Unit I: DEVELOPING A BUSINESS PLAN

Afrida E. Lopez, LPT, MBA

 Learning Outcomes
At the end of this lesson, the learners can:
 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.
a. Analyze the market need.
b. Determine the possible products or services that will
meet the need.
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.
 SCANNING THE MARKETING ENVIRONMENT

• It is the starting point of any venture that

involves understanding and knowing the
intricacies of the whole environment.

• Through 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
• It clearly portrays the trends, activities, and
development happening both in the macro and micro
environment including the interrelated relationships
between the various forces in the environment.
• It identifies the expected threats and opportunities
existing in the environment.
• It points out the possible factors that will determine
the success of the business venture.
• It helps define the future path of the business.
• It assists in the formulation of the most appropriate
business strategies.
 General Rule:

“Find the opportunity first before

coming up with a new product or
service in the future”.
 SEEKING, SCREENING, and SEIZING
3S of Opportunity Spotting and Assessment
• is the framework that most of the promising
entrepreneurs use to finally come up with the
ultimate product or service suited for specific
opportunity.

• Opportunity is an entrepreneur’s business idea

that can potentially become a commercial
product or service in the future.
S1: SEEKING THE OPPORTUNITY

• Opportunity Seeking
It is the first step and the most
difficult process of all due to the
number of options that the
entrepreneur will have to choose
from.
 S1: SEEKING THE OPPORTUNITY
It involves the development of new ideas from
various sources as follows:
Changes in the environment
External/Macroenvironment
Internal/Microenvironment
Technological discovery and advancement
Government’s thrust, programs, and policies
People’s interests
Past experiences
 S1: SEEKING THE OPPORTUNITY
• External / Macroenvironment
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
 S1: SEEKING THE OPPORTUNITY PESTEL
• a1. Political Factors
are mostly induced by government policies
and administrations, which can have a strong
effect in the entrepreneur’s business.

• a2. Economic Factors

are factors which are primarily caused by
changes or movements in the Philippine
economy that have direct or indirect effects on
the entrepreneurial venture.
 S1: SEEKING THE OPPORTUNITY
• a3. Socio-cultural Factors
represent a general view of a locality’s
traditions, customs, beliefs, norms, and
perceptions.

• a4. Technological Factors

basically refer to the trends and
developments in computer and information
technology that have impact on business.
 S1: SEEKING THE OPPORTUNITY
• a5. Environmental/Ecological Factors should
be given much importance especially when
the world has already suffered severely from
human- induced calamities.

• a6. Legal Factors

are the elements and bodies that are directly
involved in the legislation and interpretation of
laws and ordinances directly affecting the
business.
 S1: SEEKING THE OPPORTUNITY
• Industry Environment 
b1. Government
refers to the system or institution that handles the
affairs of a particular country.

Five Types/Classifications of Government: 

democracy
autocracy
republic monarchy
dictatorship
 S1: SEEKING THE OPPORTUNITY
• b2. Suppliers
• refer to individual persons or companies that
provide the required materials, parts, or services to
the business.
• Criteria of Selecting the Supplier:
– quality of the goods or services
– terms of payment
– stability
– ability to respond to urgent needs
– proximity of the location
 S1: SEEKING THE OPPORTUNITY
• b3. Customers
• are the buyers of goods or services produced or rendered by the
business. 
• it must constantly evaluate and study the behavior, tastes,
preferences, inclinations, and even future activities of the
customers.
• b4. 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.
• Direct Competitors – produce and sell similar products or
services.
• Indirect Competitors – produce and sell substitute products.
 S1: SEEKING THE OPPORTUNITY
• b5. Employees
• are the workers of the business who are highly responsible
for the production of goods or delivery or services 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
• b6. Creditors
• refer to banks, financial institutions, and financial
intermediaries engaged in the lending of money to the
borrower usually for a fee or charge in the form of interest.
 S1: SEEKING THE OPPORTUNITY
• Internal / Microenvironment
• refers to the environment within the business. a. Business
Resources
• are assets or properties owned or controlled by the
business.
• can either be tangible or intangible.
• Tangible Resources – are assets of the business that have
physical appearance and form.
• Current Resources – are used, applied, or consumed within
a short period or one year.
• Noncurrent or fixed Resources – are properties whose
usefulness or benefits extend beyond one year.
 S1: SEEKING THE OPPORTUNITY
• 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
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.
 S1: SEEKING THE OPPORTUNITY
• Types of Cultures operating in the Internal Environment:
Culture of the Business or Organization
• 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. 
• Cultural Integration – refers to the degree by which all
units across the business accept and share a common
culture.
 S1: SEEKING THE OPPORTUNITY
• c. Business Structure
• 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.
 S1: SEEKING THE OPPORTUNITY METHODS OF
GENERATING IDEAS
1. Focused Group Discussion (FGD)
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
• 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, brainstorming is a fun discussion with lenient rules.
 S1: SEEKING THE OPPORTUNITY
3. Brainwriting or Internet brainstorming
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
is similar to the FGD except that the participants are
already given an inventory of product or service
problems.
- 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.
 S2: SCREENING THE OPPORTUNITY
• Opportunity Screening
• is the process of cautiously selecting the best
opportunity.
- the selection will depend on the entrepreneur’s internal
intent and the external intent which will address the
compelling needs of the target market.
Risk Appetite – refers to the entrepreneur’s tolerance of
business risks.
The 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.
 S2: 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
• Is a potential cash cow
• Matches with the entrepreneur’s skills,
resources, and risk appetite
 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
• 1. Relevance to vision, mission, and objectives of
the entrepreneur.
• 2. Resonance to values.
• 3. Reinforcement of Entrepreneurial Interests
• 4. Revenues – determine the sales potential of
the products or services you want to offer.
 SCREENING THE OPPORTUNITY
5. Responsiveness to customer needs and wants.
6. Reach – attainment of rapid growth
7. Range – potentially lead to a wide range of possible
product or service offerings
8. Revolutionary Impact – “next big thing” or a game-
changer that will revolutionize the industry
9. Returns – high returns on investment
10. Relative Ease of Implementation – easy to implement
11. Resources Required – fewer resources is better than
those requiring more resources
12. Risks
 SEIZING THE OPPORTUNITY
• Opportunity Seizing
• is the last step in opportunity spotting and
assessment.
• the “pushing through” with the chosen
opportunity.
• Innovation - is the process of positively improving
an existing product or service.
• it is a key driver for economic growth.
 S3: SEIZING THE OPPORTUNITY
Three (3) types of Innovations according to the degree of
distinctiveness:
1. Breakthrough innovation
- 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

2. Technological innovation
- occur more frequently than breakthrough innovations.
- are technological advancements of an existing product or service.
These innovations need to be protected too.
Examples: wireless fidelity or Wi-Fi, laptop, and jet airplane.
 S3: SEIZING THE OPPORTUNITY
• 3. Ordinary innovations 
- occur ordinarily as the name implies. - are
commonly originating from market analysis and
technology pull instead of a technology push.
- 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 travellers.
 S3: SEIZING THE OPPORTUNITY
• The 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
• Idea stage – in this stage, the entrepreneur determines
what are the feasible products and/or services that will
perfectly suit the opportunity.
• Market evaluation
– Assessment of the value of new products/services
– Elimination of unappealing products/services 
• Concept stage – the developed idea will undergo a
consumer acceptance test. This test includes getting
the initial reactions of the primary target market and
the distribution channel.
– Conversational interviews
 S3: SEIZING THE OPPORTUNITY
• Product development stage – in this stage, the
entrepreneur leverages on the information generated
from the prospective customers via the concept stage.
– Determine actual reactions from prospective
customers
– Conduct consumer panel
– 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.
– Actual sales results
 S3: SEIZING THE OPPORTUNITY
• Once 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.
 ACTIVITY
• Please referto Module No. 5