Quarter 1 — Module 2

Recognize a Potential Market

CO_Q1_Entrepreneurship SHS
Module 2
Entrepreneurship – Grade 12

Alternative Delivery Mode

Quarter 1 - Module 2
Second Edition, 2021

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Entrepreneurship
Quarter 1 – Module 2
Recognize a
Potential Market
 Introductory Message

For the Learner

Have you ever dreamed of becoming the next multi-millionaire? If

you’re thinking that winning the lottery is the only way to become one, well,
think again. It is not chance that gives you millions, instead being a
millionaire is a result of hard work and determination. Starting your own
business is a good beginning towards fulfilling your dreams. Entrepreneurship
is the way!
You may often hear the word entrepreneur and entrepreneurship. But
what do these terms mean? You may refer to an entrepreneur as the person
managing the business and entrepreneurship as the business venture. Some
may say there is no difference.
So, what does this module provide you towards reaching your dreams?

1. It outlines the concepts and basic principles, and processes of

developing a business plan.
2. It helps you understand the environment and market in your
locality as a factor in developing a business concept.
3. It allows you to experience starting and operating your own business.

Substantial knowledge of entrepreneurial principles and processes is

important as this increases the chances of making your business successful.
In this module, you are guided with a set of learning parts that will help
you understand the underlying principles of entrepreneurship.

1. What I Need to Do – the part used to introduce the learning objectives

in this module.

2. What I Know – this is an assessment as to your level of knowledge to the subject

matter at hand, meant specifically to gauge previous knowledge.

3. What’s In – the part used to connect your previous learning with the new lesson.
 4. What’s New – the part used to introduce new lesson through a story, an
activity, a poem, song, situation or activity.

5. What is It – the part that will help you discover and understand
entrepreneurial
concepts.

6. What’s More – the part that will help enrich your learnings of entrepreneurial
concepts.

7. What I Have Learned – the part that will help you process what you have learned
In the lesson.

8. What I Can Do – the part that allows you to apply what you have learned into
real life situations.

9. Assessment – the part that evaluates your level of mastery in achieving the
learning objectives.

10. Additional Activities – the part that enhances your learning and improves
your mastery of the lesson.

This module will help give you all the essentials needed in your entrepreneurial
journey.

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 discovering the ideal buiness you are going to offer for your community.
Basically, in return for 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.

1 CO_Q1_Entrepreneurship SHS
Module 2
  Look for 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 guide on how to develop a Business Plan. By identifying and appealing to
a particular group of consumers you need to check on the possible product needed in your
locality.
Business industries offer 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 involved 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 propose solutions 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

Let’s 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. An entrepreneur enters a business because of its profitability.
_ 2. New business ideas provide business opportunities.
_ 3. The 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 sources
of business opportunities.
_ 6. Interest and hobbies of the people are possible good sources of
entrepreneurial ideas.
_ 7. The industry environment of the 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 season is ideal.
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.
 Lesson
Recognize a Potential Market
1

What’s In

In the previous lesson, you already know about the difference between a businessman
and an entrepreneur. Knowing all the entrepreneurial concepts will not assure a person of
becoming a successful entrepreneur and not all business people are entrepreneurs. Some say
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 you must have 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. PSIERSPL 6. UTSBETIUST
2. NISSUBES 7. ICEVERS
3. KERTAM 8. PECITIONMTO
4. EDICRRSTO 9. IMCLTEA
5. SUTEMOSRC 10. NTERTSAN

What is It

Entrepreneurial Ideas
The creation of an entrepreneurial idea leads to the identification of entrepreneurial
opportunities, which in turn results in the opening of an entrepreneurial venture.

4 CO_Q1_Entrepreneurship SHS
Module 2
 The entrepreneurial process of creating a new venture is presented in the diagram
below. (Nick L. Aduana, Etrepreneurship in Philippine Setting for Senior High School, 2017,
C&E publishing page 46, Aduana, 2017).

Creation of Identification of Opening of

entrepreneurial entrepreneurial entrepreneurial
Ideas Opportunities Venture

Figure 1. The Entrepreneurial Process of Creating New Venture

Essentials in Entrepreneur’s Opportunity – Seeking
These are the basic foundation that the entrepreneur must have in seeking
opportunities:
Entrepreneurial mind frame. This allows the entrepreneur to see things in a very
positive and optimistic way in the midst of difficult situation. Being a risk - taker, an
entrepreneur can find solutions when problems arise.

Entrepreneurial heart flame. Entrepreneurs are driven by passion; they are

attracted to discover satisfaction in the act and process of discovery. Passion is the great
desire of an entrepreneur to achieve his/her goals.
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 belief 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. The following are some 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 on 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 additional engine parts that considerably reduce fuel consumption.

6 CO_Q1_Entrepreneurship SHS
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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 sources of entrepreneurial
ideas, like the increasing number of Internet Cafés at present could 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 a 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 ones that pay cash in exchange for your goods and services. One
example is the influence 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 are noticed:
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 companies or businesses that have the ability to
penetrate or enter into a particular industry. For example, in 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 noticed 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 wherein business organizations are competing with each
other in a particular market. 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

8 CO_Q1_Entrepreneurship SHS
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4. Substitute Products
Substitute is one that serves the same purpose as another product in the market. 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 noticed:
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 in business operations
such as office supplies and equipment. In an example where supplies and services being
offered is unstable the intensity of the threat is strong in this kind of the competitive force in
the industry. This can be noticed 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
Look for words in the puzzle related to the topic may it be horizontally, vertically, or
diagonally. Write the words 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

Buyers – are the ones who pay cash in exchange for your goods and services.
Competition – it is the act or process of trying to get or win something. 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.
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.
New entrants – the one who enters something.
Opportunity – seeking – the process of considering, evaluating, and pursuing market-
based activities that are accepted to be beneficial for the business.
Rivalry – is a state or situation in which people or groups are competing with each other.
Sources of opportunity - can be attained 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.
Substitute – anything that takes the place or function of another.
Suppliers – are the ones who provide something that is needed or wanted.
 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.

Post 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

12 CO_Q1_Entrepreneurship SHS
Module 2
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 influence 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 ones who pay cash in exchange for 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 recognize, 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. A source of entrepreneurial idea where expertise and skills developed 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 questions:
 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 has your business been in operation?
 How much manpower was involved from the start of operation until now?

15 CO_Q1_Entrepreneurship SHS
Module 2
 References

BOOKS

Aduana, Nick L., Entrepreneurship in Philippine Setting for Senior High School, 2017 Page 46, C&E publishing,
Inc.

Banastao,C.,& Frias, S.(2008) Entrepreneurship .Quezon City Philippines: C & E Publishing, Inc.

Batisan, Ronaldo S., Entrepreneurship: Diwa Senior High School Series, Diwa Learning Systems Inc.

Habaradas, Raymund B. and Tullao,Jr., Tereso S., Pathways to Entrepreneurship,2016,Phoenics publishing house

De Guzman, Angeles A., Entrepreneurship for Senior High School Applied Subject ABM Strand,Lorimar
Publishing

Morato Jr., Eduardo A., Entrepreneurship, 1st ed., Manila, Philippines: REX Books Store

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