Search for a Sound Business Idea PDF

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MODULE 14 THE SEARCH FOR A SOUND BUSINESS IDEALearning Objectives:At the end of the module, students are expected to: Define a sound business idea. Discuss the role of creativity in the formulation of a sound business idea. Identify and explain the creative process. SOUND BUSINESS IDEA A firm operat...

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MODULE 14

THE SEARCH FOR A SOUND BUSINESS IDEA

Learning Objectives: At the end of the module, students are expected to: 1. Define a sound business idea. 2. Discuss the role of creativity in the formulation of a sound business idea. 3. Identify and explain the creative process. SOUND BUSINESS IDEA A firm operate in a dynamic environment where success and failure is determined by how well they match and counter the offerings of competitors. Getting ahead of the competition assures the survival and growth of a business. Possible ways of achieving this are: 1. better performing 2. more economically 3. lower acquisition cost 4. higher salvage value 5. more uses 6. more easily available 7. less susceptible to obsolescence To be able to achieve any of the above, a small business is faced with any of two strategic problems: 1. What products or services to offer at the start of the business? 2. What new products or services to offer when the business is already in operation for some time? In any case, the entrepreneur will have to consider a business idea that can be used as an entry tool or a competitive weapon. WHAT IS A SOUND BUSINESS IDEA? A sound business idea is an economic opportunity which is within the reach of the entrepreneur and which will provide him with desirable value. To determine the soundness, some of the questions of the business idea that must be answerable satisfactorily are the following: 1. Is there a sufficient potential sales volume to achieve the required financial returns? 2. Does the entrepreneur possess the ability to produce the require volume? 3. Does the product or service meet a real need?

CREATIVITY AND ITS ROLE IN THE FORMULATION OF A SOUND BUSINESS IDEA

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Creativity is defined as the “ reorganization of experiences into new configurations” this will mean mentally taking things apart, rearranging the pieces in new and potentially productive arrangements, and looking beyond normal frameworks for new solution. THE CREATIVE PROCESS The creative process may be divided into four phases, namely: 1. Preparation The collection of two or more large bodies of information that become associated with new and unique ways is undertaken. This provide the person with a fertile ground for the creative exercise. It is also the background, experience, and knowledge that an entrepreneur brings to the opportunity recognition process. 2. Incubation The creative process relaxes and withdraws from the intense preparation period. It means getting out of the situation and observing at a distance after sufficiently relaxing. It is also a stage during which a person considers an idea or thinks about a problem. 3. Insight It occurs when the creative individual discovers new associations and patterns which useful solutions to a problem. 4. Verification It involves testing, refining, demonstrating and communicating the creative ideas during the insight phase. The phases sometimes overlap, however. For instance insights may happen during the preparation period. ELEMENTS OF CREATIVITY When aiming for creative outputs, five aspects of creativity must be considered. Cole and Hamilton listed them as follows: 1. Drive Refers to the motivation or willingness to repeat a process until the answer to a problem is obtained. 2. Fluency Refers to the ability of the creative person to come up with a lot of ideas regarding the problem under consideration. 3. Flexibility It refers to thinking beyond a certain category of ideas. 4. Originality It refers to the ability to consider the use of rare and unusual ideas. 5. Awareness It refers to the ability to see unusual connections between objects and things. TYPES OF INNOVATION To be able to reap of innovation, one must be familiar what forms of innovation may be considered.

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1. PRODUCT INNOVATION It refers to the new products or services as well as improvements of old products or services. 2. PROCESS INNOVATION It refers to improvement process in the organization. 3. MARKETING INNOVATION It refers to improvement in the marketing functions of promotion, pricing, distribution, packaging, advertising. INNOVATION AND THE RIGHT ORGANIZATIONAL CULTURE In order to be successful at innovation, the right organizational culture must exist. Higgins indicated that this culture must have the following major characteristics: 1. Encouragement of productivity 2. Rewards for creativity 3. Encouragement of risk taking 4. Open communication 5. Allowance for errors 6. Participative climate 7. Structural mechanisms that aid creativity 8. Training in creative process 9. Flexibility The Creative Organization As management is responsible for providing solutions to various problems that will have to be solved or prevented, it must be provide such climate. Allen indicates that such climate is present in a sound organization which stimulates independent, creative thinking by providing well-defined areas of work. A creative organization according to Fulmer has the following characteristics 1. Has open communication among members 2. Has open communication with the outside 3. Has a large variety of personality types 4. Allows members to be themselves 5. Approaches tasks objectively and is able to see both sides 6. Is not afraid of change 7. Is not enamored of change for its own sake 8. Enjoy experimenting with new ideas 9. Wants to know about everything 10. Can tolerate flexible scheduling 11. Is committed to defining goals and achieving them 12. Enjoy its work 13. Makes decisions without concern for repercussions 14. Can’t be charter by time and motion studies The New Product Process

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When the firm is already in existence for some time and its management would like to maintain its competitive stance, it is faced with a strategic problem of what new product or service to offer. The new products process, according to Kueczmarski, consist of the following: Stage 1 – New Product Direction – Setting Process 1. New Product Strategy 2. Category analysis and Screening Stage 1 – new product process refers to the evaluation of past new product performance, defining the role of new products in the overall of the firm, identifying the range of product categories that may be examined, and analyzing and screening categories identified. Stage 2 – New Product development Process 1. Idea Generation 2. Concept Development 3. Market Testing Stage 2 – new product process refers to analyzing and ranking potentially attractive categories, generating ideas in selected categories. Business analysis of selected concepts is conducted followed by screening concepts to determine which proceeds to a prototype development . Commercialization of the product follows with the development of launch plans and actually introducing the product. Group Creative Technique Some business ideas come from outputs of creative endeavors. When an entrepreneur is confronted with the problem of producing new business ideas and he can utilize the creative skills of a group, there are certain techniques available. They are the following: 1. Interactive Techniques – Meeting face to face with open interchange. a.) Brainstorming – group creative problem solving process that focuses on the following procedures: (1) No negative feedback is allowed on any suggested alternative until all alternatives have been generated (2) Quantity of ideas, not quality, is the key. b.) storyboarding – a structured, but flexible brainstorming process that focuses on Identifying major issues and then brainstorming each of them. 2. Nominal Group Technique – involves a structured process for integrating individual thinking and group interaction in order to capitalize on the benefits of both. 3. Delphi Technique – involves utilizing a series of questionnaires administered by a central individual to experts who never meet face to face. As the respondents reply, their questionnaires are summarized, and a new questionnaire, based on their responses to the first to developed and sent to them. This repeating process continues until a group consensus on the problem is reached. Activity 1

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Make a list of three things that you are passionate about. Now, brainstorm business ideas that might align with each of your passions. ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ Activity 2 If you are going to venture into business, what business would it be? ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________

SAQ 1

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Identify what is being described in each of the following statements. __________________ 1. It involves utilizing a series of questionnaires administered by a central individual to experts who never meet face to face. __________________ 2. It involves a structured process for integrating individual thinking and group interaction in order to capitalize on the benefits of both. __________________ 3. It refers to the new products or services as well as improvements of old products or services. __________________ 4. It refers to improvement process in the organization. _________________ 5 It refers to improvement in the marketing functions of promotion, pricing, distribution, packaging, advertising. __________________ 6. The collection of two or more large bodies of information that become associated with new and unique ways is undertaken. This provide the person with a fertile ground for the creative exercise. __________________ 7. Meeting face to face with open interchange. __________________ 8. It refers to the ability to see unusual connections between objects and things. __________________ 9. It involves testing, refining, demonstrating and communicating the creative ideas during the insight phase. The phases sometimes overlap, however. For instance insights may happen during th e preparation period. __________________10. The creative process relaxes and withdraws from the intense preparation period. It means getting out of the situation and observing at a distance after sufficiently relaxing. Activity 1 Make a list of three things that you are passionate about. Now, brainstorm business ideas that might align with each of your passions. ASAQ 1 Identify what is being described in each of the following statements. 1. Delphi Technique 2. Nominal Group Technique 3. Product Innovations 4. Process Innovations 5. Marketing Innovations 6. Preparations 7. Interactive Techniques 8. Awareness

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9. Verifications 10. Incubation

https://www.slideshare.net/Franklin1013/chap-4-the-search-for-sound-businessideaentrepreneurship-chapter-4 Contemporary Entrepreneurship by N.A. Orcullo, Jr. Ph.D Entrepreneurial Management by Marife Agustin-Acierto Entrepreneurship by Bruce R Barringer and R Duane Ireland

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