Entrepreneurship studies – Chapter 2 © Cosmopoint International University College, School of Business – 2007.

Entrepreneurship studies – Entrepreneurship studies – Chapter 2Chapter 2

© Cosmopoint International University College, School of Business – © Cosmopoint International University College, School of Business – 20072007

Business OpportunitiesBusiness Opportunities

What is a Business Opportunity?What is a Business Opportunity?– A business opportunity is said to exist A business opportunity is said to exist

when:when:There is a possibility of offering a new There is a possibility of offering a new product or service in a particular market.product or service in a particular market.

The product or service fulfills the demands The product or service fulfills the demands and preferences of the customers.and preferences of the customers.

Where the product can be used to solve Where the product can be used to solve their problem. their problem.

Business OpportunitiesBusiness OpportunitiesWhen and Why is there a need to offer a When and Why is there a need to offer a product or service in a particular market:product or service in a particular market:When?When?– Changes in Environmental Factors Changes in Environmental Factors

Political and LegalPolitical and LegalEconomicEconomicSocialSocialTechnologicalTechnological

Why?Why?– Because Environmental Factors effect Because Environmental Factors effect

customers’ demand for particular product or customers’ demand for particular product or service.service.

Business OpportunitiesBusiness OpportunitiesThe Process of Identifying, Evaluating and The Process of Identifying, Evaluating and Selecting a Business opportunity.Selecting a Business opportunity.– Identify the needs and wants of customers.Identify the needs and wants of customers.– Scanning (examining) the environment and Scanning (examining) the environment and

evaluating of self (entrepreneur) and the evaluating of self (entrepreneur) and the community.community.

– Screening (Process of evaluating) of business Screening (Process of evaluating) of business opportunities.opportunities.

– Selecting a business opportunitySelecting a business opportunity– Preparing a Business Plan. Preparing a Business Plan.

Identify the needs and wants of the Identify the needs and wants of the customercustomerHuman needs and wantsHuman needs and wants– A A needneed is something that is basic in life, for is something that is basic in life, for

example we need food, clothing and shelter.example we need food, clothing and shelter.– But as human we also have But as human we also have wantswants that is, that is,

there is a desire or craving something that is there is a desire or craving something that is far better than basic items.far better than basic items.

– Wants are shaped by :Wants are shaped by :Our life styleOur life styleLevel of EducationLevel of EducationPurchasing power Purchasing power Personality of the personPersonality of the person

Business OpportunitiesBusiness Opportunities

Business OpportunitiesBusiness OpportunitiesHuman needs and wantsHuman needs and wants– Human needs and wants are unlimited and are Human needs and wants are unlimited and are

of all types.of all types.– Society affluence lead to increase to human Society affluence lead to increase to human

wants and needswants and needs– More business opportunities arises.More business opportunities arises.– Thus entrepreneurs must take this opportunity Thus entrepreneurs must take this opportunity

to provide products and servicesto provide products and services– Entrepreneurs must be sensitive to changes in Entrepreneurs must be sensitive to changes in

customers’ needs and wants in order to be customers’ needs and wants in order to be aware of new business opportunities.aware of new business opportunities.

Scanning the environment and Scanning the environment and evaluating of self and the community.evaluating of self and the community.– Environmental Scanning (ES)Environmental Scanning (ES)

ES can lead to an idea that can be converted into a ES can lead to an idea that can be converted into a business opportunity.business opportunity.

Two approaches are used and what are they?Two approaches are used and what are they?– Scan the environment by micro perspectiveScan the environment by micro perspective– Scan the environment by macro perspective Scan the environment by macro perspective

From the macro perspective for example the From the macro perspective for example the agricultural sector can offer business opportunity in agricultural sector can offer business opportunity in forestry, fishing, plantation, and livestock breeding.forestry, fishing, plantation, and livestock breeding.

Business OpportunitiesBusiness Opportunities

Scanning the environment and Scanning the environment and evaluating of self and the evaluating of self and the community.community.– Environmental Scanning (ES)Environmental Scanning (ES)

But from micro perspective every industry can offer But from micro perspective every industry can offer specific business opportunities.specific business opportunities.For example in the case of forestry an entrepreneur can For example in the case of forestry an entrepreneur can be involved in:be involved in:

– LoggingLogging– Manufacturing of veneer plywoodManufacturing of veneer plywood– Processing of sawn timberProcessing of sawn timber– Manufacturing of furniture.Manufacturing of furniture.– Making wooden doors and frames.Making wooden doors and frames.

Business OpportunitiesBusiness Opportunities

Another approach of scanning the Another approach of scanning the environment is by looking at the following environment is by looking at the following factors:factors:– Structure of the population, income and Structure of the population, income and

tastes.tastes.– Examine the import and export information of Examine the import and export information of

a country.a country.– Study and examine types of local resources Study and examine types of local resources

and technological breakthrough.and technological breakthrough.– Examine the Industrial linkages.Examine the Industrial linkages.– Examine the development projects by the Examine the development projects by the

public and private sectors.public and private sectors.– Newspaper and magazines – local and foreign Newspaper and magazines – local and foreign

as a source of business opportunitiesas a source of business opportunities

Business OpportunitiesBusiness Opportunities

Another approach of scanning the Another approach of scanning the environment is by looking at the following environment is by looking at the following factors:factors:– Examine what the local issues and social Examine what the local issues and social

problemsproblems– Examine what new government policies Examine what new government policies

and regulation have impact on small and regulation have impact on small business.business.

Business OpportunitiesBusiness Opportunities

Self EvaluationSelf Evaluation– Besides Environmental scanning one is Besides Environmental scanning one is

to do a self evaluation to identify what to do a self evaluation to identify what skills, experience is available in an skills, experience is available in an entrepreneur that can be used in entrepreneur that can be used in business development and engagement.business development and engagement.

– Skill competency, experience, Skill competency, experience, knowledge that match the business knowledge that match the business opportunities.opportunities.

Business OpportunitiesBusiness Opportunities

The factors that need to be The factors that need to be considered are as follows:considered are as follows:– ExperienceExperience– Knowledge and Competency SkillsKnowledge and Competency Skills– Financial Status and situationFinancial Status and situation– Interest – likes and dislikesInterest – likes and dislikes– Networking – circle of friends and Networking – circle of friends and

associatesassociates– Cultural values and norms of the Cultural values and norms of the

community.community.

Business OpportunitiesBusiness Opportunities

Screening of Business OpportunitiesScreening of Business Opportunities– By using the process of screening business opportunities will By using the process of screening business opportunities will

help the entrepreneur to select a business opportunity that help the entrepreneur to select a business opportunity that he or she can focus on totally and be dedicated to it success.he or she can focus on totally and be dedicated to it success.

– This process involves four factors as follows:This process involves four factors as follows:Legal within the law of the country.Legal within the law of the country.Monopolistic Power and Level of Competition.Monopolistic Power and Level of Competition.Capital Requirements must be adequate to business Capital Requirements must be adequate to business undertakingundertakingRisk factorRisk factorLiquidity LevelLiquidity LevelLoansLoansCredit facilities for customers.Credit facilities for customers.Foreign Exchange Rate – volatile or stable currency rate.Foreign Exchange Rate – volatile or stable currency rate.

Business OpportunitiesBusiness Opportunities