RM 2 - MODULE 2 - GENERATING IDEAS AND OPPORTUNITIES PDF

PRINTABLE LEARNING MATERIAL Reading Material #2: GENERATING BUSINESS IDEAS AND OPPORTUNITIES Learning Outcome: The learners:  understand ways how to identify Entrepreneurial Opportunities  understand the techniques in Problem Solving and Need Recognition Identify ways how to  find a prob...

PRINTABLE LEARNING MATERIAL Reading Material #2: GENERATING BUSINESS IDEAS AND OPPORTUNITIES Learning Outcome: The learners:  understand ways how to identify Entrepreneurial Opportunities  understand the techniques in Problem Solving and Need Recognition Identify ways how to  find a problem worth saving through Idea Generation  understand ways how to identify Entrepreneurial Opportunities; and  understand the techniques in Problem Solving and Need Recognition Entrepreneurial Problem Solving - is the process of using innovation and creative solutions to close that gap by resolving societal, business, or technological problems. Entrepreneurial Problem Solving Skills 4. Business and industry awareness – Entrepreneurs need sound 1. Critical Thinking. It is the complex analysis of a understanding of markets and industries. problem or issue with the goal of solving the problem or Often times, they are already working in making a decision. The entrepreneur analyzes and peels a large organization when they see away the layers of a problem to find the core of an issue growth opportunities or inefficiencies in facing a business. The entrepreneur focuses on the heart of a market. The employee gains a deep the problem and responds reasonably and openly to understanding of the industry at hand. If suggestions for solving it. the employee considers a possible solution for a problem, this solution might become the basis for a new business. 2. Communication. The ability to communicate 5. Resourcefulness - is a mindset, messages effectively to an intended recipient, are the skills and is especially relevant when the goals entrepreneurs use to pool resources for the purposes of you have set are difficult to achieve or investigating solutions leading to innovative problem solving you cannot envision a clear path to get to and competitive advantage. where you desire to go. With a Ideation - brainstorming sessions resourcefulness mindset you are driven Hackathon - event hosted by tech companies which to find a way. brings together programmers and other degrees of specialization within company, organization to collaborate Business Model Canvas - can be used internally or  externally to identify problems and work toward creating viable solution Networking - network may consist of potential employees, customers, board members, outside advisors, investors, or champions (people who just love your product) with no direct vested interest. Social networks consist of weak ties and strong ties. 6. Data Analysis - process of analysing data and modelling it into a 3. Decisiveness - the ability to make a quick, effective structure that leads to innovative decision, not letting too much time go by in the process. conclusions. Entrepreneurs can explore Entrepreneurs must be productive, even in the face of risk. and leverage different data sources to They ask what problem needs to be solved, think about identify and compare “attractive” solutions, and then consider the means necessary to opportunities, since such analyses can implement an idea. And the decisions must be informed describe what has happened, why it with research. happened, and how likely it is to happen again in the future. Opportunity Spotting and Assessment Scanning the environment is the starting point of any new venture that involves understanding and knowing the intricacies of macroenvironment, microenvironment and internal environment. Finding a good idea is the first step in transforming the entrepreneur’s desire and creativity into a business opportunity. An idea whether weird or simple, will serve as a starting point. It just needs to be transformed into viable business opportunities.  Opportunity Seeking - endless curiosity  Screening the Opportunity - Cautiously selecting the best opportunity. Entrepreneurs must be able to intelligently say no to LOW-COMPELLING OPPORTUNITIES and proceed with sensible ones.  Seizing the Opportunity - Last step in opportunity spotting and assessment. This is the “pushing through” with the chosen opportunity. Innovation is the process of positively improving an existing product or service. 3 Types of Innovation: 1. Breakthrough Innovation - occurs infrequently as these establish the platform on which future innovations in an area are developed. These must be protected by a patent, a trade secret or a copyright. Examples: Internet, Computer, Airplane 2. Technological Innovation - These innovations occur more frequently than breakthrough innovations. These 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 3. Ordinary Innovation - These innovations occur more ordinarily as the name implies. Commonly originated from market analysis and technology pull instead of push. This means that the market has a strong influence in the implementation of innovation. Examples: unlimited internet plans, wireless mouse Entrepreneurial Process of Creating a New Venture 1. Identification of Entrepreneurial Opportunities 2. Creation of Entrepreneurial Journey 3. Opening of Entrepreneurial Venture As a future entrepreneur, always remember that a business must be firmly established on existing business opportunities, and that there can be no business opportunities in the absence of an entrepreneurial idea. Entrepreneurial Sources of Opportunities 1. Macroenvironmental Sources – These Industrial Sources represents the general environment where entrepreneur can identify the business opportunities from and where the future business is about to operate. Any of these forces can have a direct effect in opportunity generation and business sustainability. 2. Socio-Cultural Factors - These factors 1. Government -system or represent a general view of a locality’s traditions, institution that handles the affairs of a customs, beliefs, norms and perceptions. These factors particular country. affect how a person of the locality behaves and reacts to marketing and selling activities. 2. Suppliers- refer to individual 3. Technological Factors- Innovations of an existing persons or companies that provide the technology or an invention of a new one mostly on applied required materials, parts or services to science and engineering research areas. the business.. 4. Economic Factors- These factors play a vital role in 3. Customers- buyers of goods or the scanning of marketing environment because economic services produced or rendered by the factors directly affect any business venture. business. 4. Competitors - They produce, 5. Environmental Factors. This will help the sell or render products or services entrepreneur determine if the business he/she is which are similar to those of the entering into will comply with the environmental business. Can be: DIRECT - standards or will just be hazard to the people, animals produce/sell similar products and nature. INDIRECT - produce/sell substitute products 5. Employees - are the workers of 6. Political Factors. These factors are mostly the business who are highly induced by government policies and administration, responsible for the production of which can have a strong effect in the entrepreneur’s goods or delivery or services to the business customers. 6. Creditors - refers to banks, 7. Legal Factors. Related to political factors, these financial institutions and financial are government laws and regulations that can restrict intermediaries engaged in the lending or allow business activities. of money to the borrower usually for a fee or charge in form of interest. 8. Ethical Factors. These factors serve as entrepreneur’s guide on how to be ethical in running the business. 9. Demographic Factors. These are the characteristics of the people in the target market. Environmental Scanning - Refers to the gathering, critical evaluation and utilization of information on events and activities and their relationships with the physical, societal and industry environments. Importance of Environmental Scanning: 1. Clearly portrays the trends, activities and developments happening in every environmental layer including the interrelated relationships between the environments. 2. Identifies the expected threats and opportunities existing in the environment. 3. It points out the possible factors that will determine the success of the entrepreneurial venture 4. It helps define the future path of the business 5. Assists in the formulation of the most appropriate entrepreneurial strategies. STEEPLED Analysis is used to check the validity and reasonableness of the overriding of business targets and strategies. Any positive factor should be converted into an action plan that will describe how to lessen the anticipated risks. This analysis is very effective and should be applied while monitoring, compiling and reporting the financial plan of an organization. SWOT Analysis is a framework used to evaluate a company's competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential. SW - internal/controllable OT - External/ uncontrollable Michael Porter’s Five Forces Analysis is a business analysis model that helps to explain why various industries are able to sustain different levels of profitability. 1. Industry Rivalry - The larger the number of competitors, along with the number of equivalent products and services they offer, the lesser the power of a company. 2. Bargaining Power of Buyers - It is affected by how many buyers or customers a company has, how significant each customer is, and how much it would cost a company to find new customers or markets for its output. 3. Bargaining Power of Suppliers - The fewer suppliers to an industry, the more a company would depend on a supplier. As a result, the supplier has more power and can drive up input costs and push for other advantages in trade. 4. Threat of Substitutes - Companies that produce goods or services for which there are no close substitutes will have more power to increase prices and lock in favourable terms. When close substitutes are available, customers will have the option to forgo buying a company's product, and a company's power can be weakened. 5. Threat of New Entrants - The less time and money it costs for a competitor to enter a company's market and be an effective competitor, the more an established company's position could be significantly weakened.  6. Customer Segmentation - to understand your demand, you must identify customer segments that share common characteristics Examples: age, gender, location, education level, occupation, lifestyle, attitude, values 7. Purchase Situation Analysis - When do people buy our product? Where do they purchase? How do they pay? 8. Direct Competition Analysis What are the products and brands of our industry that are growing significantly? What is their value proposition? What is our competitive advantage? STEPS IN CREATIVE PROBLEM-SOLVING:  Step 1: Clarify. Critical step of recognizing the existence of a gap between the current state and a desired state. This can also be thought of as having need awareness, which occurs when the entrepreneur notes a gap between societal or customer needs and actual circumstances  Step 2: Ideate. Involves generating and detailing ideas by the entrepreneur. After collecting all information relevant to the problem, the entrepreneur lists as many causes of the problem as possible. This is the step in which the largest variety of ideas are put forth. Each idea must be evaluated for feasibility and cost as a solution to the problem.  Step 3: Develop. It is the step in which the entrepreneur takes the list of ideas generated and tests each solution for feasibility. The entrepreneur must consider the cost of each idea and the obstacles to implementation.  Step 4: Implement. To implement is the step in which the solution to the problem is tested and evaluated. The entrepreneur walks through the planned implementation with the client and tests each part of the solution, if a service, or thoroughly tests a developed good. The entrepreneur implements the solution and goes through a structured system of follow-up to ensure the solution remains effective and viable.  Step 5: Evaluate. To evaluate is the step in which the final solution is assessed. This is a very important step that entrepreneurs often overlook. Any fallacy in the implementation of the product or service is reassessed, and new solutions are implemented. A continual testing process may be needed to find the final solution. Using Creativity to solve problems: Entrepreneurs are faced with solving many problems as they develop their ideas for filling gaps, whether those opportunities involve establishing a new company or starting a new enterprise within an existing company. Some of these problems include staffing, hiring and managing employees, handling legal compliance, funding, marketing, and paying taxes. Some entrepreneurial collaborative methodologies include crowdsourcing, brainstorming, storyboarding, conducting quick online surveys to test ideas and concepts, and team creativity activities: a) Crowdsourcing - involves teams of amateurs and non-experts working together to form a solution to a problem. b) Brainstorming - is the generation of ideas in an environment free of judgment or dissension with the goal of creating solutions. c) Storyboarding - is the process of presenting an idea in a step-by-step graphic format. This tool is useful when the entrepreneur is attempting to visualize a solution to a problem. d) Team creativity - is the process whereby an entrepreneur works with a team to create an unexpected solution for an issue or challenge. Teams progress through the same creative problem-solving process described already: clarify, ideate, develop, implement, and evaluate. The main advantage of team creativity is the collaboration and support members receive from  one another. Great teams trust in other team members, have diverse members with diverse points of view, are cohesive, and have chemistry. Licensing & Attributions / References  Entrepreneurship (2021) Retrieved August 18, 2021 from https://openstax.org/books/entrepreneurship/pages/1-1- entrepreneurship-today  Grade 12 - Opportunity Seeking (2021) Retrieved August 18, 2021 from https://www.youtube.com/watch?v=V1LMmisH4X4  Porter’s Five Forces (2021) Retrieved August 18, 2021 from https://www.investopedia.com/terms/p/porter.aspentrepreneurship-today