Business Enterprise Simulation - Week 1 PDF

BUSINESS ENTERPRISE SIMULATION WEEK 1  This subject integrates all the key concepts and processes of Accountancy, Business and Management (ABM) as applied in real-life activities following the business cycle: business opportunity search, product/service development, business formati...

BUSINESS ENTERPRISE SIMULATION WEEK 1  This subject integrates all the key concepts and processes of Accountancy, Business and Management (ABM) as applied in real-life activities following the business cycle: business opportunity search, product/service development, business formation and organization, business implementation and control, business wind-up, and relevant management reporting in the context of ethical standard and social responsibility. Technologies are used in a business enterprise as appropriate. MOST ESSENTIAL LEARNING COMPETENCIES Scan the market and identify potential business opportunities to capitalize on What are the top 5 businesses in your area? 1. 2. 3. 4. 5. Why do you think these businesses flourish? “The hardest part is starting. Once you get that out of the way, you’ll find the rest of the journey much easier.” – Simon Sinek, British- American author and inspirational speaker Scanning the Market to Identify Potential Business Opportunities The starting point of any new venture that involves understanding the intricacies of the macroenvironment, microenvironment, and internal environment This way, you can recognize various opportunities and at the same time understand the arena where your future business will operate. The general rule is to find the opportunity first before coming up with the product or service. 3 ENVIRONMENTS AFFECTING THE BUSINESS 1. MACROENVIRONMENT - consists of external factors and forces that impact all businesses in a broader context and are typically beyond the business's control (PESTEL) 2. MICROENVIRONMENT – includes external factors that directly influence a specific business and its immediate operations; partial control (competitors, suppliers, customers, intermediaries, and publics) 3. INTERNAL ENVIRONMENT - consists of factors within the organization that influence its operations, goals, and performance; fully controllable (employees, management, resources, processes, mission, and vision) SOURCES OF BUSINESS IDEA From the product From the process From the person From relationships 1. Business opportunities from the product A. Look for ways on how your product can be differentiated from those that are already offered in the market. You can differentiate by changing the size, shape, color, content, and even the flavor of the your product if it is food. For example, Lots’a Pizza introduced square pizzas while Bibingkinitan introduced bite-size rice cakes. B. Ask yourself, “What’s next?”. Think about trends and technologies on the horizon and how you might move into those areas. Think about innovations related to something, then ask, “What can that mean in terms of new ways to live?” 1. Business opportunities from the product C. Do something about what bugs (or irritates) you. This is what others call “annoyance-driven innovation. What are your usual “complaints?” Whenever consumers complain badly or bitterly concerning a product or service, or when you hear someone saying ‘I wish there was... “or “If only there were a product/service that could... “, then, you have the potential for a business idea. D. Make a cheaper version of an existing product. Start by offering customers similar products but at a much lower price, without sacrificing the quality. 2. Business opportunities from the process of production and distribution A. Look for new niches. Take a look at what some of the big players in an industry are missing and figure out if you can fill the gaps. B. Innovate the usual process of offering the product. For example, a firm selling pritchon combined the process of frying (prito) and roasting (lechon) pork belly. 3N Bakery became famous for its toasted siopao, which is a deviation from the traditional steamed siopao. 2. Business opportunities from the process of production and distribution C. Trying to offer a product at a smaller packaging so that it will be cheaper can be a potential business idea as well. D. Play the mix and match game. Walk up and down the aisles of a store, observe, and try combining two products into one. 3. Business opportunities sourced from the person A. Examine your own interest, hobby, skills, dreams, and even your travels. Many businesses today started out as a hobby then became a profitable venture. For example, if you are an artist, why not sell your artworks? B. Talk to shoppers. Ask customers what they wish they could find in the market. C. Skills learned from prior employment can also become a business idea. For example, some preschools were established by successful teachers. Cooks were able to put up their own restaurants. Hair cutters got the chance to put up their own salon after harnessing their craft in their previous employment. 4. Business opportunities from relationships A. Friends and classmates may start their business partnerships as teammates in school projects and eventually decided to put the study into reality after graduation. B. Your neighborhood can also be a source of business idea. Simply look at what is missing or what is your everyday problem. C. Families and relatives can also be good sources of business ideas, just like what happens in Filipino Chinese communities in the country wherein the young generation become exposed with the business, which they get to manage once they become adults. PERFORMANCE TASK NO. 1 The class will be divided into four groups. The group will further be divided and will be assigned one of the four business ideas. They will: 1. Identify a Problem or Opportunity in the locality related to their assigned category. 2. Propose a Business Idea that addresses the identified problem. 3. Describe the Proposal briefly, including its features or services. 4. Identify the Target Market for the proposed business. Ideas should reflect creativity, practicality, and potential marketability. OPPORTUNITY ASSESSMENT Once an idea has been generated and an opportunity has been recognized from it, the next step is to assess if this opportunity is feasible to implement. Opportunity assessment is the process of evaluating the likelihood that the opportunity can be realized. 7 ELEMENTS OF OPPORTUNITY ASSESSMENT 1. Product or service: What is the unique feature of the business idea? Why will the consumers purchase this once it is already available in the market? What need does it try to fill? What is the competitive edge of this product compared to the existing products and services? 7 ELEMENTS OF OPPORTUNITY ASSESSMENT 2. Market opportunity – this refers to the appraisal of the characteristics of the market, which includes how competitive the environment is. Is it easy to enter the market? Are there barriers to entry and can you overcome them? How strong is the bargaining power of the existing products and services? How different is your proposed product compared to the existing ones? What market segment are you trying to target? 7 ELEMENTS OF OPPORTUNITY ASSESSMENT 3. Costing and Pricing – a product which may be considered valuable by the consumers may not be affordable. Thus, the cost of production as well as the unit price are very important in the assessment. The price of the product depends on the cost of raw materials and other factors of production. Come up with a product that is competitively priced. 7 ELEMENTS OF OPPORTUNITY ASSESSMENT 4. Profitability – the primary motivation of venturing into business is to earn profit. Thus, a nonprofitable enterprise, no matter how creative the product is, is not worth pursuing. Profitability is based on how the market will receive your product and the cost of producing it. 7 ELEMENTS OF OPPORTUNITY ASSESSMENT 5. Resource requirements - these are the inputs (resources) in the production process, which are of two types: the intermediate input (also called raw materials that need further processing) and the factor inputs (the processing inputs which include labor, capital, and technology). 7 ELEMENTS OF OPPORTUNITY ASSESSMENT 6. Risks – Risks are uncertain situations which may increase the probability of loss or failure of a business venture. They may be internal (emanates from the management of resources and are therefore controllable) or external (coming from outside forces, which can only be managed). 7 ELEMENTS OF OPPORTUNITY ASSESSMENT 7. Entrepreneurial commitment – commitment comes from the motivations of the person, his skills, experiences, resources, and the amount of time he can devote in the operation of the business.