OUR LADY OF FATIMA ACADEMY OF DAVAO, INC.

Brgy. 24-C, Fatima St., Davao City

S.Y. 2020-2021

Entrepreneurship
Quarter 1 – Module 2
Recognize a Potential
Market

After reading this module, the learners should be able to:

1. Learn and understand the sources of opportunities for business.
2. Determine the essentials in the entrepreneur’s opportunity seeking
3. Identify market problems and propose potential products or services that
will meet the market needs.
4. Know the problem in which a business opportunity arises from.
5. Identify, screen and proposed solution to meet the problem
6. Select the best product or service that will meet the market’s need with a
consideration of generating profit.

Adapted from DepEd Reading and Writing Skills ADM Modules

 Lesson 1 Recognize a Potential Market

What is It

Entrepreneurial Ideas

The creation of an entrepreneurial ideas leads to the identification of entrepreneurial

opportunities, which in turn results in the opening of an entrepreneurial venture.
The entrepreneurial process of creating a new venture is presented in the diagram
below. (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 solution when problems arise.
Entrepreneurial heart flame. Entrepreneur's driven 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 believes that everything you aspire can be reached.

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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. Some are the following 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

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 during the rainy season. An individual with entrepreneurial drive can be extremely
imaginative and inventive in identifying opportunities. He/she can venture 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 that additional engine parts that considerably reduce fuel
consumption.

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 source of
entrepreneurial ideas. Like the increasing number of Internet Café at present could
be 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 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

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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 one that pays cash in exchange to your goods and
services. For example, the influenced 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 notice:
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 the one who enters something. For example, 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
notice 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.

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 f. High switching cost

3. Rivalry among Existing Firms

Rivalry is a state or situation in which people or groups are competing with
each other. 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.

4. Substitute Products
Substitute means anything that takes the place or function of another. 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 notice:
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 or wanted. For
example if the supply and services being offered is unstable or keep. The intensity of
the threat is strong in this kind of the competitive force in the industry. This can be
notice 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.

6
c. Substitute products are not readily available in the market
d. The switching cost is very high.
e. The product or service is unique.

7
 Our Lady of Fatima Academy of Davao, Inc.
Brgy. 24-C, Fatima St., Davao City
S.Y. 2020-2021

Name: ____________________________ Inclusion Dates: __________________

Grade and Section: ______________________

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.

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

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

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 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 influenced 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 one that pays cash in exchange to 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.

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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 recognized, 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. Source of entrepreneurial idea where expertise and skills developeb 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

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