TLE 101 Unit 4: Opportunity Identification and Selection PDF

TLE 101 – Edukasyong Pantahanan at Pangkabuhayan with Entrepreneurship UNIT 4 OPPORTUNITY IDENTIFICATION...

TLE 101 – Edukasyong Pantahanan at Pangkabuhayan with Entrepreneurship UNIT 4 OPPORTUNITY IDENTIFICATION AND SELECTION OBJECTIVES: ▪ Describe what a sound business idea is; ▪ Gain concept regarding scanning of the environment for a business idea; ▪ Determine ways of screening business ideas; ▪ Get familiarized with SWOT analysis; and ▪ Identify the different analyses prior to making a final decision on the business venture. The Search for a Sound Business Idea What is a Sound Business Idea? - it is the economic opportunity that is within the reach of the entrepreneur and will provide with a desirable value. SOUND BUSINESS IDEA Established New Venture Business Successful Success in Market Entry Competition The Search for a Sound Business Idea New Business Venture Established Business - confronted with the - must grow or at immediate concern of least maintain its gaining at least a competitive stance foothold in the market it desires to serve. There is a need to adopt “new sound business ideas” Opportunity to Start an Enterprise Opportunity - refers to a good chance for advancement or progress Steps in Arriving at a Business Opportunity Selection Business Idea and Concept Generation Screening Formulation First Step: Idea Generation Environment - one of the best sources where an inspiring entrepreneur can get ideas for business WAYS OF SCANNING THE ENVIRONMENT 3 Looking closely at the market View the larger 2 environment 4 Looking at people’s skills Scan and understand the needs and wants 1 Looking at of people 5 available assistance programs First Step: Idea Generation Environment - one of the best sources where an inspiring entrepreneur can get ideas for business WAYS OF SCANNING THE ENVIRONMENT Scan and understand the needs and wants of people 1 Need - generic Want - specific Market Segmentation First Step: Idea Generation Environment - one of the best sources where an inspiring entrepreneur can get ideas for business WAYS OF SCANNING THE ENVIRONMENT View the larger 2 environment S - Social T - Technological E - Economic E - Environmental P - Political First Step: Idea Generation Environment - one of the best sources where an inspiring entrepreneur can get ideas for business WAYS OF SCANNING THE ENVIRONMENT 3 Looking closely at the market a. Demand and supply analysis b. Import-export movement c. Product substitution d. Forward-backward industry linkages First Step: Idea Generation Environment - one of the best sources where an inspiring entrepreneur can get ideas for business WAYS OF SCANNING THE ENVIRONMENT 3 2 Looking at 4 people’s skills *Observe community on skills available 1 *Analyze if skills can 5 be develop for commercial purposes First Step: Idea Generation Environment - one of the best sources where an inspiring entrepreneur can get ideas for business WAYS OF SCANNING THE ENVIRONMENT 3 2 - government and 4 private institutions - non-government organizations (NGOs) 1 5 Looking at available assistance programs Marketing Technical Financial RULES FOR SUCCESSFUL INNOVATION Easily Compatible communicable with existing benefits attitudes and beliefs Immediate benefit Should be divisible— Should not users be complex Advantage over existing products Second Step: Screening and Selection Ways of Screening and Selecting Business Ideas The Screening Process - Screening is Personal Firm done primarily to level level focus on the Screening Screening business that will be suitable to the entrepreneur’s situation. Criteria for Personal-level Screening: Personal preference Educational and training background Work experience Business network and contacts Family support  It uses generally accepted business criteria in determining the feasibility of a proposed enterprise. It should be taken only as initial analysis of the proposed business and should not be regarded as a final indicator of viability. Technical Financing Feasibility Feasibility Market Financial Feasibility Feasibility Criteria for Firm-level Screening  stable and sufficient demand potential competitive strength of the firm Market Feasibility Criteria for Personal-level Screening  Products or Services - with required quality and quantity Technical Technical concerns Feasibility - procurement of materials, manpower, and others Criteria for Personal-level Screening Possible sources of financing: proposed owner’s savings Financing relatives and friends Feasibility financing institutions Criteria for Personal-level Screening  Projected Balance Projected Projected Sheet Cash Flow Income Statement Statement Projected Financial Statement Methods of analyzing financial prospects of business idea: preparation of projected financial statement Financial determination and analysis Feasibility of financial ratios derived from projected statements Criteria for Personal-level Screening Final Step: Business Concept Formulation Screening – its purpose is to eliminate from the list the generated business ideas that did not pass the adapted criteria Screening may result to the following: a. status quo - all business ideas listed passed the adapted criteria b. short list - some of the ideas generated were eliminated c. zero listing - all business ideas generated and listed were eliminated Types of Analyses that Must Be Done Before Making Final Decision on the Proposed Business Venture 1 Resource Analysis 2 Environmental Analysis 3 Personal Value Analysis Types of Analyses that Must Be Done Before Making Final Decision on the Proposed Business Venture 1 Resource Analysis indicates what the firm is capable of doing at the start of the business the Strengths and Weaknesses are identified 7Ms of resources needed to start and sustain a business: Money Materials Machines Methods Manpower Management Moment (Time) - these are internal to the enterprise, and within the control of the firm  Types of Analyses that Must Be Done Before Making Final Decision on the Proposed Business Venture 1 Resource Analysis Initial question for analysis: Do you have enough resources to start and sustain the business your choice? If YES - indicates the strength of the firm If NO – limited resources can be a weakness Strength and Weaknesses – they are internal problems or issues and have to be understood and dealt with on an ongoing basis Table 1. Sample Analysis of Resources for Meat Processing Business RESOURCES STRENGTHS WEAKNESSES The proponent has 100,000 to invest but still needing 150,000 to start the business Money The proponents has contacts with Hog Raisers Association that can supply the Materials raw materials The equipment for making process meat Machines are available The method for making processed meat Methods are available There is a need to hire skilled and diligent Manpower workers The owner and other members of the management team have the training and education to manage the meat Management processing business The company is dedicated to work full Moment (Time) time in making processed meat  Types of Analyses that Must Be Done Before Making Final Decision on the Proposed Business Venture 2 Environmental Analysis gives an indication whether the business can survive or not the Opportunities and Threats are identified Opportunities - development in the environment that work favorably for the business Threats - situations that work unfavorably for the business  Socio- cultural Economic Technical Peace Population- Natural and Demographics Order Political The Different Government Global Environments Affecting the Business Operation Table 2. Sample Analysis of Environment for Meat Processing Business FACTORS IN THE OPPORTUNITIES THREATS ENVIRONMENT People have developed the habit of Health-conscious people may not choose eating in fast food restaurants. Many of to eat ham, and other processed meat Socio-cultural these establishments serve ham and suspected to have “high cholesterol bacon and other processed meat content” Technology and The new technology can cure ham and technical bacon in three days The purchasing power of the population has lowered because of the peso Economic devaluation and high cost of oil, thus reducing the number of people who buy ham and bacon Foot and mouth disease can threaten the Natural supply of raw materials Political instability is affecting the Political economy Peace and In general, there is peace and order in the order place of business Population The population is increasing. More people trends mean more consumers who need food The government is providing assistance to MSMEs. The company may be able to avail Government of this assistance in the form of financing, programs technical, and marketing If there is a shortage in supply of local pork, Global it is possible to import raw materials from environment other countries  SWOT Analysis - stands for Strength, Weaknesses, Opportunities and Threats - a method of analysis of the company’s resources and the environment it is standing with. Two Parts of SWOT Analysis: a. the Strengths and Weaknesses - the resources analysis - refer to the internals of a company - within the control of the firm b. the Opportunities and Threats - the environmental analysis - external to the company and exist in the environment - not in the company's control Types of Analyses that Must Be Done Before Making Final Decision on the Proposed Business Venture 3 Personal Value Analysis Personal Values - represent one’s philosophy, guiding principles, outlook, and aspirations for the business - non-monetary values which indicate personal attitude towards the business - specify what the owner wants to do with the business - represents the kind of satisfaction one like to give to the client, other stakeholders, and to oneself Questions to Ask in Analyzing Personal Values: 1. What are my guiding principles in doing business? 2. How do I expect to satisfy my customers? Demosthenes Greek Stateman References: Opportunity. (n.d.). In Meriam-Webster.com Dictionary. Retrieved from https://www.merriam-webst er.com/dictionary/opportunity Medina, R.G. (2014). Entrepreneurship and small business management (3rd ed.). Rex Book Store, Inc. Small Enterprises Research and Development Foundation. (2007). Introduction to entrepreneurship (2 nd ed.) The Economic Times. (n.d.). Definition of SWOT analysis. Retrieved from https://economictimes.indi atimes.com/definition/swot-analysis  THANK YOU! Questions? You can find me at: Messenger : Jennifer Iracta Guevarra Email : [email protected]