CHAPTER 5:
THE SEARCH FOR
SOUND BUSINESS IDEA
CHAPTER OBJECTIVE
To assess and determine the best business idea
Topics:
Procedure in determining the best business idea
Methods of searching for ideas
Screening generated ideas
Organizational culture and creativity
What is a Sound Business
Idea
May
be defined as the
economic opportunity which
is within reach of the
entrepreneur and which will
provide him a desirable value.
THE PRODUCT OR SERVICE
OFFERING MAY BE IMPROVED IN
SOME TERMS OF:
1. Performance, like the chair that can carry
more weight
2. Maintenance cost, like the car battery that
requires less servicing than competing brands
3. Acquisition cost, like the latest low priced
model of a certain brand of cellphone
compared to competition
4. Salvage value, like the steeel filling cabinet
that has a higher value and uses, like the fly
paper that can also be used as mousetrap
Different forms of Business
Ideas
1.
2.
3.
4.
5.
An old type of business can be
professionalized.
A standard product can be customized.
New technology can be adapted to
manufacture an old product.
Imported products can be replaced by
local products.
Business operations can be
internationalized.
Procedure in Determining
Best Business Idea
1.
2.
3.
Preparation of the list of business ideas
a. Unanticipated means (persons work, persons
hobbies, persons acquaintances, and a chance
event encountered by the person)
b. Deliberate search (using search questions and idea
prompting)
Screening of listed ideas
1. Market feasibility
2. Technical feasibility
3. Financing feasibility
4. Financial feasibility
Final Selection
1. Status quo
2. Shorter list
3. Zero listing
Screening Generated
Ideas
Market
Feasibility
Positive indications: (1) stable and
sufficient demand (2) potential
competitive strength of the firm
Sources of Market Information (1)
Prior studies of the market or related
markets by the company (2) actual
poll of population samples (3)
negotiations with prospective
customers to solicit orders
Screening Generated
Ideas
Technical
feasibility the business
ideas must be easily converted to
real products or services.
Financing Feasibility- there should
be sufficient funds to finance
operations.
Sources of funds: (1) proposed
owners savings (2) relatives and
friends (3) financing institutions
Screening Generated
Ideas
Financial
feasibility - analysis of
financial prospects of the proposed
business idea
(1) income statement summarizes
revenues, expenses, and profits over a
given period
(2) balance sheet statement shows
planned or expected financial position
of the enterprise on a particular date.
(3) cash flow statement shows the
planned or expected cash sales and or
purchases.
Final Selection
1.
Final Selection
1. Status quo means all
business ideas listed passed
the adapted criteria
2. Shorter list means some of
the ideas generated were
eliminated
3. Zero listing means all
business ideas generated were
eliminated.
NEXT MEETING:
ORGANIZATIONAL CULTURE & CREATIVITY
Characteristics
1. Encouragement for creativity and risktaking
2. Rewards for creativity
3. Open communication
4. Allowance for errors
5. A climate for participation
6. Structural mechanisms that aid creativity
7. Training in the creative process
8. Flexibility
SEATWORK
Prepare
yellow pad
SUPPLY THE ANSWER
1-3
May be defined as the 1. ________
opportunity which is within reach
of the 2. ________ and which will
provide him a desirable 3.
_______.
May be defined as the economic
opportunity which is within reach
of the entrepreneur and which
will provide him a desirable
Unanticipated means or
Deliberate search
4. using search questions
5. persons hobbies
6. chance event
7. persons work
SUPPLY THE ANSWER
8. Status quo means all
business ideas listed passed
the adapted criteria
9. Shorter list means some of
the ideas generated were
eliminated
10. Zero listing means all
business ideas generated were
eliminated.
Organizational Culture and
Creativity
Creative organization characterized by the
following.
1. Encouragement of creativity and risktaking;
. Creativity refers to activities involved in
finding solutions to problems hinder the
achievement of the firms objective.
. Proactive ways to solve problems.
. Testing an idea however require a certain
measure of risk taking that means the idea may
turn good or bad.
. The organizational culture that characterized
by risk taking is not discouraged by poor result
2. Reward for creativity;
There is an assurance that such activity will
continue existing.
3. Open Communication;
Open Communication Free-flowing exchange
of ideas between the members of an
organization.
Communication flow through the vertical and
horizontal relationships in the organizations
structure.
4. Allowance for errors;
When an error detected a move should be
made to correct it.
When it is done , the creative individual is not
discouraged from pursuing his creative
A Climate participation;
When somebody feels that the organization
espouses participation, that person will not
hesitate to make a contribution to the creative
efforts of the organization.
The firm will benefit from the good effects of
employee participation.
More bright ideas will be generated if
employees feel free to participate in the
creation of solutions to problem.
5.
6. Structural Mechanisms that Aid
Creativity;
The urge to create solutions to problems
would be heeded by the innovative person
more
easily
if
there
are
structural
mechanisms within the organization to
7. Training in the Creative Process
Creative pursuits are bit complicated and it will
help if those expected to perform such functions
are properly trained.
Although some persons have natural talents for
generating business ideas, those who are not
considered as such would benefit from acquiring
the required skills through training.
8. Flexibility
One of the distinct characteristics of the
creative organization is flexibility.
The creative employee is allowed to engage in
creative activities on hours most convenient to
him and the company.
Flexibility may also applied to place of work,
like allowing the creative employee to work in
