Entrepreneurship module 2, Study notes of Business

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Entrepreneurship – Grade 12 Alternative Delivery Mode Quarter 1 - Module 2 First Edition, 2020

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Borrowed materials included in this module are owned by the respective copyright holders. Effort has been exerted to locate and seek permission to use these materials from the respective copyright owners. The publisher and author do not represent nor claim ownership over them. Published by the Department of Education – Region X – Northern Mindanao Regional Director: Dr. Arturo B. Bayocot, CESO V

Printed in the Philippines by: Department of Education – Bureau of Learning Resources (DepEd-BLR) Office Address: Masterson Avenue, Upper Balulang, Zone 1, Cagayan de Oro City, Cagayan de Oro, Lalawigan ng Misamis Oriental

Development Team of the Module Authors: Joel Y. Yacas Janice B. Dominguez Naneth M. Valdehuesa Ronee D. Quicho Mary Cris A. Maquilan Marylinda T. Puzon Charity E. Parel Denver E. Neri Lorena Fe S. Anub Ethel Lalaine B. Morales Evaluators: Cherryl F. Descallar Eddy Lou T. Hamak Sherriemae V. Reazol Reviewers: Illustrator: PSSg Edzel M. Dominguez Layout Artist: Management Team: Chairperson: Dr. Arturo B. Bayucot, CESO III Regional Director Co-Chairpersons: Dr. Victor G. De Gracia Jr., CESO V Asst. Regional Director Mala Epra B. Magnaong CES, CLMD Members: Dr. Bienvenido U. Tagolimot, Jr. Rone Ray M. Portacion EPS-ADM EPS-LRMS

Development Team of the Module: Author: Joel Y. Yacas Janice B. Dominguez Naneth M. Valdehuesa Ronee D. Quicho Mary Cris A. Maquilan Marylinda T. Puzon Charity E. Parel Denver E. Neri Lorena Fe S. Anub Ethel Lalaine B. Morales Evaluators: Cherryl F. Descallar Eddy Lou T. Hamak Sherriemae V. Reazol Illustrator: PSSg Edzel M. Dominguez Management Team: Chairperson: Dr. Arturo B. Bayocot, CESO III Regional Director Co-Chairpersons: Dr. Victor G. De Gracia Jr., CESO V Asst. Regional Director Mala Epra B. Magnaong CES, CLMD Members: Dr. Bienvenido U. Tagolimot, Jr. Regional ADM Coordinator Elson C. Jamero EPS-Designate-TLE

Printed in the Philippines by: Department of Education – Regional Office 10 Office Address: Zone 1, Upper Balulang Cagayan de Oro City 9000 Telefax: (088) 880-7071, (088) 880- E-mail Address: [email protected]

Introdu What I Need to Know

Welcome to the second module of entrepreneurship. This module will allow you to learn independently the knowledge and skills in recognizing a potential market. It will guide you to identify the market problems to be solved or the market needs to be met; and let you propose solution/s in terms of product/s and service/s that will match the need using techniques on seeking, screening, and seizing opportunities. Also in this module we are going to identify the market problem and propose solutions with regards to products and services, to continue discover the ideal buiness you are going to offer to your community. Basically, in return to your hard time of selling your product you can generate profit.

In this module, you will know the following:  Associate the market problem to be solved or the market need to be met;  Look for solution/s in terms of product/s and service/s that will meet the need using techniques on seeking, screening, and seizing opportunities:  Break down the market needs;  Detect the possible product/s or service/s that will meet the need of your locality.  Screen the proposed solution/s based on viability, profitability, and customer need in developing a Business Plan.  Choose the best product or service that will meet the market needs. This is your guide on how to develop a Business Plan. By identifying and appealing to particular group of consumers you need to check on the possible product needed in your locality. Business industries offers products and services. The activity of making, buying, or selling goods or providing services in exchange of money is called business. Product is something that is made or grown to be sold or use, or something that is result of a process. Services are those intangible products where there is a skill involve and has a value.

After completing this module, you need to:  Learn and understand the sources of opportunities for business.  Determine the essentials in the entrepreneur’s opportunity seeking  Identify market problems and propose potential products or services that will meet the market needs.  Know the problem in which a business opportunity arises from.  Identify, screen and proposed solution to meet the problem  Select the best product or service that will meet the market’s need with a consideration of generating profit.

What I Know

Lets check first what you already know. True or False. On the space provided before the number write T if the statement is true and F if the statement is false. _____ 1. Entrepreneur enter a business because of its profitability. _____ 2. New business ideas provide business opportunities. _____ 3. Entrepreneurial process starts with identification of entrepreneurial opportunities. _____ 4. Not all changes in the external environment provides business opportunities. _____ 5. Discovery and advancement in the use of technology are additional good source of business opportunities. _____ 6. Interest and hobbies of the people are possible good source of entrepreneurial ideas. _____ 7. Industry environment of business is under technological discovery and advacement sources of opportunities. _____ 8. The variables in the physical environment include the economic forces. _____ 9. Entrepreneurial heart flame refers to the ability of the entrepreneur to sense without using the five senses. ____ 10. Entrepreneurial mind frame permits the entrepreneur to see things in a very positive and optimistic light.

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)

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.

Lesson

Recognize a Potential Market

Creation of entrepreneurial Ideas

Identification of entrepreneurial Opportunities

Opening of entrepreneurial Venture

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.

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

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 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. 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

What’s More

WORD HUNT

Think of words or terms related to the topic and find the words in the grid horizontally, vertically, or diagonally. Write the words or terms on the space provided below. V E N T U R E A B C D E F A B C D E F S A B N P O H W Q G S D L O S J E T U E Q B C T R P R O D U C T S R L R E H R B E C V R E P G O Y T R E P T G S T V A C N V H E N O V R F D A B C U D E I O G V T H K B E R C T K R F G E N H C J R K H R K I C I T H U L V D E O C E U A T U K E I D V D U K N S J Y I R Z O Q E U Y I P D G H G N O U A O F G T U X N X N D R G L K L I P W L R E P U R E P O J O G E L H Z H T S P K L I O N H L I O M E L N H A X Q I M I L G C V R I V A L R Y H E A D S J E T U R E A B B S T I T U H A U S S U B S T I T U T E S J E T U R F J R V T U R E A B Q R S J E T U T U R E A B

1. ____________________ 6. ____________________
2. ____________________ 7. ____________________
3. ____________________ 8. ____________________
4. ____________________ 9. ____________________
5. ____________________ 10. ____________________

What I Have Learned

Definition of Terms Opportunity seeking - Process of considering, evaluating, and pursuing market based activities that are accepted to be beneficial for the business. Entrepreneurial process - can be defined as the steps taken in order to begin a new enterprise. It is a step-by-step method, one has to follow to set up a business. Entrepreneurial ideas - an innovative concept that can be used for financial gain that is usually centered on a product or service that can be offered for money. Essentials of entrepreneur’s opportunity seeking - These are the basic foundation that the entrepreneur must have in seeking opportunities, such as entrepreneurial mind frame, heart flame and gut game. Sources of opportunity - can be attain by assessing and looking at changes in the environment; technological discovery and advancement; government’s thrust, programs, and policies; people’s interest, and past experiences. External environment - refers to the physical environment, societal environment, and industry where the business operates. Government - refers to the local government (municipality, city, or provincial) or the national government and its branches. Competition – it is the act or process of trying to get or win something. Substitute – anything that takes the place or function of another. New entrants – the one who enters something. Suppliers – are the one that provide something that is needed or wanted. Buyers – are the one that pays cash in exchange to your goods and services. Rivalry – is a state or situation in which people or groups are competing with each other.

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 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.
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

Answer Key

What I Know What’s More

1. T 11. T 1. Substitute
2. T 12. T 2. Service
3. F 13. T 3. Opportunities
4. F 14. F 4. Employee
5. T 15. F 5. Economy
6. T 6. Products
7. F 7. Ventures
8. F 8. Rivalry
9. F 9. Gut
10. T 10. Entrepreneur

What’s New Assessment

1. Suppliers 1. A 11. C
2. Business 2. A 12. D
3. Market 3. B 13. B
4. Creditors 4. C 14. B
5. Customer 5. A 15. B
6. Substitute 6. C
7. Service 7. D
8. Competition 8. A
9. Climate 9. D
10. Entrants 10. D

References

BOOKS

Ronaldo S. Batisan, DIWA Senior High School Series: Entrepreneurship Module. Diwa Learning Systems Inc.

Angeles A. De Guzman. Entrepreneurship (For Senior High School, Applied subject, ABM Strand. Lorimar Publishing, Inc 2018, 25 – 26.

Edralin, Divina M. Entrepreneurship. Quezon City: Vibal Group, Inc. 2016, 80 – 83.

Leedy, P. and Ormrod, J. Practical Research: Planning and Design 7 th^ Edition. (Merrill Prentice Hall and SAGE Publications, 2001),

Nick L. Aduana, Entrepreneurship in Philippine Setting (for Senior High School), 2017

Dr. Eduardo A. Morato Jr., Entrepreneurship, 2016

Angeles A. De Guzman, Entrepreneurship for Senior High School Applied Subject ABM Strand,Lorimar Publishing,p.1-

Ronaldo S. Batisan, Entrepreneurship: Diwa Senior High School Series, Diwa Learning Systems Inc., p. 16-

Eduardo A. Morato Jr., Entrepreneurship, 1 st^ ed., Manila, Philippines: REX Books Store,p.

Nick L. Aduana, Etrepreneurship in Philippine Setting for Senior High School, 2017, C&E publishing, Inc.p.46-

Angeles A. De Guzman, Entrepreneurship for Senior High School Applied Subject ABM Strand,Lorimar Publishing,p.25-

Raymund B. Habaradas and Tereso S. Tullao,Jr., Pathways to Entrepreneurship,2016,Phoenics publishing house,p.17-

Nick L. Aduana, Etrepreneurship in Philippine Setting for Senior High School, 2017, C&E publishing, Inc.p.46- Raymund B. Habaradas and Tereso S. Tullao,Jr., Pathways to Entrepreneurship,2016,Phoenics publishing house,p.17-

Aduana, Nick L. Entrepreneurship in the Philippine Setting for Senior High School. Quezon City.C & E Publishsing, Inc. 2016.

Morato, Eduardo A. Entrepreneurship. Manila. Rex Bookstore, Inc. 2016.

Batisan, Ronaldo S. Entrepreneurship Module, Diwa Senior Highschool Series, Diwa Learning System Inc. Legaspi Village, Makati City Philippines, copyright 2016.