12

Entrepreneurship
Quarter 1 – Module 2
Recognize a Potential
Market

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holders to email there feedback, comments, and recommendations to
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Department of Education ● Republic of the Philippines

Introdu What I Need to Know

Welcome to the second module of entrepreneurship. This module will allow

you to learn independently the knowledge and skills in recognizing a potential
market. It will guide you to identify the market problems to be solved or the market
needs to be met; and let you propose solution/s in terms of product/s and service/s
that will match the need using techniques on seeking, screening, and seizing
opportunities. Also in this module we are going to identify the market problem and
propose solutions with regards to products and services, to continue discover the
ideal buiness you are going to offer to your community. Basically, in return to your
hard time of selling your product you can generate profit.

In this module, you will know the following:

• Associate the market problem to be solved or the market need to be met;
• Look solution/s in terms of product/s and service/s that will meet the need
using techniques on seeking, screening, and seizing opportunities:
• Break down the market need;
• Detect the possible product/s or service/s that will meet the need of your
locality.
• Screen the proposed solution/s based on viability, profitability, and customer
need in developing a Business Plan.
• Choose the best product or service that will meet the market need.

This is your guidelines on how to develop a Business Plan. By identifying and

appealing to particular group of consumers you need to check on the possible
product needed in your locality.
Business industries offers products and services. The activity of making,
buying, or selling goods or providing services in exchange of money is called
business. Product is something that is made or grown to be sold or use, or
something that is result of a process. Services are those intangible products where
there is a skill involve and has a value.
After completing this module, you need to:
• Learn and understand the sources of opportunities for business.
• Determine the essentials in the entrepreneur’s opportunity seeking
• Identify market problems and propose potential products or services that will
meet the market needs.
• Know the problem in which a business opportunity arises from.
• Identify, screen and proposed solution to meet the problem
• Select the best product or service that will meet the market’s need with a
consideration of generating profit.

What I Know

Lets check first what you already know.

True or False. On the space provided before the number write T if the statement is
true and F if the statement is false.
_____ 1. Entrepreneur enter a business because of its profitability.
_____ 2. New business ideas provide business opportunities.
_____ 3. Entrepreneurial process starts with identification of entrepreneurial
opportunities.
_____ 4. Not all changes in the external environment provides business
opportunities.
_____ 5. Discovery and advancement in the use of technology are additional good
source of business opportunities.
_____ 6. Interest and hobbies of the people are possible good source of
entrepreneurial ideas.
_____ 7. Industry environment of business is under technological discovery and
advacement sources of opportunities.
_____ 8. The variables in the physical environment include the economic forces.
_____ 9. Entrepreneurial heart flame refers to the ability of the entrepreneur to
sense without using the five senses.
____ 10. Entrepreneurial mind frame permits the entrepreneur to see things in a
very positive and optimistic light.
_____ 11. The business operates in the industry environment.
____ 12. Opening a Halo – halo business during summer seasons.
____ 13. Environmental scanning is conducted only when a new business is
opened.
____ 14. When the barriers to the competitive forces are high, the effect to the
growth of the business is likewise high.
____ 15. Entrepreneurs need not observe and evaluate the priorities of the
government.

What’s In

In the previous lesson, you already know about the difference between
businessman and entrepreneur. Knowing all the entrepreneurial concepts will not
assure a person of becoming a successful entrepreneur and not all business people
are entrepreneurs. Some says being an entrepreneur is a calling; a lot of qualities
must be possessed to be considered successful and sustainable. So, if you are
given a great opportunity to venture into the field of entrepreneurship, it may be a
long process to undertake and the willingness to take a risk. Also, you’re not only the
one who’s in progress but at the same time, you’re helping for the development
growth of our economy.

esson 1
What’s New

FIX ME
Direction: Arrange the scrambled letters to form a correct word.
1. UPSIERSPL ________________ 6. UTSBETIUST ________________
2. NISSUBES ________________ 7. ICEVERS ________________
3. KERTAM ________________ 8. PECITIONMTO ________________
4. EDICRRSTO ________________ 9. IMCLTEA ________________
 Entrepreneurial gut game. This refers to the ability of the entrepreneur of
being intuitive. This also known as intuition. The gut game also means confidence in
one’s self and the firm believes that everything you aspire can be reached.
Sources of Opportunities

There are many ways to discover opportunities. Looking at the big picture some
have noticed the emerging trends and patterns for business opportunities. While
others are trying to find out their target market. Some are the following sources of
opportunities:

1. Changes in the environment

Entrepreneurial ideas arise when changes happen in the external
environment. A person with an entrepreneurial drive views these changes positively.
External environment refers to the physical environment, societal environment, and
industry environment where the business operates.
1.1 The physical environment includes
a. Climate- the weather conditions.
b. Natural resources- such as minerals, forests, water, and fertile
land that occur in nature and can be used for economic gain.
c. Wildlife- includes all mammals, birds, reptiles, fish, etc., that live in
the wild.
1.2 The Societal environment includes the various forces like
a. Political forces- includes all the laws, rules, and regulations that
govern business practices as well as the permits, approvals, and
licenses necessary to operate the business.
b. Economic forces- such as income level and employment rate.
c. Sociocultural forces- customs, lifestyles and values that
characterize a society.
d. Technological environment- New inventions and technology
innovations.
1.3 The industry environment of the business includes:
a. Competitors
b. Customers
c. Creditors
 d. Employees
e. Government
f. Suppliers
For example, one factor in the physical environment that can easily
change is the climate. The temperature is very high during summer but very low
during the rainy season. An individual with entrepreneurial drive can be extremely
imaginative and inventive in identifying opportunities. He/she can venture a
business that responds to the needs of the people during summer and rainy
season.

2. Technological discovery and advancement

A person with entrepreneurial interest sees possibility of business

opportunities in any new discovery or because of the use of latest technology.
For example, an individual with knowledge in repair and installation of a
machine engine discovers that additional engine parts that considerably reduce fuel
consumption.

3. Government’s thrust, programs, and policies

The priorities, projects, programs, and policies of the government are also
good sources of ideas.
For example, the use of firecrackers to celebrate New Year’s Eve is strictly
prohibited. People without entrepreneurial interest will view the ordinance as a plain
restriction. However, for an entrepreneur, it is a business opportunity to come up with
a new product that will serve as a substitute for firecrackers.

4. People’s interest
The interest, hobbies, and preferences of people are rich source of
entrepreneurial ideas. Like the increasing number of Internet Café at present could
be lead to the strong attachment of young people to computers.

5. Past experiences
 The expertise and skills developed by a person who has worked in a
particular field may lead to the opening of related business enterprise.
For example an accountant who has learned the appropriate accounting and
management skills and techniques in a prominent accounting firm can start his/her
business venture by opening his/her own accounting firm.

Forces of Competition Model

It is also known as the “five forces of competition,” An industry environment is
a competitive environment. Regardless of what product or services you have,
competition is always present.

Competition – it is the act or process of trying to get or win something.

For example, the prices are lower when there is a competition among the
stores.

These are the five forces competing within the industry:

• Buyers
• Potential new entrants
• Rivalry among existing firms
• Substitute products
• Supplier

1. Buyers
The buyers are the one that pays cash in exchange to your goods and
services. For example, the influenced of the price or in the bargaining strategy. The
buyer has a strong and magnified bargaining power. The threat of its bargaining
power will be less if the following factors notice:
a. There are several suppliers available in the market.
b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
e. The buyer purchases large portions of the seller’s product or services.
2. Potential New Entrants
A new entrant is defined as the one who enters something. For example, the
level of capital requirements, if the business requires huge capital, new entrants
should decline to join the business. This gives a threat to the business. This can be
notice if there is the presence of the following factors:
a. Substantial capital requirement.
b. Strict government policy.
c. Difficulty in accessing distribution channels.
d. Economies of scale.
e. High cost of product differentiation.
f. High switching cost

3. Rivalry among Existing Firms

Rivalry is a state or situation in which people or groups are competing with
each other. For example it depends on the Marketing strategy of your competitor,
like giving freebies and special offers. The intensity of rivalry among existing firms is
characterized to the following factors:
a. Diversity of rivals.
b. Number of competing firms.
c. Characteristics of the products or services.
d. Increased capacity.
e. Amount of fixed costs.
f. Rate of industry growth.

4. Substitute Products
Substitute means anything that takes the place or function of another. For
example the consumers decide to use margarine as a substitute for butter. In case
the price of butter increases, preferably the consumer will gradually switch to
margarine.

A substitute product can give a big threat in the industry environment if the following
factors are notice:
 a. Switching cost is low.
b. Preferences and tastes of the customers easily change.
c. Product differentiation is highly noticeable
d. The quality of substitute products dramatically improves.
e. The price of substitute product is substantially lower.

5. Suppliers
The Suppliers are the one that provide something that is needed or wanted. For
example if the supply and services being offered is unstable or keep. The intensity of
the threat is strong in this kind of the competitive force in the industry. This can be
notice if there is the presence of the following factors:
a. The supplier has the ability for forward integration.
b. Suppliers in the industry are few, but the sales volume is high.
c. Substitute products are not readily available in the market
d. The switching cost is very high.
e. The product or service is unique.
 What’s More

WORD HUNT
Think of words or terms related to the topic and find the words in the grid
horizontally, vertically, or diagonally. Write the words or terms on the space provided
below.
V E N T U R E A B C D E F A B C D E F S
A B N P O H W Q G S D L O S J E T U E Q
B C T R P R O D U C T S R L R E H R B E
C V R E P G O Y T R E P T G S T V A C N
V H E N O V R F D A B C U D E I O G V T
H K B E R C T K R F G E N H C J R K H R
K I C I T H U L V D E O C E U A T U K E
I D V D U K N S J Y I R Z O Q E U Y I P
D G H G N O U A O F G T U X N X N D R
G L K L I P W L R E P U R E P O J O G E
L H Z H T S P K L I O N H L I O M E L N
H A X Q I M I L G C V R I V A L R Y H E
A D S J E T U R E A B B S T I T U H A U
S S U B S T I T U T E S J E T U R F J R
V T U R E A B Q R S J E T U T U R E A B

1. ____________________ 6. ____________________
2. ____________________ 7. ____________________
3. ____________________ 8. ____________________
4. ____________________ 9. ____________________
5. ____________________ 10. ____________________
 What I have Learned

Definition of Terms
Opportunity seeking - Process of considering, evaluating, and pursuing market
based activities that are accepted to be beneficial for the business.
Entrepreneurial process - can be defined as the steps taken in order to begin a
new enterprise. It is a step-by-step method, one has to follow to set up a business.
Entrepreneurial ideas - an innovative concept that can be used for financial gain
that is usually centered on a product or service that can be offered for money.
Essentials of entrepreneur’s opportunity seeking - These are the basic
foundation that the entrepreneur must have in seeking opportunities, such as
entrepreneurial mind frame, heart flame and gut game.
Sources of opportunity - can be attain by assessing and looking at changes in the
environment; technological discovery and advancement; government’s thrust,
programs, and policies; people’s interest, and past experiences.
External environment - refers to the physical environment, societal environment,
and industry where the business operates.
Government - refers to the local government (municipality, city, or provincial) or the
national government and its branches.
Competition – it is the act or process of trying to get or win something.
Substitute – anything that takes the place or function of another.
New entrants – the one who enters something.
Suppliers – are the one that provide something that is needed or wanted.
Buyers – are the one that pays cash in exchange to your goods and services.
Rivalry – is a state or situation in which people or groups are competing with each
other.
 What I Can Do

Activity 3:
COMPLETE ME
Complete the table below by supplying it with products that you consider similar.
Write the product and not the brand in their respective columns. Then describe and
differentiate its characteristics and uses.
Primary Product Substitute Product
No.
( Product name ) ( Product name )
Example Butter - expensive price used Margarine – lesser price also used as
as bread spread. bread spread
1.

2.

3.

4.

5.

Assessment

Direction: Encircle the letter of your choice.

1. It is the process of considering, evaluating, and pursuing market-based
activities that are believed to be advantageous for the firm.
A. Opportunity seeking C. Opportunity screening
B. Opportunity seizing D. Sources of opportunity

2. This is essential to opportunity seeking which allows the entrepreneur to see

things in a positive and optimistic light in the midst of crisis or difficult
situations.
A. Entrepreneurial mind frame C. Entrepreneurial heart flame
B. Entrepreneurial gut game D. Entrepreneurial heart frame
3. It is the ability of entrepreneur that can sense without using the five senses,
also known as intuition.

A. Entrepreneurial mind frame C. Entrepreneurial heart flame

B. Entrepreneurial gut game D. Entrepreneurial heart frame
4. One of the essetials of entrepreneur’s opportunity seeking that refers to the
driven passion of an individual.

A. Entrepreneurial mind frame C. Entrepreneurial heart flame

B. Entrepreneurial gut game D. Entrepreneurial heart frame
5. What variable of societal environment includes income level and employment
rate?

A. Economic forces C. Political forces

B. Sociocultural forces D. Technological forces

For questions 6 and 7 refer to the following statements:

A. Preferences and tastes of the customers easily change.

B. The buyer has the potential for backward integration.
C. The cost of switching the supplier cost is minimal.
D. Product differentiation is highly noticeable.
6. Which are the factors of the substitute product that pose a great threat in the
industry environment?
A. A,B,C,D C. A and D
B. A and C D. B and C
7. Which are the factors that influenced the buyer to have a less threats because
of the bargaining power?
A. A only C. A and D
B. A and C D. B and C
8. They are the one that pays cash in exchange to your goods and services.
A. Buyers C. sellers
B. Competitors D. suppliers
9. The intensity of rivalry among existing firms is characterized to the following
factors except one:
A. Diversity of rivals.
B. Number of competing firms.
C. Characteristics of the products or services.
D. The product represents a high percentage of the buyer’s cost.
10. The following are the forces competing within the industry except one:
A. Potential new entrants and Substitute Products
B. Buyers and Suppliers
C. Rivalry among existing firms
D. Needs and Wants
11. Which of the following good sources of entrepreneurial ideas determine the
interest, hobbies and preferences of people.
A. Changes in the environment C. People’s enterest
B. Technological discovery D. Past experiences
12. Societal environment includes the following, except:
A. Economic forces C. Political forces
B. Sociocultural forces D. Natural resources
13. Which among the following is the result of identifying entrepreneurial
opportunities?
A. Creation of entrepreneurial ideas C. Sources of opportunity
B. Opening of entrepreneurial venture D. Entrepreneurial process
14. What entrepreneurial idea will you recognized, if you consider the new
discovery and advancement of technology as source of opportunity?
A. Changes in the environment
B. Technological discovery and advancement
C. Government’s thrust, programs, and policies
D. People’s interest

15. Source of entrepreneurial idea where expertise and skills developeb by a

person from its previous work can lead to the opening of a related business
enterprise.
A. Government’s thrust, programs, and policies
B. Past experiences
 C. People’s interests
D. Technological discovery and advancement

Additional Activities

Conduct a short interview of any successful entrepreneur in your locality. Ask the
following question:
• What is the nature of your business?
• Who are your customers?
• What industry are you operating?
• How much was your starting capital?
• How many years in operation?
• How many manpower involved from the start of operation until now?