Entrepreneurship and Ethics Mod 2

Opportunity Assessment

Chetan T.R

Module 2

Opportunity Identification and Selection

Opportunity is defined as a time or set of circumstances that makes it possible to do something or to achieve something.

Factors influencing Business Opportunities

Accessibility of Industrial Inventory Chance of export Congregation of information regarding

the tentative industry Ease of use of internal resources Form of external support Height of risk in the business Level of demand Analysis of existing units performance

Business Environment

Business Environment is an environment in which business is conducted and encompasses of factors that affect a Company’s operations including customers, competitors, suppliers, distributors, industry trends, substitutes, regulations, government activities, demographics, social and cultural factors, innovation, and Technological developments

Features of Business Environment

Totality of external forces Specific and general forces Dynamic in Nature Uncertainty Relativity

Importance of Business Environment

Firm to identify opportunities and getting the first mover advantage

Firm to identify threats and early warning signals

Coping with rapid changes Improving performance

Environmental Analysis

Refers to the evaluation of the possible or probable effects of external forces and conditions on an organisation’s survival and growth strategies

Benefits of Environmental Analysis

Identification of strength, Weakness, Opportunities and Threats

Keeping the Business enterprise alert Keeping business flexible and Dynamic Understanding future problems and

prospects Making business Socially acceptable Ensures optimum utilisation of resources Ensures survival and growth Maintaining adaptability to changes

Process of Environmental Analysis

Step1: Identification of relevant environmental variablesStep2: Collection of Information Step 3:ForecastingStep 4:Monitoring

Limitations of Environmental Analysis

Environmental analysis does not predict the future, nor does it eliminate uncertainty for any organization

It is not a sufficient guarantor of organisational effectiveness

The potential of environmental analysis is often not realised bcos of how it is practiced

Not much reliable without secondary facts supporting it.

Steps for New Venture start-ups

Identification and evaluation of the

opportunityDetermining the

resources requiredManaging the

Venture

Challenges of New Venture StartUps

Start up Funding

Misunderstanding the market for a startup

Startup Cash flow problems

Creating the right culture in your startup

Patient protection and affordable care act

PitFalls in selecting New Ventures

Create agile business systems

Passion without a plan

Selling too cheaply

Ineffective Marketing and advertising

Understanding Capital

Lack of management

oversight

Lack of specific skills

Critical Factors for New Venture Development

Use a Contract

Create responsive business systems

Understand your payment termsKnow the difference between employee and independent contractor

Have legal agreements handy

Why New Venture fails

No business plan Under funded Lack of operating goals and objectives Failure to measure Goals and Objectives Failure to pay attention to Cash flow Failure to understand the industry and the target

customer Poor or no marketing programs Underestimating the competition Not cost competitive Lack of attention to accounts receivables and

inventory Poor people management skills

Sources of Finance for New Venture

Equity Financing: Exchanging a a portion of ownership of the business

for a financial investment in the business Life Insurance policies Home equity loans Friends and relatives Venture capital Angel Investors Government grants Equity offerings IPO – Initial public offerings Warrants Personal Savings

Sources of Finance for New Venture

Debt Financing Friends and relatives Commercial Finance companies Banks and other commercial Lenders Government Programs Bonds

Sources of Finance for New Venture

Lease