Module 2: Environment and Market

One of your greatest dreams in life is to become a successful entrepreneur. As a

person, you are capable of developing your character and personality and how to
respond to some business challenges and opportunities. You can make things happen
by identifying the opportunities around you. You may ask yourself these questions:
What do people need? What products and services are available in the market today?
Can they be improved? How are they made or delivered? Can things be done better?
cheaper? faster? cleaner? Can a product which is used for specific purpose be also
used for some other purposes?

You slowly find answers to these questions as you decide to do the first step in
launching a business enterprise. Be cautious however, that you should develop a habit
of identifying opportunities around you. Only then, you will find the activity both exciting
and easy.
 EXPLORE your Understanding

Essential Question
How does one select an entrepreneurial activity?

Content Standard

- The learner demonstrates understanding of environment and market that

relates with the career choice.

Performance Standard

- The learner formulates a business idea based on the analysis of the

environment and market

Guide Questions:

1. How does one determine the product to be produced or services to be offered

and delivered to the target market or customers in a particular community?

2. How does one select an entrepreneurial activity?

3. How can one respond effectively to a business enterprise?

Hello there!Are you ready to assess yourself if you are ready to

generate potential business ideas? Let’s try by answering the succeeding pre-assessment.

Pre-assessment

1. The following are examples of peoples’ basic needs, except:

a. Recreation
b. Clothing
c. Shelter
d. Food

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 2. Which of the following should be considered first by a prospective
entrepreneur in choosing the right location for his/her store?

a. Types of merchandise
b. Access of the target customers
c. The attractiveness of the store layout
d. The prevailing prices of goods in the area

3. Thong plans to put a “digi-print” studio in their locality. Which of the following
will help him determine a successful plan for setting up of his business?

a. Survey of consumer associations

b. Checking for similar business to avoid competition
c. Getting feedback on the quality of service
d. Conduct a SWOT analysis

4. Ceasar studies the population in his immediate community. He is doing this to –

a. identify his would be “suki”.

b. predict his biggest buyer.
c. select his favorite costumers.
d. determine whom to sell his product or service.

5. When an entrepreneur improves and alter products to make it more appealing to

target consumers, he/she is doing an----------of the product.
a. alteration
b. invention
c. innovation
d. improvisation

Lesson 1 Needs and Wants of People

Everyone has his or her own needs and wants. However, people have different
concepts of needs and wants. Needs in business are important things that every
individual cannot do without in a society. These include:

1. Basic commodities for consumption

2. Clothing and other personal belongings,
3. Shelter, sanitation and health

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 4. Education and relaxation

Basic needs are essential to every individual so he/she may be able to live with
dignity and pride in the community of people. These needs can obviously help you
generate business ideas.

Wants are desires, luxury and extravagance that signify wealth and an expensive
way of living. Wants or desires are considered above all the basic necessities of life.
Some examples are the eagerness or the passion of every individual which are non-
basic needs like; fashion accessories, shoes, clothes, travelling around the world, eating
in an exclusive restaurant; watching movies, concerts, plays, having luxurious cars,
wearing expensive jewelry, perfume, living in impressive homes, and others.

Needs and wants of people are the basic indicators of the kind of business that
you may engage into because it can serve as the measure of your success. Some
other good points that you might consider in business undertakings are the kind of
people, their needs, wants, lifestyle, culture and tradition, and social orientation that
they belong.

Lesson 2 Generating Ideas for Business

Here are some ways by which you may generate possible ideas for business.

1. Examine the existing goods and services. Are you satisfied with the product?
What do other people who use the product say about it? How can it be
improved? There are many ways of improving a product from the way it is made
to the way it is packed and sold? You can also improve the materials used in
crafting the product. In addition, you introduce new ways of using the product,
making it more useful and adaptable to the customers’ many needs. When you
are improving the product or enhancing it, you are doing an innovation. You can
also do an invention by introducing an entirely new product to replace the old
one.

Business ideas may also be generated by examining what goods and services
are sold outside by the community. Very often, these products are sold in a form
that can still be enhanced or improved.

2. Examine the present and future needs. Look and listen to what the
customers, institution, and communities are missing in terms of goods and

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 services. Sometimes, these needs are already obvious and felt at the moment.
Other needs are not that obvious because they can only be felt in the future, in
the event of certain developments in the community. For example, a town will
have its electrification facility in the next six months. Only by that time will the
entrepreneur could think of electrically- powered or generated business such as
xerox copier, computer service, digital printing, etc.

3. Examine how the needs are being satisfied. Needs for the products and
services are referred to as market demand. To satisfy these needs is to supply
the products and services that meet the demands of the market. The term
market refers to whoever will use or buy the products or service, and these may
be people or institutions such as other businesses, establishments,
organizations, or government agencies.

There is a very good business opportunity when there is absolutely no supply

to a pressing market demand.

Businesses or industries in the locality also have needs for goods and
services. Their needs for raw materials, maintenance, and other services such
as selling and distribution are good sources of ideas for business.

4. Examine the available resources around you. Observe what materials or

skills are available in abundance in your area. A business can be started out of
available raw materials by selling them in raw form and by processing and
manufacturing them into finished products. For example, in a copra-producing
town, there will be many coconut husks and shells available as “waste” products.
These can be collected and made into coco rags/doormat and charcoal bricks
and sold profitably outside the community.

A group of people in your neighborhood may have some special skills that can be
harnessed for business. For example, women in the Mountain Province possess
loom weaving skills that have been passed on from one generation to the next
generation. Some communities there set up weaving businesses to produce
blankets, as well as decorative items and various souvenir items for sale to
tourists and lowland communities.

Business ideas can come from your own skills. The work and experience you
may have in agricultural arts, industrial arts, home economics, and ICT classes
will provide you with business opportunities to acquire the needed skills which
will earn for you extra income, should you decide to engage in income-generating

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 activities. With your skills, you may also tinker around with various things in your
spare time. Many products were invented this way.

5. Read magazines, news articles, and other publications on new products

and techniques or advances in technology. You can pick up new business
ideas from Newsweek, Reader’s Digest, Business Magazines, Go Negosyo, KAB
materials, Small- industry Journal. The Internet serves as a library where you
may browse and surf on possible businesses. It will also guide you on how to put
the right product in the right place, at the right price, at the right time.

Listing of possible businesses to set up in an area may also be available from

banks or local non-government organizations.

Lesson 3 Selecting the Right Idea

Once you have embarked on identifying the business opportunities, you

will eventually see that there are many possibilities that are available for you. It
is very unlikely that you will have enough resources to pursue all of them at once.
Which one will you choose?

You have to select the most promising one from among hundreds and one
ideas. It will be good to do this in stages. In the first stage, you screen your
ideas to narrow them down to about five choices. In the next stage, trim down
the five choices to two options. In the final stage, choose between the two and
decide which business idea worth pursuing.

In screening your ideas, examine each one in terms of the following

factors:
1. How much capital is needed to put up the business?
2. How big is the demand for the product? Do many people need this product
and will continue to need it for a long time?
3. How is the demand met? Who are processing the products to meet the need
(competition or demand)? How much of the need is now being met (supply)?
4. Do you have the background and experience needed to run this particular
business?
5. Will the business be legal, not going against any existing or foreseeable
government regulation?
6. Is the business in line with your interest and expertise?

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 Your answers to these questions will be helpful in screening which ones
from among your many ideas are worth examining further and worth pursuing.

Lesson 4 Environmental Scanning

There is a need to conduct environmental scanning to identity the needs

and wants of people, the niche for your business mission, and to give attention to
trends and issues. This may also serve as an evaluation of the type of the
entrepreneurial activity appropriate in the community.

Environmental scanning is defined as a process of gathering, analyzing,

and dispensing information for tactical or strategic purposes. The environmental
scanning process entails obtaining both factual and subjective information on the
business environments in which a company is operating.

Environment in the community can be viewed according to its

technological, political, economic, and social aspects. For example, in the past,
people in the community used personal computers but the transmission of
development in terms of technology was interrupted because people were not
satisfied with what they have today. They still look for the changes in their life
and the corresponding in their environment.
As a future entrepreneur, you must be well-versed in this kind of
advancement and progression of your environment particularly in technology so
as to secure the success of your future business. Always think of something new,
something novel, authentic, reinvent the existing ones, and create your new
version of goods/products, and services. For instance, your own hair straightening
is herbal, while in the other salons it is made of synthetic chemicals. This kind of
changes being made will effect the existing principles in business and industries
that can be easily adapted to the changes in producing the products/services to
meet the needs and wants of people in the community.

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 FIRM UP Your Understanding

Bear in mind these simple rules for successful SWOT analysis.

 Be realistic about the strengths and weaknesses of your business when

conducting SWOT analysis.
 SWOT analysis should distinguish between where your business is today,
and where it could be in the future.
 SWOT should always be specific. Avoid any grey areas.
 Always apply SWOT in relation to your competition i.e. better than
or worse than your competition.
 Keep your SWOT short and simple. Avoid complexity and over analysis
 SWOT is subjective.

DEEPEN Your Understanding

People keep on searching for new things, new trends, and new
issues. For these reasons, an entrepreneur hurriedly responds to these needs
and wants of people.
As generations come and go, another set of new trends will come or will
exist. In order to adapt to the rapid changes in the business environment, the
existing industries need to improve their products and services. But how can you
generate business ideas with those strong competitors? There are three main
sets of decisions that you need to make - what to produce, how to produce, and
how to share or sell out the product to the market.

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Activity 2 Screening business ideas

Directions: After filling out the chart above, try to list down all the probable
business opportunities which you may wish to venture in. Remember to consider
the ideas and suggestions discussed in Lesson 3. Use the suggested matrix
below to indicate your choice. Write your answers in your notebook.

Example: Selling wooden toys

Positive Factors Negative Factors

Strengths Opportunities Weaknesses Threats

TRANSFER Of Learning

Now that, you have all the information, are you ready to test
your ability to generate your own business idea? If your answer is yes, start
studying the sample vicinity map of a community with a population of two

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thousand people. A new housing project will be constructed
adjacent to Daang Hari St, close to Old Molino St., its main road.
This housing project targets the homeowners who are young
couples with two kids.

In this activity, you need to answer the questions that may

lead to the generation of a probable business. Your answers to
these questions will serve as the bases in formulating your own
business ideas.

1. Who do you think are your target consumers/markets?

2. Where is the most ideal location to situate your business?
3. Which products or services would appeal to your target
consumers/markets?
4. Can you say that you have seized the most feasible
business opportunity?

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