Chapter 2
Chapter 2
Chapter 2
OPPORTUNITY SEEKING
Opportunity
Is an entrepreneur’s business idea that can potentially become a commercial product or
service in the future.
Opportunity Seeking
An endless curiosity to discover new or different ideas and see whether these ideas will
work in the marketplace. Is the first step and is the most difficult process of all due to the
number of options that the entrepreneur will have to choose from.
Sources of Opportunities
1. Macro Environmental Sources of Opportunities - it involves the larger society forces that
influence the (SPEET) socio-cultural, political, economic, ecological, and technological.
2. Industrial Sources of Opportunities
a) Government – refers to the system or institution that handles the affairs of a particular
country.
Five Types/Classifications of Government:
Democracy
Autocracy
Republic
Monarchy
Dictatorship
b) Suppliers – refer to individual person or company that provide the required materials,
parts or services to the business.
Criteria of Selecting the Supplier:
Quality of the goods or services
Ability to respond to urgent needs
Proximity of the location
c) Customers – are the buyers of goods or services produced or rendered by the business.
d) Competitors – are the forces existing in the industry environment that produce, sell, or
render products or services which are similar to those of the business.
Direct Competitors – produce and sell similar products or services.
e) Employees – are the workers of the business who are highly responsible for the
production of goods or delivery or services to the customers.
f) Creditors – refer to banks, financial institutions, and financial intermediaries engaged in
the lending of money the borrower usually for a fee or charge in the form of interest.
OPPORTUNITY SCREENING
Personal Screening
The 12 Rs of Opportunity Screening
The Pre-Feasibility Study
Market Potential and Prospects
Technology Assessment and Operations viability
Investment Requirements and Product/Servicing Cost
Financial Forecast and Determination of Financial Feasibility
The Personal Screen
In screening opportunities, the entrepreneur first must consider his or her preferences and
capabilities by asking three basic questions:
4. Price Expectations. The selling price of the product or service would be evaluated by the
customers according to the value they would receive (in terms of quality delivery and quantity)
and this value added should be matched against competitors.
4. The entrepreneur needs to determine how much money is needed to start a business
opportunity with consideration to the technologies and operating levels required
1. Pre-Operating Costs
a. These are the costs related to the preparation for the launch of the business. These
includes the feasibility study, market research, product development, organizational
development, etc.
2. Production/Service Facilities Investment
b. This refers to long-term investment for the actual establishment including
investment in land. building machinery, equipment, etc.
3. Working Capital Investment
c. This includes the investment needed to operationalize the business, compose of
cash, accounts receivable, and inventories.
5. Financial Forecast and Determination of Financial Feasibility
The financial forecasts refer to the monetary transactions that the business is expected to
engage in
1. Income statement
o An income statement is a financial statement that shows you the company's income
and expenditures.
o The income statement is also known as a profit and loss statement, statement of
operation, statement of financial result or income, or earnings statement.
Formula:
Revenues - Expenses = Income or Profit
2. Balance sheet
o Financing the assets or investments are the liabilities and equity.
o Liabilities-represent the enterprise's debts to supplier, to the government, to
employees, other financiers
o Stockholders' equity represents investors' investments in the stock or shares of the
business
Formula:
Assets = Liabilities + Equity
3. Cash flow statement
o A cash flow statement is a financial statement that provides aggregate data
regarding all cash inflows a company receives from its ongoing operations and
external investment sources. It also includes all cash outflows that pay for business
activities and investments during a given period
4. Fund's flow statement
o The fund flow statement means a change in working capital. It is also known as the
statement of sources and uses of funds.
o Fund flow statement is a statement of cash inflows and cash outflows.
OPPORTUNITY SEIZING
The entrepreneur has an idea as to where he or she will locate the business and how he or she
will market the product or service.
The question for the entrepreneur in opportunity seizing is "Will I be able to manage to my
advantage, the critical success factors and avoid the critical failure factors"
In order to craft a positioning statement, the entrepreneur is advised to look at the other
competitors or substitutes in the marketplace.
Details such as their major buyers’ attributes or features that make the competitors'
products attractive should give the Entrepreneur an idea.
The following key points can help the entrepreneur on how to go about this questioning
1. What are the main customer segments
2. What are the different product attributes and features of each of the competitors
3. What are the existing marketing practices of the various competitors
4. What are the market preferences of customers when it comes to the products being
offered
A good planner and programmer must make several important choices to achieve the desired end
results
First is to choose the correct technology the one that would produce the output that would
meet the quality specifications of the customers.
Second is the choose the right people who can perform the technical and the managerial
functions necessary to realize the desired end results.
Third is to design the operating workflow that would assure the effective economical, and
efficient production of the output.
Fourth is to specify the systems listen procedures that would govern the enterprise motivate
and discipline the work force and satisfy the customers.