Grade

12
Self-Learning
ENTREPRENEURSHIP
Module in
Tools to be used to determine product/service viability,
Lesson: profitability and customer requirement.
Day and
Quarter: III Week: 5 See Class program
Time:

Learning competency/ies:
 screen the proposed solution/s based on viability, profitability, and customer
requirement;
 select the best product or service that will meet the market need

Learning Tasks:
Study Notebook Activity Sheet
 Pre-Test, pp. 1 – 2  Worksheet pp. 9-10
 Post-Test, p. 7

I.INTRODUCTION
One of the traits of an entrepreneur is being innovative opportunity seekers for they
always discover and love new things or ideas and see if these will work in the marketplace.
This is what makes them different from other businessman whose aimed is just simply to earn
profits from producing, buying and selling. But an entrepreneur they see to it that the product
or service they offer in the market will really proposed solutions based on viability,
profitability and customer requirement by means of doing such research, survey and analysis.
And once have just successfully hurdled such analysis and after being able to assess what
enterprise and product/service they intend to put up, they find out what business opportunities
their environment currently offers, and which among these will be wise to pursue and select
the best product/service that will meet the customer’s need. So in this module we will be
discussing how to determine market viability, profitability and customer requirement for a
product or service. This is a little bit more technical for it entails a considerable degree of
experience and expertise to really appreciate how the tools discussed in this study apply to
the business enterprise.

II. Pre-test
ACTIVITY 1 - Instruction: Read the statements carefully then write True if the statement
is correct & write False if you think the answer is not correct.

______1. The reciprocal of the factors involved in computing the ROI is the profit margin.
______2. In analyzing the intensity of rivalry among existing competitors, one should assess
how high or low are switching costs.

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______3. Threats are considered the external negatives to business organizations
______4. Strengths are considered the external positives to an enterprise/business organization.
______5. Opportunities are possible occasions to improve the enterprise/business
organization resources, quality or productivity.
______6. In analyzing the bargaining power of a supplier one should ask the question, “Are
there no substitutes for these suppliers?”
______7. In identifying opportunities in the environment one should determine and evaluate
the rivalry.
______8. Supplier Information is important in conducting an Industry analysis.
______9. Special Products are products which can be used to replace an existing product with
the same purpose or use.
______10. The more players in the industry are, the greater the competition.

III.DISCUSSION OF CONCEPTS

Product due diligence is the approach used to evaluate the viability, profitability and
customer requirement of a given product or service.
There are four (4) common tactics include:
1. SWOT Analysis
2. Identifying Opportunities in the Environment Using Trend Analysis
3. Competitor Analysis.
4. Industry Analysis

SWOT Analysis
A SWOT analysis is used to assess your internal competencies as well as external
factors that could impact your success. SWOT is an acronym for strengths, weaknesses,
opportunities and threats. This framework is sometimes referred to as TOWS, which starts by
identifying threats and opportunities before weaknesses and strengths. Strengths are the
“internal positives of the organization, the assets or valuable resources of the organization or
the enterprise. Examples, state-of-the-art facilities, competitive advantage, and strategic
location of business. Weaknesses are the exact opposites of strengths, these are factors that
are causing negative impacts on company’s performance. Examples, high number of
untrained workers, inefficient distribution channels, and a high amount of liabilities.
Opportunities, on the other hand, are the external positives of the enterprise. In contrast to
strengths and weaknesses, opportunities are outside the control of the enterprise. These are
possible occasions to improve the organization’s resources, quality or productivity. In here,
you have to consider the political, economic, social and technological environments.
Examples, a new regulation increasing import quotas lower personal income taxes etc.
Threats are the external negatives that may inhibit or prevent the organization from reaching
its goals. Analyzing opportunities and threats helps you prepare for market entry with a clear
vision of how to make money, and how to protect against potential pitfalls. Example, influx
of cheap and imported goods to the Philippines is a threat to local industries offering same
products. The figure below illustrates the relationships of the elements in the SWOT Matrix.

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 POSITIVE NEGATIVE

Internal S
Strength
W
Weaknesse
s s

O T
External

Opportunities
Threats

Proper identification of factors into SWOT elements is very important in order to come up with
effective strategies to make sure that the product/service you offer to the market is viable, profitable
and it is the needs of the customers that will really satisfy them.

A. Business Opportunity Identification Using Trend analysis

Let us go the external environment. After being able to assess your enterprise, then try to find
out what business opportunities your environment currently offers, and which among these will be
wise to pursue by using trend analysis. Trend analysis is a technique used in technical analysis that
attempts to predict the future stock price movements based on recently observed trend data. Trend
analysis is based on the idea that what has happened in the past gives traders an idea of what will
happen in the future. (www.investopedia.com)

B. Competitor Analysis
Competitor analysis involves a comparison of your product or service features, strengths and
weaknesses relative to those offered by competitors. After identifying some possible opportunities
you can now further scrutinized these opportunities by answering the guide questions below to help
you decide what business or product/service to set up or how you can improve a current one to meet
customer’s needs.
1. Who are the competitors?
2. Among these competitors, who are my direct competitors?
3. Among these competitors, who are my indirect competitors?
4. At what prices do my competitors sell their product?
5. How do they distribute their products to make these accessible to their customers?
6. What is their relative size and market share?
7. Is there still a portion of the market I can make as target market? Is there a “neglected” part
of the market my competitors don’t offer products to that I can make my target market?
8. What can make my intended products different from those of my competitors?

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 A . Industry Analysis
C. Industry Analysis
An industry analysis is a review of the current scope of an industry and the types of goods being
offered. After An industryyour
identifying analysis is a review
competitors of see
you can the now
current
the scope
bigger of an industry
picture. andthat
Take note the types of
goods being offered. After identifying your competitors you can see now the bigger picture.
before an entrepreneur enters into the industry, they conduct first an industry analysis to let them
Take note that before an entrepreneur enters into the industry, they conduct first an industry
assess their capability to set up, operate and sustain the business enterprise. In conducting industry
analysis to let them assess their capability to set up, operate and sustain the business
analysis below areInthe
enterprise. guidelines industry
conducting adapted from the Five
analysis belowForces Model
are the of Michael
guidelines Porter
adapted of the Five
from
HarvardForces ModelPorter
University. of Michael
is knownPorter
for hisofextensive
Harvard research
University. Porter is known
on competition for his extensive
and competitive
research
strategy, and hison competition
studies are widelyand competitive
used strategy,
by professionals, and hisand
regulators, studies are widely
businesses. These used by
professionals, regulators, and businesses. These elements are shown below.
elements are shown below.

Barriers to
Entry

Bargaining Bargaining
Power of Power of
Suppliers Porter’ Buyers
s Five
Forces

Threat of Rivalry of
Substitutes Competition

1.

1. Barriers to Entry. The threat of entry by new competitors. Barriers to entry determinants
Barriers to Entry. The threat of entry by new competitors. Barriers to entry d
include economies of scale, product differentiation, capital requirement, access to distribution

channels, government policies, resource exclusivity, and industry growth rate. These are

thefactors that tend to raise barriers to the entry of competitors.

• Are there government policies existing that may enhance or hamper my entry into
this industry?

• What cost disadvantages will I encounter in the operation of my business?

• What costs will I encounter due to distribution?

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 • What costs will I encounter in encouraging my customers to switch their current brand to
mine? What costs will there be if my customers switch from my brand to other newer
brands?

• How much capital do I need to make my product different from the other brands?

• How much products do I need to produce to reach economies of scale? Do I have the
advantage in increasing this scale?

(Note: The easier competitors can enter the industry, the more competitors you will
have. The harder to penetrate the industry, the less competitors.)

2. Bargaining Power of Suppliers. Determinants of supplier power include supplier

concentration, availability of substitute inputs, supplier’s product differentiation, buyer’s
switching cost to other inputs, supplier’s threat of forward integration, and buyer’s threat of
backward integration. This item assesses how much influence do suppliers have.

• Is the industry dominated by a few or many suppliers?

• How concentrated or dispersed are these suppliers compare to the buyers?

• Are there or are there no substitutes for these supplies?

• How many important customers do suppliers have?

• Is the supplier’s input or contribution critical to the industry?

• How high or how low are switching costs of enterprise if they switch from one
supplier to another?

(Note: If the answers to these questions tend to favour suppliers, suppliers have the upper hand.
If answers tend not to be in their favour, suppliers tend to have less influence.)

3. Bargaining Power of Buyers. The bargaining power of buyers impacts industry structure.
It points to the influence of consumers on product/service prices in the industry.
Common determinants are number of buyers relative to sellers, product differentiation,
switching costs to use other products, buyer’s threat of backward integration, and buyers
volume. This item measures how much influence do buyers possess.

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 • How concentrated or dispersed is the bargaining power of buyers?

• Do buyers buy in volume or in smaller quantities?

• Do buyers prefer standardized or differentiated products?

• Do buyers experience high or low switching costs?

• Does the industry experience low profit margins from these buyers?

• How important is the product to the buyers?

• How much relevant information do the buyers have regarding the product?

(Note: The more favourable the answers are to the buyers, the greater is their
bargaining power. The less favourable, the less the bargaining power.)

4. Threat of Substitutes. Substitutes refer to goods or services that satisfy the same
consumer need as another good or service. The main determinants of the threat of substitutes
include price of substitute products, relative quality of substitutes, and switching costs to
buyers. Pressure from substitutes products. This item measures the threat presented by
substitute products.

• How many close (direct) substitutes does the industry have for the product I am
considering?

• How many not-so-close (indirect) substitutes does the industry have for the product I am
considering?

• How differentiated are these substitutes?

• What advantages or disadvantages will my product have over these substitute products?

• How different will my product be from these substitutes?

(Note: If there are more close substitutes that tend to be more superior, the harder it is to
compete. The fewer substitutes there are and more varied features from one another, the
easier it will be.)

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5. Rivalry of Competition. The intensity of rivalry among existing competitors. Determinants of
industry rivalry include the number of competitors and concentration, relative size of competitors,
industry growth rate, fixed costs versus variable cost, product differentiation, diversity of competitors,
and exit barrier. These factors tend to increase or decrease the rivalry among the existing competitors.

• How many rivals are there in the industry – few or numerous?

• Is the rivalry equally balanced or does it tend to favour some over the others?

• What is the growth scenario in this industry? Do competitors grow slowly or

at a rapid pace? What do I expect with the growth of my business enterprise?

• How high or how low are the fixed costs of rival firms? Could I be at par with them?

• How differentiated are products in this industry? Could my product be any different?

• How high or how low are switching costs? Could I afford these costs?

• What is the standing of these enterprise in terms of incremental production

capacity?

• How many competitors will my enterprise really have? How diverse is this
competition?

• How high or how low are the stakes or risks in this industry?0Could I afford
to take these risks?

• How easy or difficult is it to leave or exit this industry?

(Note: The greater the rivalry among firms, the less profitable it will be for a business
enterprise. The less the rivalry, the better for your business.)

IV. Post Test

I. Directions: Categorize the following as strength, weakness, opportunity, or threat.
Support your answer by giving a brief explanation.

Example Category Explanation

1. Strategic location
of business
2. Influx of cheap and

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 imported goods to the
Philippines
3. Imposition of import
quotas
4. Inefficient
distribution channels

5. Competitive advantage

II. Directions: Identify at least three (3) trends in the environment/problems

encountered with the products you use as possible sources of business
opportunities. List them below and refer to them as you complete the table.
Some Current Trends Possible Business Opportunities
1. 1.
2. 2.
3. 3.

KEY ANSWER
II. PRE TEST. True or False

1. True 2. True 3. True 4. True 5. True 6. False 7. True 8. False 9. False 10. True

IV. POST TEST

Activity 1: Categorize and Explain

Example Category Explanation

1. Strategic location of Strength This is an enterprise strength because
business if you have strategic location you can
attract and retain best employees
which can boosts company’s
performance. Also you can attract
more customers to your outlet. So a
well located store make supply and
distribution easier.

2. Influx of cheap and This is a threat because imported

Threat
goods increases competition and cuts
imported goods to the
local producers profits.
Philippines
3. Imposition of import Opportunity This is an opportunity especially if
quotas your enterprise rely on imports of raw
materials

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 4. Inefficient distribution Weakness I consider this as weakness
channels
because you could not reach all your

target market.
5. Competitive advantage Strength This is strength because you can make
this to give a higher price for your
product/service which gives you more
profit or income.

Activity 2: Complete the Table for Business Opportunity Identification Using Trend Analysis

Note: answers vary. These are only one of the possible answers.

Some Current Trends Possible Business Opportunities

1. Phone system devices including Plant Shop
smartphones
2. Bakeware Online Business
3. Personal Protective Materials such as Thrift Shop (Ukay Ukay)
face masks, face shield and etc.

ROSALES NATIONAL HIGH SCHOOL

SENIOR DEPARTMENT
Don Antonio Village, Rosales, Pangasinan
INSTRUCTION: Detach and submit this Worksheet together with the activity sheets.

WORKSHEET

Name:
Subject: ENTREPRENEURSHIP
Grade/Section:
Subj. Teacher: Week: 5

I. FORMATIVE ASSESSMENT

Test/Activity Score
A. Pre-Test pp.1-2
B. Post Test p.7

II. SUMMATIVE ASSESSMENT

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Directions: Read each question carefully then choose the correct letter that best describe the
concepts/statements. Write the letter on the space provided before each item.

___1. These are internal positives, assets or valuable resources of the enterprise.
A. Strengths B. Opportunities C. Business opportunity D. Competitive Advantage
___2. It refers to the assessment of enterprise internal and external environment specifically its
strengths, weaknesses, opportunities and threats.
A. Trend Analysis B. SWOT Analysis C. Industry Analysis D. Competitor Analysis
___3. It is the approximate time needed to recover the initial investment.
A. Payback Period B. Holding Period C. Recovery Period D. Return Period
___4. These are considered as internal negatives.
A. Business Limits B. Weak Points C. Weaknesses D. Threats
___5. It is computed by dividing the potential profit per year by the total amount of the
investment.
A. Return on Investment B. Residual Income C. Asset Turnover D. Profit Margin
___6. These are the external negatives that prevent the enterprise from reaching its goals.
A. Risks B. Threats C. Weaknesses D. Opportunities
___ 7. The following questions are helpful in identifying possible opportunities EXCEPT.
A. Who are my competitors?
B. How easy or difficult is it to leave or exit this industry?
C. Is there still a portion of the market I can make as target market?
D. How do they distribute their products to make these accessible to their customers?
___8. Determinants that tend to raise barriers to the entry of competitors include the following
EXCEPT.
A. Economies scale C. Government policies
B. Capital requirement D. Number of competitors
___9. In conducting an industry analysis, guide questions are adapted from the Five Foces
Model contributed by.
A. Peter Porter B. Michael Porter C. Peter Drucker D. Michael Drucker
___10. A technique used in technical analysis that attempts to predict the future stock price
movements based on recently observed trend data.
A. Trend Analysis B. SWOT Analysis C. Competitor Analysis D. Industry Analysis
Activity III - REFLECTIVE ASSESSMENT
Direction: On a separate sheet of paper, answer the following questions:
1. What concepts or skills did you learn well?
2. What concepts or skills was difficult to understand?
3. What activities did you enjoy the most?
4. What activity was hard to execute?
5. Did you ask help from your teacher? (Yes or No). If Yes, did you immediately
receive the needed assistance? Was the given assistance helpful for you to understand
better the lessons?

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