Identifying a Business Opportunity

Prepared by Mr. Bibhudendra Sarangi (Sr. Lect. SC & HUM Dept.)

Subject – EM & ST

Chapter – 2 – Market Survey & Opportunity Identification(Business Planning)

Topic – Identifying a Business Opportunity

Semester – 5^th

Branch – Electronics & Telecommunication

AY-2021-2022, WINTER-2021

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IDENTIFYING BUSINESS OPPORTUNITY

WHAT IS OPPORTUNITY ?

Opportunity is defined as a situation that enables an entrepreneur to offer marketable products or services to interested buyers or end users

TYPES OF SITUATIONAL FACTORS

^Product or service is still not in existence

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^Product or service is already in the market but failed to satisfy the customers – so need to be improved

EMERGENCE OF OPPORTUNITY

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When people decide they have certain needs and want to be satisfied, or when people discovered a problem of some kind that can be helped by a product or service.

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The presence of unfulfilled needs and want and/or problems alerts the entrepreneur to the potential opportunity.

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The entrepreneur later creates a business that is able to fulfill the needs or want and/or solve the problem.

OPPORTUNITY IDENTIFICATION

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Opportunity identification is a process that involved the search for and discovery of business opportunities.

APPROACH TO OPPORTUNITY IDENTIFICATION

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1. Observe changes in the environment
2. Recognize a need that customers have that is not being satisfied
3. Recognize problems and find ways to solve it

OBSERVING CHANGES IN THE ENVIRONMENT

Changes in the environment give rise to needs and wants and/or problems, and an opportunity emerges

Important environment forces to observe include:

1. Economic forces
2. Social forces
3. Technological advances
4. Political and regulatory statues

Examples of How Changes in the Environment Provides Openings for New Product and Service Opportunities

RECOGNIZE NEEDS AND WANTS

^Opportunity occurs whenever there is a need and want to fulfill. The term “needs” refer to basic needs that the consumer must have in order to live while the term “wants” refers to a personal desire for something that is more than a basic need.

RECOGNIZE PROBLEM AND FIND SOLUTION

OPPORTUNITY IDENTIFICATION PROCESS

Search for Changes in

the environment

Recognize needs and wants, and solutions

Discovery of Opportunity

ABILITY TO SEARCH AND DISCOVER BUSINESS OPPORTUNITIES

• Experience and exposure
• Knowledge and skills
• “Special alertness”

• Social network
• Creativity
• Vigilant

MECHANISM TO IDENTIFY OPPORTUNITIES

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Customers

Retailers and distributors Business associates Bankers

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Consultants Employees Others

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EVALUATION AND SELECTION PROCESS

The evaluation and selection process involves judging the viability of the opportunity and assessing its potential.

CRITERIA FOR EVALUATION AND SELECTION

1. Can make money and has potential for growth
2. Less competition
3. Good fit between entrepreneur and opportunity
4. Has competitive advantage
5. Workable and efficient
6. Not against the norms and values of the community
7. Conform with laws and regulations

• Divergent Thinking Mode

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• Convergent Thinking Mode

• Out-of-the-box thinking -

thinking that moves away in diverging directions so as to involve a variety of aspects and which sometimes lead to novel ideas and solutions; associated with creativity.

• Divergent thinking is a thought process or method used to generate creative ideas by exploring many possible solutions.
• Divergent thinking typically occurs in a spontaneous, free- flowing manner, such that many ideas are generated in an emergent cognitive fashion.
• Many possible solutions are explored in a short amount of time, and unexpected connections are drawn. After the process of divergent thinking has been completed, ideas and information are organized and structured using convergent thinking.

• Thinking that brings together information focused on solving a problem (especially solving problems that have a single correct solution)
• Convergent thinking is the type of thinking that focuses on

coming up with the single, well-established answer to a problem.

• It is oriented toward deriving the single best, or most often correct answer to a question. Convergent thinking

emphasizes speed, accuracy, and logic and focuses on recognizing the familiar, reapplying techniques, and

accumulating stored information

Preparation of personal profile

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Development of OS (decision making) framework

Generation of ideas Snap investigation

Evaluation in terms of OS (decision making), framework & short listing of ideas

Pre-feasibility studies Opportunity selection

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About the entrepreneur:

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May include following details:

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Background : Personal, educational, experience, personality

Objectives for establishing enterprise Investment preparedness

Attitude to risk taking Personal considerations

^ Investment

• How much are you willing to invest?
• Contingency & escalation
• Working capital margin

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^ Technology sophistication

^ Quality & Quantity of technology to acquire

^ Managerial/ Organization demands

• Size or intensity or organizational task
• How skills & expertise match?

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• Market Competition
• Market research
• Aggressiveness & determination to ‘sell’
• Export industry consideration

• Sector preference
• Government intervention/ dependence
• Implementation time
• Profitability
• Degree of risk & its form
• Location
• Personal considerations
• Taboos/ Religious Sentiments

• To hit up ideas – the heart of OIS process
• Strong creative dimension to be present
• Stretch one’s mind for opportunity
• Idea generation

• Idea not enough – must examine preliminary viability
• Preliminary investigation

• Questions like:
• What exactly is the product or service?
• Application & uses
• Possible scales of production or operation
• Project cost to a given scale of production/ operation

• Market / competition
• Unit sale price
• Degree of technological complexity
• Expected annual turnover
• Expected profit margin (range)

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And any other information you can collect without incurring too much expenditure

• Will you be able to learn and get grip over business?
• Securing term loans, financial assistance or

commercial bank… will it pose a problem?

• Key determinants: success & risks
• Must cross check all judgments

• Portion a highly individualistic process
• Generation of ideas will depend on

• Interest in sending opportunity over time
• Sense of urgency of business enterprise
• Ability to harness courses of knowledge & information
• Vision & creativity
• Lateral thinking

7 approaches to generation of ideas

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Natural resources

Existing anticipated industries Market driven

Service sector scanning

Extension/ modification of present work content Creative effort

Other ways

Natural resources – to convert into profitable enterprises

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Forest Horticulture Agro-waste Marine or aqua Mineral Animal

Wind Sun Human

Natural resources – must pay attention to:

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Exploitation

Resource quantification & life Resource stability

Critical infrastructure for resource utilization Commodity/ trading dimension

Legal dimension Other considerations

Where will you pick resource based ideas?

Existing anticipated industries

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Similar projects

Raw material for existing industry

Further processing of output of existing industry

Projects based on waste or by- products of existing industry

Packaging materials Service requirements

Projects based on skills/ technology developed through existing industry

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Existing/ anticipated industries – keep following in view

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Outlook for existing industry of your interest Ancillary parent industry syndrome

Captive arrangement

Nature of decision making Projects in the pipeline Motivated feedback

Look beyond local industries

Well trenched non- local supply industries

Demand driven or market driven opportunities

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Trade flows Import substitution

Growth products

Product positioning/ differentiation Exports

Basis of import

Competitive advantage, not just potential 100% export

Networking

Service sector opportunities

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Existing industrial enterprises Medium and large projects in pipeline

Commercial establishment Public utility orgs.

Social infrastructure

Business enterprises catering to community needs

Government/ quasi- government orgs. & local bodies Citizens

households

Creative effort

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Development of problem solving products/ services

Exploitation of new technology or material to meet a widely felt need

Creating a demand for a psychological product Technical extension of an established product concept Creating a demand implicit in emerging lifestyle Technical work

Introducing products/ services alien to region or country Value addition through technical or managerial innovation

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^ Basic guidelines

• Imperfect knowledge
• Comprehensive comparison
• Key issues
• Technology comfortability
• Degree of difficulty of market position
• Risks
• Profitability
• Government dependence
• Success & risks calculated

“Me too” syndrome

Fallacy of numbers

Failure to grasp key elements of success Lack ownership

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Catch the first bus

Inaccurate information Unwillingness to step back

Thank You