THE
TEACHERS’ GUIDE
SUBJECT :
ENTERPRENEURSHIP
EDUCATION
TOPIC
: EXPLORING
THE ENVIRONMENT FOR BUSINESS OPPORTUNITIES
SUBTOPICS
:
- Business opportunities
- Market
- Factors for assessing market potential
- Conducting market assessment
CLASS :
Senior Two
CLASS
SIZE : 65 learners
TIME
REQUIRED : Minimum:
560 – 640
minutes (i.e. 14 – 16 periods)
Brief
description of the Unit
In
Unit 1, we discussed the meaning of success in business. We learnt
what it takes for one to have a successful business. In this Unit, we
shall find out how an entrepreneur can select what business to do
from the many possible alternatives. We shall particularly discuss
the bases from which an entrepreneur can identify different business
opportunities, the meaning of market, market potential, market
assessment, the factors for assessing market potential and the
process of conducting a market assessment.
Content and Concepts
In
dealing with this unit, you should have knowledge on the following:
- Meaning of a business opportunity.
- Meaning of a market.
- Factors for assessing market potential.
- Conducting a market assessment.
Objectives
By
the end of this topic, learners should be able to:
- Define a business opportunity.
- Discuss the meaning of a market.
- Identify the factors for assessing market potential of a business.
- Conduct a market assessment
Materials
required
- Markers
- Flip charts
Job
related life skills
By
the end of this topic, learners are expected acquire the following
Job Mark related Skills:
- Personal attributes – self confidence, time management, creativity/imaginative, recording skills, enthusiasm, imagination and self awareness.
- Communication – observation and listening skills, reporting in writing.
- Team work – task oriented leadership skills, group work.
- Problem solving - information seeking, environmental protection and conservation, seeking for information (research).
5. Application
of number - numeracy
(as they compare crop yields in treated and untreated plots)
Business Opportunities
This
is an identified situation or chance that can be turned into real
profitable business. An opportunity is the evidence that the
entrepreneur’s idea can be turned into reality. Business
opportunities start as ideas, which are generated by entrepreneurs.
Entrepreneurs always look at situations with the question “where is
the opportunity in this?” After this, the entrepreneur starts
thinking, dreaming and generating ideas about possible businesses
that can be made out of the given situation.
Entrepreneurs
always generate many business ideas on given situations which they
thoroughly check and rank to pick the best that can be turned into a
business opportunity. They use the following criteria in selecting
good business opportunities;
- There should be a demonstrated need for the product or service by (a) buyer(s) willing to pay a price higher than the cost of producing the product.
- The number of the willing buyers should be large enough to ensure that the quantities of the product to be bought will lead to a profitable business.
- The business to be started should be able to access factor inputs required for its operations. These include capital, labour/human resources, raw materials, energy, transport and communication facilities, etc.
- There should be technology and skilled manpower to start and operate the business. The technology should not only be available but also affordable by the entrepreneur and once installed, it should operate without numerous breakdowns and if they occur, it should be easy to repair them at affordable prices.
- The business to be started should be legal and compatible with the social norms of the community where it is located. For example, if the community is predominantly Muslim, a business opportunity of selling pork would not be worthwhile.
- The business should be acceptable in the community. For example, though a disco and video business may be a profitable business within a school’s neighbourhood, it may not be acceptable by the community.
Activity
One
A
school canteen as a business opportunity
Procedure
In
groups of 5 to 8, ask learners to
- Find out what fellow learners and staff might need from the canteen and show how they can intervene to take care of those needs.
- Carry out a market survey to establish a market philosophy and consumer profile and, most importantly, consumer demand.
- Establish whether there is a viable or potential market and formulate a strategy on how to maximise opportunity and monitor competition.
- Draw a plan showing how the business will be developed and how the unexpected events will be counteracted.
- Determine the product mix that will satisfy the consumer demand after analysing the market.
- Show how financial records will be kept or maintained.
- Assess the opportunity cost of the venture.
Note:
- Let each group have a team leader and a secretary.
- Give time to each group to present their findings to the class.
- Interpose where necessary to rectify possible mistakes and/ or make more elaborate explanation.
Activity
Two
Identifying
business opportunity
Discuss
with the learners the nature of business opportunity in Uganda and
its relevance to the country’s economy. Develop a list of
opportunities that can develop into a business venture over a short
period of time.
Sources
of business ideas
Business
ideas are a starting point in the journey to starting a business.
Entrepreneurs can develop or generate business ideas from the
following:
- The technical skills and experience they possess. These give them opportunity to think creatively about given situations. They also plan to do things better or produce better products.
- Personal contacts which expose them to different situations.
- Observation of developments and changes taking place around them, upcoming challenges and the trends of demand for salient needs.
- The press - newspapers and magazines, radio, television, internet etc., where most developments, policies and priorities are communicated and publicised.
- Surveys conducted to find out what is happening, the latest thinking and preferences of customers, entrepreneurs’ plans, etc.
- Discussions and/or interviews with other entrepreneurs on business issues, to seek their views and suggestions or get their comments on certain situations.
- Going into the market to observe the products that are being sold, the lacking products, products to be improved on and the existing gaps.
- Trends of changes taking place e.g. population growth, people’s income, upcoming major players in different areas, topical/key issues in the community or the country etc.
Activity Three
Present the following
scenario to the learners and ask them to provide answers to the
questions that follow;
-
Students are coming back to school from their holidays. They are expected to arrive between 11.00 a.m. and 6.00 pm and the school is about 800 metres from the stage where taxis drop them. Tired as they are, they wonder how to carry their luggage to the dormitories. They have suitcases, mattresses, bags, etc. Most of them have travelled long distances and are already hungry or very thirsty yet the school starts serving meals at 7.30 p.m.
- Suggest business opportunities that can be generated out of the above school’s situation.
- Rank your business ideas.
- Describe what you would need to get your business idea running.
- What are the likely challenges you may face in your business?
Creativity
Creativity
is the power or ability, which enables entrepreneurs to come up with
exciting business ideas even in situations that may look hopeless,
for example, setting up a lucrative business in a refugee camp or
turning people’s problems into business opportunities. In any
situation, entrepreneurs are able to dream up business ideas, which
they can develop into opportunities and eventually turn them into
profitable businesses.
Areas
that provide a base for business opportunities
An
entrepreneur can generate business ideas for different types of
businesses, for example, agribusinesses, manufacturing, trading or
service businesses which s/he can develop into profitable businesses.
He/she can do this by:
- Observing the available raw materials and finding what products can be made out of them and then be sold at prices higher than the cost of production thus make profit.
- Finding out if human resources are available and skilled enough to undertake desirable businesses.
- Finding out the peoples’ needs and examining how best they could be met through provision of required goods and services at profitable prices.
- Checking on those things other people/institutions consider useless and finding out what business could come out of them. Such may include farm wastes (which can be used to make biogas), composite manure, mulch, etc
- Examining existing businesses to find out those which do not satisfy peoples’ needs, then figure out how to satisfy those needs. This could be done through increasing the quantity, improving the quality of the products, better customer service, packaging, branding, etc.
- Researching about businesses which people wish to have but are not available and generate ideas on how to start them.
Market
In
the previous section, we have seen that an entrepreneur begins the
journey into business formation by generating as many ideas as
possible from different situations. S/he subjects them to a ranking
process and selects the best idea which becomes his/her business
opportunity. We also saw that the best business opportunity is the
one where there are many buyers willing to buy the products or
services in sufficient quantities at prices that are higher than the
costs of production.
The
existence of buyers, the quantities of the business products they are
willing to buy and the prices at which they are willing to buy them
are therefore crucial in the whole process of business selection. Put
together, these constitute what is called market.
a)
Meaning of a market
In
entrepreneurship, a market for any business means all buyers (people,
institutions, businesses, etc) within a specific geographical area,
who need the business products and are willing and able to buy them.
For example a market for products of a trading business consists of
people or institutions that exhibit the following characteristics:
i)
They need or want the products being sold by the trading business.
ii)
They are able to buy the products.
iii)
They are willing to buy the products.
From
this therefore, it can be said that a market for any business is
composed of people, institutions or businesses that need, are able
and are willing to buy its products.
(b)
Meaning of potential market
A
potential market for a business is made up of people, businesses or
institutions that need its products and are able but are not yet
willing to buy. The potential market of a business is very important
because it is from here that it can get new customers to expand its
market and operations.
(c)
Meaning of market assessment
Market
assessment is the process of determining the market for the products
of a business. Through market assessment, the entrepreneur is able to
find out the ‘real’ and potential market of the product. After
starting their businesses, entrepreneurs also need to carry out
regular market assessment to ensure that they know the size of the
market for their products and what they need to do to sustain or
expand it.
1.3
Factors for assessing market potential of a business
As
seen in section 1.2 (b) above, the market potential for a business is
the number of people or institutions which need its products and are
able but are not yet willing to buy them. It is therefore important
that an entrepreneur knows the size of his/her potential market
before and after starting his/her business because it is from it that
the business will get new customers to sustain or expand its market.
The
following factors are used in assessing market potential for a
business:
i)
Demand
This
is the amount of the business products that the people are willing to
buy at any given price. The higher the demand, the higher the
potential market and therefore the better the prospects for the
business.
ii)
Competition´
Businesses
selling similar products or services to the same customers share
them. Customers will have more options to choose to buy from.
Businesses will therefore be at pains to try to keep their customers
as well as attract those of others. This is known as competition in
business. A business which faces high competition has a low market
potential market because the would-be customers have already been
taken by other businesses.
iii)
Prices
Although
there may be many people and institutions who need or wish to buy the
business products, their ability to buy them is affected by the
prices at which they are being offered. For example, the potential
market for new designer clothes in a rural area shall be very low
because the people cannot afford them yet the potential market for
cheap second hand clothes shall be very high because people are able
to buy them.
iv)
Substitutes
Substitutes
are alternative products that buyers can go for to satisfy the same
need. For example a bottle of soda and a glass of juice. A business
which produces products with no close substitutes has a higher
potential market than the one which has many substitutes. This is
because customers will choose only its products to meet the same
need.
v)
Income levels
A
potential market depends on the ability or capacity of the target
people and institutions to purchase the business products at
profitable prices. The higher the income level, the higher the
potential market.
vi)
The location of the business
A
business which is strategically located in relation to its target
customers will have a higher potential market than the one that is
not.
vii)
The number of people, businesses and institutions operating from the
target area
A
potential market of any business will depend on the number of people,
businesses and institutions operating from the business’ target
area. The higher the number, the higher the business’ potential
market.
viii)
Government policies
Government
policies may affect operations of businesses. For example, the
opening and closing hours for business, the licensed customers that
the business can serve, taxation policies, etc
Activity
Four
Students
assess a market potential for a business opportunity of their choice
|
The
following exercise is a procedural process through which an
entrepreneur can assess the potential market for a business. Carry
out one.
|
|
Name
of the business _______________________________________________
Nature
of business__________________________________________________
|
|
Location
and why you chose this particular business?_____________________
Is
it nearer to the customers?
________________________________________
|
|
Who
are the customers? _____________________________________________
Are
they new or those that have always bought the
products?____________
How
often do they come back? _______________________________________
|
|
Are
there similar businesses in the same locality?
______________________
How
does their presence affect your clientele?
_________________________
What
other competitive commodities are being sold in the area?
|
|
Are
there many people in the area?
___________________________________
Do
they have families? ______________________________________________
Do
they have many young children? ___________________________________
Is
the population growing or decreasing?
______________________________
Is
it a rich or poor population/neighbourhood?
________________________
Who
comes to buy; the rich or the poor? _____________________________
How
do the customers react to small price changes? ___________________
|
|
What
government policies affect the business operations and how?
___________________________________________________________________
|
1.4
Conducting a market assessment
(a)
Factors to be considered when conducting a market assessment
As
seen in Section 1.2 (c) above, market assessment is a process through
which an entrepreneur finds out how much market his/her products will
have once produced. To conduct a market assessment for business
products, an entrepreneur would have to consider the following
factors:
i)
The target market for the products
This
refers to people, businesses or institutions the business intends to
serve. Since a business may have a geographical focus, this also
provides a boundary within which the assessment is to be done. When
looking at the target group, the entrepreneur may wish to look at the
age, sex, income levels, education, etc.
ii)
The nature of the products to be produced and what the market wants
Under
this factor, the entrepreneur looks at the product variety, quality,
design, features, brand name, and packaging, range of sizes,
services, warranties and returns. All these are checked against what
the customers would wish to have.
iii)
The competition and substitute products the business products will
face and how this affects their market
Most
businesses have competitors making products (goods or services) that
perform functions similar to what the entrepreneur would wish to
produce. This means that the competitors’ products can be
substituted for the ones the entrepreneur wishes to make.
This
therefore, requires the entrepreneur to check on the competitors
he/she will face in the market and establish the level of competition
his/her products are going to face. If the competition is too high,
implying that few of his/her products will be sold, then the
entrepreneur would better not go into such business. In such a case
the entrepreneur would go back to his/her list of business ideas and
get an alternative opportunity that can be turned into business.
iv)
The target market trends and their implications on the business
market
Target
market trend is an important factor to be considered when conducting
a market assessment for a business. The entrepreneur would wish to
know how the market he/she intends to join has been behaving in the
recent past. This will affect the total number of products he/she
will be able to sell now and in the future. The market trend issues
that the entrepreneur would wish to know include the following:
- Is the market expanding or contracting?
- Is the market stable or volatile?
- How does the market treat new entrants?
- What are the major factors that are driving the market trend; is it the prices, seasons, population, income, government policies, etc?
Activity
Five
Group
activity
- In groups of 5-8, conduct a market assessment for a business of your choice.
- Write a group report of not more than 1,000 words of your findings.
- Present to the class.
Information
to look out
Identify
their;
b)
Customer needs
c)
Competition
d)
Trends –
Are
there:
|
Using
SWOT analysis in determining the competitive advantage of a business
In
market assessment, the SWOT (Strengths, Weaknesses, Opportunities,
and Threats) analysis is used as a tool, which enables an
entrepreneur to check the chances of success of his/her business in a
market. Once the entrepreneur has found out this, it will enable
him/her to reach a decision as to whether to go ahead with the
business or not. SWOT analysis enables the entrepreneur to check on
his/her business strengths, weaknesses, opportunities and threats and
compare them with those of his/her competitors. This helps him/her to
determine whether his/her business is in a better position to compete
with those of his/her competitors or not.
|
|
Strengths
|
Weaknesses
|
Opportunities
|
Threats
|
|
Potential
competitors
|
What are
the competitors’ strengths in the market when compared to the
entrepreneur?
|
What are
the competitors’ weaknesses in the market when it comes to
competing with the entrepreneur?
|
What are
the competitors’ opportunities in the market when compared to
the entrepreneur?
|
What are
the competitors’ threats in the market when compared to the
entrepreneur?
|
|
Potential
entrepreneur
|
What are
the entrepreneur’s strengths in the market?
|
What are
the weaknesses of the entrepreneur’s business in the market?
|
What are
the entrepreneur’s business opportunities in the market?
|
What
threats does the entrepreneur’s business face in the market?
|
The
following are examples of the issues that the entrepreneur will have
to consider when carrying out self-assessment using SWOT analysis
with a view to determining his/her competitive advantage.
Strengths
These
are the things, features and qualities that put the entrepreneur’s
business products at an advantage when compared to the competitors.
They include the following:
- High quality products
- Customer friendly but profitable prices
- Ability of the product to meet the customers’ tastes
- Efficiency and effectiveness at serving customers
- Ability to attract customers
- Good location of the business
- Good and trained marketing staff
- High and effective entrepreneurial spirit
Weaknesses
These
are the limitations/constraints that the business products may face
in the market.
- Being new in the market and having a weak market image
- Weak distribution image
- Marketing skills that are below average
- Higher overall unit costs relative to key competitors
- Inability to finance needed marketing changes
- Too narrow a product line
- Location not being close or easily accessible to customers
Opportunities
These
are external possibilities or chances that may happen and benefit the
business. The business has no control over such happenings and they
may not happen. Such possibilities may include the following:
- Possibility of landing big orders say from the government arising out of policy changes
- Sudden shift in tastes and fashions of customers in favour of the entrepreneurs products
- Change in the market trend due to new developments, for example, a new school being opened up in the neighbourhood, a large business being established in the area, etc.
- Falling trade barriers in attractive foreign markets, for example, the Unites States of America’s Growth Opportunity Act (AGOA), which removed import duties on goods manufactured in Africa and enables African countries to export to America.
- Faster market growth
- Complacency among rival enterprises
Threats
These
are undesirable happenings that may occur in the market to the
disadvantage of the business.
- Entry of lower cost foreign companies
- Rising sales of substitute goods
- Adverse shifts in foreign exchange rates and trade policies
- Costly regulatory requirements
- Growing bargaining power of customers or suppliers
- Changing buyer needs and tastes
- Adverse demographic changes
- Sudden negative changes in the government policies
- Competitors reducing their prices
After
checking his/her own position, the entrepreneur should make a similar
check for his/her immediate competitors. S/he should compare his/her
position in all the above areas against those of his/her close
competitors. If the comparison is not favourable, i.e. if the
competitors are in a better position, then s/he has a competitive
disadvantage. This would imply that if put on the market, his/her
products will not be able to compete with those of the competitors.
The entrepreneur will therefore make losses and fall out of business.
On
the other hand, if his/her position is stronger than that of his/her
competitors, it means he/she has a competitive advantage. This means
that if put on the market, his/her products would attract more
buyers/customers than those of the competitors. The entrepreneur
would sell more of his/her products at profitable prices, make more
profits and his/her business will expand.
Further,
the results of the analysis exercise will enable the entrepreneur
find out whether his/her position can be improved or not. If it
cannot be improved, then the entrepreneur should not start that
business, rather, he/she should go back to the list of his/her
business ideas and choose the second best and subject it to a similar
analysis. This process should be continued until the one that
promises him/her the best competitive position in the market is
found.
Activity
Six
SWOT
analysis – Identifying the strong and weak points of a company
1.
Organise learners into four groups
Group
1: Soft Drinks Company
Group
2: Dairy Milk Company
Group
3: Mobile Telephone Company
Group
4: Bread Making Company
2.
Explain to learners that a SWOT analysis is a common way in business
to get a very quick ´snapshot´ of a company and its market.
3.
Ask learners to think of four items for each box in the Table below
for their company.
Positive Negative
|
Company
|
Strengths
|
Weaknesses
|
|
Market
|
Opportunities
|
Threats |
4.
Ask learners to present their findings to the rest of the class.
5.
Learners discuss and compare their ideas.
Variation
Learners
can do a personal SWOT analysis for learning Entrepreneurship
Education.
1.
What are your strengths in Entrepreneurship Education?
2.
What are your weaknesses in Entrepreneurship Education?
3.
What are your opportunities for learning Entrepreneurship Education?
4.
What stops you getting better?
Job-Mark
Related Skills
During
all these activities, the learners are expected to acquire and
exhibit the following Job-Mark related skills:
- Self confidence
- Communication
- Team working
- Task oriented
- Information gathering
- Numeracy
- Reflective and ambitious
- Imaginative
- Self awareness
- Enthusiasm
Requests
on ICT implementation
Web
links
References:
Bagatya,
W.Z.K.( 2007) The
Principles and Practices of Advanced Level Entrepreneurship
Education,
Kampala
Kabatire,
S. and Mutyaba, S.V. (2007) Entrepreneurship
Skills, Kampala,
Netsoft Publishers
Kigenyi,
F.D. (2007) Entrepreneurship
Education for UACE and Colleges,
Kampala
National
Curriculum
Development Centre (NCDC) (2002)
Entrepreneurship
for Secondary Schools. Book 2,
Kampala,NCDC
Sempijja,
M. (2006) Entrepreneurship
Education for Advanced Level and Business Institutions,
Kampala
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