Chapter 2:

Opportunity Seeking, S
creening, and Seizing
2.1 Opportunity Seeking

Entrepreneurs are innovative

opportunity seekers, separating them
from ordinary businessmen whose
main objective is simply to earn
profits from producing, buying, and
selling goods.
 Opportunity Seeking
Entrepreneurs
introduce new
products, innovate
product features, and
improve their
products’ operational
capability.
Opportunity Seeking
Entrepreneurs may totally change
the existing business paradigm by
rendering it obsolete through the
introduction of new technologies,
processes, and systems.
Disrupt – to cause something to be unable to continue in
the normal way, to make something that is not the usual
way (get out of the box/comfort zone)
Entrepreneurial Mind Frame,
Heart Flame, and Gut Game
Essential to an
entrepreneur’s
opportunity
seeking are the
Entrepreneurial
Mind Frame, Heart
Flame, and Gut
Game.
Entrepreneurial Mind
Frame
This allows the entrepreneur to
see things positively in the midst of
crisis.
In fact, in Chinese writing, crisis is
composed of two characters. The first
means danger and the second means
opportunity.
Entrepreneurial Heart Flame
This is what an inventor and
entrepreneur have common. It is also
defined as passion.
Passion is the great desire to attain a
vision or fulfill a mission. Despite several
setbacks, an entrepreneur is rather
driven to persevere even more.
Entrepreneurial Heart Flame
 The terms “quit” and “surrender” are not
included in the vocabulary of successful
entrepreneurs. They keep on moving
forward. Persistent is the foundation of
commitment.
Entrepreneurial Heart Flame
The heart flame is also the emotional
intelligence or EQ, which is manifested in the
entrepreneur’s efforts to nurture relationship with
customers, employees, and suppliers. This creates
synergy among the group to work toward a
certain mission.

Emotional Intelligence (EI) pertains to the ability to

manage one’s self and interact with others in a
positive way.
Entrepreneurial Gut Game
This refers to the entrepreneur’s
ability to sense without using the five
senses. This is also known as intuition.

The gut game also connotes

courage or “lakas ng loob”.
The Many Sources of Opportunities
Macro Environmental Source of
Opportunities

The macro environment refers to the “big

or macro forces” that affect the area, the
industry, and the market, which the
enterprise belongs to.
The macro environment forces is divided
into 5 categories- Social, Political, Economic,
Ecological and Technological or SPEET.
1. Socio-Cultural Environment

This includes demographics

and cultural dimensions.
It helps the entrepreneur
assess trends and dynamics of the
bigger consumer population, their
beliefs, tastes, customs and
traditions.
2. Political Environment
The political environment defines
the governance system of the country
or the local area of business.
It includes all the laws, rules, and
regulations that govern business
practices as well as the permits,
approvals, and licenses necessary to
operate the business.
3. Economic Environment

Supply and demand forces

mainly drive the macroeconomic
environment. They are the
Same factors that drive the interest
and foreign exchanges rates that
fluctuate with the movement of the
market forces.
4. Ecological Environment
This includes all natural resources
and the ecosystem, habitat of men,
animals, plants, and minerals.
Opportunities abound for greener,
cleaner, and healthier products, whose
objectives are to save the planet and
prolong lives.
5. Technological Environment

New scientific and technological

discoveries, which often lead to the
launch and commercialization of new
products with superior attributes, are
the entrepreneur’s nightmares.
Table 2.1 Examples of Relevant Opportunities and Threats to a Fast Food Chain

Opportunities Threats to the

Factors to the Enterprise
Enterprise
1. Social
•Increasing •Increased
double income customer base for
earners in the the fast food chain
family (i.e., mother
and father are both
working) •More healthy
product offerings
•Trend toward are demanded by
healthier food customers
choices
Table 2.1 Examples of Relevant Opportunities and Threats to a Fast Food Chain

Opportunities Threats to the

Factors to the Enterprise
Enterprise
2. Political

•Tax •Increased
exemption for 13th purchasing power
month pay and of the consumers
other bonuses up leading to higher
to P70,000.00 retail sales
passed by
Congress
Table 2.1 Examples of Relevant Opportunities and Threats to a Fast Food Chain

Opportunities Threats to the

Factors to the Enterprise
Enterprise
3. Economic

•ASEAN •Opportunity for •Smaller suppliers

Integration in 2015 the enterprise to difficulty coping
(countries that expand to other with greater
belong to ASEAN ASEAN markets competition posed
trading at zero by foreign rivals:
tariff) might lose small
but reliable
suppliers
Table 2.1 Examples of Relevant Opportunities and Threats to a Fast Food Chain

Opportunities Threats to the

Factors to the Enterprise
Enterprise
4. Ecological

•Increased •Opportunity to •Additional costs

usage of eco bags start an advocacy incurred by new
and environment- toward a ‘greener’ packaging may
friendly containers operation (not decrease
limited to usage of profitability
eco-friendly
containers/packagi
ng)
Table 2.1 Examples of Relevant Opportunities and Threats to a Fast Food Chain

Opportunities Threats to the

Factors to the Enterprise
Enterprise
5. Technological •Potential for
online customer
•Increased •Greater usage of disappointments
usage of apps to place via and netizen
smartphones to smartphones, bashing due to
disseminate which may help poor product/
important increase market service delivery
information (e.g., reach brought about by
news, weather, intermittent
traffic updates) technical glitches
Industry Sources of Opportunities

The next biggest sources of

opportunities are the industry and
the market. One of the most
difficult aspects about industry
analysis is defining what
constitutes an industry in the first
place.
Industry Sources of Opportunities
Participants in an industry include:

1. Rivals or competitors in a particular type

of business (e.g., Jollibee vs. McDonald’s,
Coca-Cola vs. Pepsi, Samsung Galaxy vs.
Apple’s iPhone, etc.). True rivals or
competitors are those competing for the
same or similar markets.
Industry Sources of Opportunities
2. Suppliers of input (e.g., fuel,
electricity, raw materials) to rivals as
well as suppliers of machinery and
equipment, suppliers of manpower
and expertise, and suppliers of
merchandise.
3. Consumer market segments being
served by rivals or competitors.
Industry Sources of Opportunities
4. Substitute products or services, which
customers shift or turn to.
5. All other support and enabling
industries.

After identifying the participants, it

would help the entrepreneur to
determine the logic of the industry.
 Defining an Industry
The most common way of defining an
industry is according to product types or
according to the functions of the product
or service.

Another way is by tracing the industry

from its most basic raw material down to
its various consumer applications, or the
product or value-added chain.
Market Sources of Opportunities

The entrepreneur must also

be able to measure the actual
demand and supply as well as the
potential demand and supply of
the industry that the enterprise
belongs to.
Market Sources of Opportunities

Equally important is the

monitoring of the prevalence of
product substitutes and their market
impact on the existing players in the
industry.
Micromarket

Micromarket refers to the

specific target market segment of
a particular enterprise.
Consumer Preferences, Piques
and Perceptions
Consumer preferences refer to
the tastes of particular groups of
people. The consumer’s age, culture,
and status affect their preferences.

Pique – a sudden feeling of annoyance or anger when

someone has offended you
Consumer Preferences, Piques
and Perceptions
In contrast, consumer dislikes refer to the
things that irritate customers.

Both preferences and dislikes can bring

opportunity to entrepreneurs.

Because of many choices that customers

have to struggle with every day, a product or
service must be able to win the battle for the
customers’ mind.
How to win it?
First: Generate awareness about
the new product or
service.
Second: Arise customers’ interest
to buy.
Third: Evaluate the product.
Last: Decide to purchase the
Other Sources of Opportunities

1. Customer preferences change over

time.
2. People’s tastes in clothes, music,
shoes, entertainment, dance, sports,
hobbies, and even careers have
evolve over the years.
Other Sources of Opportunities

3. What piques customers is a great

source of opportunity.
4. Before the customer is won over;
there is first a battle for the mind.
Next, there is a battle for the
heart. Finally, there is a battle for
the wallet.
Other Sources of Opportunities
5. The longer the customer wants to
use the product, the greater the
chances of creating lasting loyalty.
6. Opportunities has abound in shaping
consumer perceptions or occupying
spaces in their minds or places in
their hearts that have not yet been
filled.
 Other Sources of Opportunities
7. New inventions, new systems and work
processes, new insights about the human
psyche, new applications for old knowledge,
new revelations about how the physical
world works, new interpretations, new
combinations based on the convergence of
previous technologies, new outlooks about
life should be led, and a host of other new
things are tremendous sources of
opportunity.Psyche – the soul, mind, or personality of a person or group
Other Sources of Opportunities

8. Determining personal preferences

and competencies lay the foundation
for a new business venture.
9. Unexpected occurrences in both the
external and internal environment of
the enterprise indicate that
significant changes are happening
and opportunities are sprouting.
2.2 Opportunity Screening

Because of the many

opportunities possible for the
entrepreneur, it is important to
come up with a short list of a few
very promising opportunities, which
could be scrutinized in detail.
The Personal Screening
1. Do I have the drive to pursue this
business opportunity to the end?
2. Will I spend all my time, effort, and
money to make the business opportunity
work?
3. Will I sacrifice my existing lifestyle,
endure emotional hardship, and forego
my usual comforts to succeed in this
business opportunity?
The 12 R’s of Opportunity Screening

A more complex screening grid

uses 12 criteria for screening
opportunity.

1. Relevance to vision, mission, and

objective of entrepreneurs.
2. Resonance to values.
The 12 R’s of Opportunity Screening
3. Reinforcement of Entrepreneurial
Interest.
4. Revenues or sales.
5. Responsiveness to customer needs
and wants.
6. Reach places and expands through
branches.
7. Range. Can lead into wide range of
product or service offerings.
The 12 R’s of Opportunity Screening

8. Revolutionary Impact.
9. Returns
10.Relative ease of
implementation.
11.Resources required.
12.Risks
The Pre-Feasibility Study
The opportunity screening
matrix aims to narrow down the
many opportunities into one or two
most attractive ones. The next step
is to conduct pre-feasibility study to
assure the viability of the
opportunity.
The Pre-Feasibility Study
The following factors are contained in the
feasibility study:
Market potential and prospects
Availability and appropriateness of
technology
Project investment and detail cost
estimates
Financial forecast and determination of
financial feasibility
Market Potential and Prospects
Market potential is based on the
estimated number of possible customers
who might avail of the product service.
For a more realistic number, it would help
to narrow down your estimation to the
relevant population or target customers
in the area where you want to operate
your business (micromarket).
Segmenting the Market
Using a set of demographics (e.g.,
gender, place of residence, income class,
etc.) will be the most basic in determining
the target segment.
In this regard, the entrepreneur must
be able to do actual field research like
surveys, focus group discussion, in-depth
interviews, observation techniques, etc.
Assessing Competition
Market potential is also affected
by the number of establishments
supplying and serving your target
customers. This process would
determine how saturated the
market is in the given area of
coverage.
 Estimating Market Share and Sales
The next thing that the entrepreneur
should assess is the potential market
share he or she can attract.
In the assessment of market
potential, the entrepreneur should
evaluate the relative strength of the
various suppliers or competitors in the
market place by asking the following:
Estimating Market Share and Sales
Who has the dominance?
Who has greater bargaining power?
Which segments are saturated and over
served and which are relatively
underserved?
Is it the past expertise in the segment
or the weaker competition in the
segment that makes market segment
more attractive?
Estimating Market Share and Sales
The final task is to determine what
slice or share of the targeted market
segments he wants to carve out.
Having determined the forecast, the
entrepreneur should then estimate
potential sales. The sales forecast can be
computed using the following formula:
(Estimated Sales Volume x Estimated
Price).
 Technology Assessment and
Operations Variability
There are at least four target customer
expectations affecting the scale and
complexity of an enterprise’s operation.

1. Quantities demanded
2. Quality specifications demanded.
3. Delivery expectation
4. Price expectations
Investment Requirement and
Production/ Servicing Cost
There are three investments
that need to be funded when
building your business:
1. Pre- Operating Cost
2. Production/ Service Facilities
Investment
3. Working Capital Investment
Financial Forecasts and Determination
of Financial Feasibility

Upon completing the first

three parts of the pre-feasibility
study, the entrepreneur should
now be able to proceed his or
her enterprise’s financial
forecast for the business.
Financial Forecasts and Determination
of Financial Feasibility

Financial forecasting calls for

the creation of the four critical
financial statements:
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
4. Funds Flow Statement
Income Statement
The income statement measures an
enterprise’s performance in terms of
revenue and expenses over a certain
period. Simply put, the formula is:
REVENUE-EXPENSES=INCOME OR PROFIT (LOSS)
Balance Sheet
Creating the balance sheet is bit
more complicated because one has to
look at three different things: assets,
liabilities, and equities.

The balance sheet equation is:

ASSETS=LIABILITIES + EQUITY
Financial Ratios and Measurements

Payback Period:
PAYBACK PERIOD= TOTAL INVESTMENT
ANNUAL NET INCOME AFTER TAXES

Return on Sales:

RETURN ON SALES= NET PROFIT AFTER TAXES

SALES
Financial Ratios and Measurements

Return on Assets

ROA = NET PROFIT AFTER TAXES

TOTAL ASSETS

Return on Investment:

ROI= NET PROFIT AFTER TAXES

TOTAL INVESTMENTS
2.3 Opportunity Seizing
At this stage, the entrepreneur
must be able to determine the critical
success factors that enable other
players in the same industry to
succeed while, at the same time, be
vigilant about those factors that
cause other businesses to fail.
2.3 Opportunity Seizing

The question for the

entrepreneur in Opportunity Seizing
is “ Will I be able to manage, to my
advantage, the critical success factors
and avoid the critical failure factors?”
Crafting a Positioning Statement
In order to craft a positioning
statement, the entrepreneur is advised
to look at other competitors (or
substitutes) in the market place. Details
such as their major buyers, attributes or
features that make competitor’s product
attractive should give the entrepreneur
an idea.
Crafting a Positioning Statement
Going through the process of
questioning, the entrepreneur will be
able to come up with each of the
competing products’ Main Value
Proposition (MVP) and from there, work
on his own positioning. For
questioning, these are some key points
to help the entrepreneur:
Crafting a Positioning Statement
1. What are the main customer segments?
2. What are the different product attributes
and features of each competitor?
3. What are the existing marketing practices
of the various competitors?
4. What are the market preferences of
consumers when it comes to the products
being offered?
Grids for Competitor Analysis
HIGH PRICE

H A
G B
MID PRICE

F C
E D
LOW PRICE

LOW QUALITY MID QUALITY HIGH QUALITY

Grid 1: Quality versus Price Positioning of Competitors

 Grids for Competitor Analysis
VERY HIGH
4
HIGH
5
SALES 2
VOLUME IN AVERAGE
UNITS OR
LOW 1 6
PESOS
3 7
VERY LOW
8
HIGH GOOD GOOD POOR
GRID 2: SALES VOLUME QUALITY QUALITY QUALITY QUALITY
VERSUS MAIN VALUE HIGH PRICE MEDIUM LOW PRICE LOW PRICE
PROPOSITION. PRICE

MAIN VALUE PROPOSITIONS

Conceptualizing the Product or
Service Offering
In order to come up with the product
or service concept, the following options
may be considered by the entrepreneur:

1. The first is to create a concept similar

to the winning products in the
marketplace and ride to the obvious
market trends.
Conceptualizing the Product or
Service Offering
2. Find a market niche that has not been filled
by the competitors.
3. Conceptualize product in a positioning
category where the participants are rather
week.
4. Conceptualize a product that would change
the customers think, behave, and buy, thus
making existing products “obsolete” and
“old-fashioned.”
Designing, Prototyping and Testing the
Product
Designing means that the entrepreneur
must render the concepts and translate it
into its very physical and very real
dimensions.
The entrepreneur must be able to
‘perfect’ the product or service as it goes
through the available processes while the
product is continuously subjected to testing
and improvement.
Implementing, Organizing, and
Financing
 Good planning and good programming
are essential to have good implementation. A
good planner and programmer must make
several important choices to achieve the
desired end results.
 Implementing, Organizing, and
Financing
First is to choose the correct technology,
the one that would produce the output that
would meet the quality specifications of
customers.

Second is to choose the right people who

can perform the technical and managerial
functions necessary to realize the desired end
results.
 Implementing, Organizing, and
Financing
Third is to design the operating
workflow that would assure the effective,
economical, and efficient production of
the output.

Fourth is to specify the systems and

procedures that would govern the
enterprise, motivate and discipline the
 Implementing, Organizing, and
Financing
Fifth is to design the organizational
architecture that would allow the people to
function at their best.

Given the above considerations, the

entrepreneur must be diligent in taking the
necessary steps toward determining the
required resources including people, physical,
and peso or money resources.