply the daily processes that a business conducts. Depending on the type of
business, methods include manufacturing of a physical product, rendering of services, product
distribution, and inventory management.
A. Manufacturing elements are elements needed to manufacture a product:
 Inputs are the ingredients or material needed to manufacture a product.
 Process is the manufacturing of inputs (mixing of ingredients, fermentation, etc.)
 Output is the result of processes or manufactured input
B. Distribution Method is the step-by-step process on how a product will reach customers. The
distribution channel is where the goods or services pass through to reach the customers.
C. Payment Process

Business Enterprise Simulation Module 7

LESSON 5: CREATING A FINANCIAL PLAN

A Financial Plan is a plan that details where the entrepreneur wants to take his or her business Consolidating the Components of the Business Plan
in terms of profitability, cash flow, and net worth. The basic rule for a financial plan or a financial After plotting all the necessary components of the business plan one by one, consolidating
projection of a business is that it should be neither overly optimistic nor overly cautious. In short, it these pieces of information now becomes easy. Below is a simplified format of business plan.
must be realistic. Below is the format of a financial plan.

A. Projected Income Statement (three to five years)

B. Projected Balance Sheet (three to five years)
C. Projected Cash Flow (three to five years)

(NOTE: Start creating/developing your business plan that you will use
for business simulation. Business plan will be submitted until 1 week
before MIDTERM. You can work individually or utmost 5 member in a
group. Business plan should be approved before implementation. At the
end of 10 days business simulation, work on your culminating report
about your business progress to be supported by a journal (by group)
and make a reflection paper (at least 3 page) about your experiences
and values learned during the activity (individual). It will be presented
on FINALS.

Business Enterprise Simulation Module 8

 Cover Page
Introduction
A. Executive Summary
B. The Competitive Environment
1. Industry Analysis (Porter’s Five Forces Model of Competition)
2. Competitive Analysis (Competitive Profile Matrix)
E. Competitive Strategies
F. The Product or Service Offering
G. The Value Proposition and Unique Selling Proposition
H. The 7Ps of Marketing (Marketing Mix)
1. Product
2. Place
3. Price
4. Promotion
5. Packaging
6. People
7. Process
I. Sales Forecast
J. Methods
1. Manufacturing/Sourcing of Goods or Service Delivery Process
2. Distribution Methods
3. Payment Process
K. Manpower
1. Job Description
2. Employee Qualification
3. Employee Development
L. Machines
1. Equipment and other Physical Facilities
2. Telecommunication and Information Technology
M. Materials
1. Suppliers
2. Logistics
N. Projected Income Statement (three to five years)
O. Projected Balance Sheet (three to five years)
P. Projected Cash Flow (three to five years)
Q. Conclusion and Recommendation
Appendices
Biographical Data

Business Enterprise Simulation Module 9