Opportunity analysis (2)

Made By:
Shruti Das, Aman Ghai

“Peter F. Ducker defined entrepreneur as one who
always searches for an opportunity. The basic test of a
successful entrepreneur is the identification of business
opportunity and initiating steps to produce, sell goods
and services to make use of the opportunity. A sound
business opportunity provides the foundation for
starting a business venture that would be both feasible
and profitable.”

What is BUSINESS OPPORTUNITY

Business opportunity can be described as an economic
idea which can be implemented to create a business
enterprise and earn profits.
Before selecting an opportunity, the entrepreneur has
to ensure two things:
 There is a good market for the product he is going to
produce..
 The rate of return on the investment is attractive to be
accepted by him

Can all IDEAS be converted into OPPORTUNITY?

 A prospective entrepreneur may be able to generate several business ideas,
but all may not be converted into opportunities. A business ideas based on
customer‟s needs and problems they are facing and which is commercially
feasible becomes an opportunity.
 There are a lot of business ideas and a person has to identify them study
them, analyze them, compare their merits and demerits and finally select
suitable one to initiate appropriate action to convert it into a successful
economic venture.
“ All ideas are not opportunities but all opportunities are ideas.”

ELEMENTS OF BUSINESS OPPRTUNITY

A business opportunity has five elements which are as
follows:
 Assured market scope.
 An attractive and acceptable rate of return on
investment.
 Practicability of the idea.
 Competence of the entrepreneur to encash it.
 Potential of future growth.

FACTORS INVOLVED IN SENSING
OPPORTUNITIES
The most important factors that are involved in sensing
opportunities are:
i. Ability to perceive and preserve basic ideas which could be
used commercially.
ii. Ability to harness different sources of information.
iii. Vision and creativity.

Spotting of an idea often triggers the process of
sensing an opportunity. However, every idea does not
create an opportunity. For the sake of clarity we can
assume that an opportunity is an idea that is based on
what consumers want.

• Problem : When an idea revolves around a problem faced by the people, the
solution is most often a business opportunity.
The best example is the safety razor. It was a problem for men to shave with a
sharp shaving knife quickly and without getting nicked(cut). This problem
gave rise to an idea that resulted in the development of safety razor.
• Change: Any change, be it social, legal or technological can usher in new
business opportunities. The mushrooming(develop rapidly) cyber café and
computer institutes are good examples of such opportunities.
• Invention: Inventions include creating new things of value as well as new
and creative processes that add value to existing products or services.
Change over from audio and video cassette players to CD players is an
example of opportunities brought by inventions.
• Competition: In order to beat the competition, an entrepreneur should
introduce new ideas.

• Harnessing(checkout) information from different sources is an important aspect
of sensing opportunities. The information gathered from different sources has
to be analyzed and utilized for the identification of the right opportunity.
• Traver Baylis, an English inventor, developed a portable radio
That was powered by clock-work instead of batteries. He displayed his
invention on BBC‟s „Tomorrow's World‟ programme. While thousands of
people watched the programme and forgot it after sometime, but an accountant
by the name Christopher Staines saw an opportunity in the invention. He was
convinced that there was great potential in the idea and bought the worldwide
development rights from the inventor. His reasoning was that the radio would
be a success in poor countries where people could not afford to buy business.
The venture proved was a huge success. Here, while the news of the invention
came to him from the television, staines obtained the figures of concerning the
number of radio users in poor countries from other sources.

One of the most striking behavioral characteristics of an
entrepreneur is a creativity. He should be able to develop
creative ideas.
The best example of a visionary and a creative genius is Henry
Ford who had vowed to build a motor car for the common
man, so low in price that any person of moderate means may
own. It was this vision and creative pursuit that gave to the
world the legendary car “Model T”.
He fulfilled his vision through a creative team of engineers.
Creative people try to find solutions to problems.

While selecting a business idea, the following need adequate
consideration:
 Utilization of skills: the business idea should enable the
entrepreneur to utilize his technical and professional skills. If
an entrepreneur has knowledge of some special manufacturing
techniques because of previous experience or otherwise, it
would be easier for the entrepreneur to manage such
techniques effectively.
 Utilization of local materials: it should enable the use of
locally available raw materials for product or service. As
compared to imported material/local materials are easy to
procure.
 Strong demand of product: it should ensure making product
that have a demand, but are not freely available in the market.
It is potentially a good idea to start with a product that could
be sold.

 Solution of current problems: it should enable the entrepreneur to
solve a current problem existing in the market. Products may be
available in the market but they do not meet the demand fully or
enough satisfactory manner.
 Institutions: several organizations set up by the government and
chambers of commerce and industry provide help to entrepreneurs in
discovering and evaluating business ideas. They provide facilities
such as technical, financial, marketing and plant locations.
 Project profile: organizations set up for the promotion of small and
medium enterprises and several private consultancy organization
publish project profiles in different areas. These describe in detail the
technical, financial and marketing requirements of new projects. An
entrepreneur can study project profiles and decide about the line of
business activity he wants to enter into.

While exploring different sources of business ideas, an
entrepreneur can use the following approaches to generate
ideas:
 Brainstorming: it helps in generating a large number of
product ideas. It should be conducted by an expert and none of
the ideas mentioned should be evaluated or judged. At this
stage one should not worry if the ideas are suitable or not.
 New ways of doing old things: a large number of products are
being made and provided in the market using methods and
practices. One approaches can be to examine if these could be
made by a different and newer method that would give the
entrepreneur an advantage over the older method.
 Improving an existing product: an existing product can be
improved by using old techniques with more care or using
newly developed technology.

 Utilizing waste materials: conservation and environment
protection are presently getting a lot of attention. Recycling
waste or turning them into useful products are good product
ideas.
 Converting hobby into business: some people are adept at
doing something or the other as a hobby or for use in house
only. It is possible to use such skills to set up an enterprise.
Hobbies like photography, interior decoration, fashion
designing are often developed business ventures.
 Market research: it involves gathering information about
products/ services that already exist in market. A systematic
and in depth study is undertaken to obtain useful data to
determine demand-supply position for a particular product of
service that is already available in the market. Such a research
will help in getting new ideas for products and services

 Information from publications: a lot of information is
available in printed form about product and services sales
brochures', catalogues, advertisements, publicity posters etc are
some of the sources easily available to anyone.
 Seminars and conferences: a number of seminars and
conferences are periodically held to discuss the emerging
challenges and opportunities of business. A young entrepreneur
can obtain lots of tips from such seminars and conferences.
 Day dreaming and fantasizing: business opportunities are
created when entrepreneurs fantasize about products and
services they would love to have in their lives. Yesterday‟s
fantasize about space tourism are today‟s reality. Many
inventions are born out of such dreams.

IDEA FIELDS
IDEA FIELDS

The process of generation of ideas can be Designed
by developing an awareness of different
. This will help the entrepreneur in
enlarging the scope of thinking at the same time
structuring the ideas according to convenient frames
of references.

CONVENIENT FRAMES OF REFRENCES FOR
STREAMLINING THE PROCESS OF GENERATION OF
IDEAS

 NATURAL RESOURCES BASED IDEAS ~ Ideas can be generated based on
natural resources. A Product or Services may be desired from forest resources ,
agriculture, horticulture , mineral, marine or aqua mineral, animal husbandry, wind,
sun and human resources. For Instance- If a person getting ideas in the field of
forest resources. He / She can think of forest produce, wood-based products , bio-
fertilizers etc .
 EXISTING PRODUCTS OR FOREST BASED IDEAS ~ A constant and
consistent effort on the part of many entrepreneurs to improve the products and
services already in the market. Example: When Black and White computer screen
came into use, many entrepreneurs started thinking of introducing colour monitors.

 MARKET DRIVEN IDEAS ~ One of most important method of
generating ideas is to carry out a market research. Such a study yields
valuable data about treads of supply, demand customer preferences.

 TRADING RELATED IDEAS ~ Trade in simple terms is buying and
selling of goods and services. Local trade, imports and exports , e-
commerce, etc. have all made trading a wide area of enterprise.

 SERVICE SECTOR IDEAS ~ Service sector is the most growing field
these days all over world, thanks to emerging knowledge society and
advances in Information Technology. For Instance- With the existing
industrial enterprise an entrepreneur think of several service-based units
like transport, communication, etc.

 Creative Efforts of the Entrepreneur ~ Entrepreneurship can be viewed as
a creative and innovative response to the environment and an ability to
recognize , initiate and exploit an economic opportunity. Entrepreneurship is
the ability to create and build something from practically nothing. There is a
practical notion that creativity is a mysterious process performed by gifted or
brilliant mind.
BEFORE AFTER

 OTHER CONSIDERATIONS SELECTING A PRODUCT/SERVICE~
While selecting a project, an entrepreneur may also have other
considerations in mind. These includes employment may also have other
considerations in mind. These include employment generation, area
development, community uplifment, environment preservation, poverty
alleviation, empowerment of women ,etc. It is necessary for entrepreneurs to
follow a path of sustainable development that is in agreement with
i. Social values
ii. Environmental protection Values
iii. Judicious management of natural resources.
Action

SUSTAINABLE
DEVELOPMENT

Techniqu-
Talent e

Resources Environment

ASSESSMENT OF IDEA AND OPPORTUNITY

Before Identification the product or service to be launched, an enterprise, the
entrepreneur must assess the idea for its opportunity potential in the light of
the prevailing socio-economic, political-legal, technological and
international environment.

“ An Idea that is not assessed for its opportunity potential may fail in
business.”

STEPS INVOLVED IN ASSESSMENT OF AN IDEA

 PRODUCT IDENTIFICATION – An idea should lead the
entrepreneur to a definite product or service which he / she can
sell. The first step is to obtain a concept of the product or
service suggested by one idea.
 USE OF THE PRODUCT- The Product should be examined
for its real life use and application if it already exists in the
market. In case of a new product, the possible uses and
application of the product from the buyer‟s point of view
should be examined.
 AVAILABILITY OF RAW MATERIAL- Availability of raw
material determines the opportunities as it decides the level of
future production.

 AVERAGE COST OF PRODUCTION- The average cost of
production per unit will depend upon the level of future
production. When production is carried on a small scale, per unit
cost of production is usually higher when production is carried
on a large scale.
 VOLUME OF OPERATION- An Entrepreneur should try to
assess the pattern of demand of proposed product or industry in
which he is planning to involve himself.
 COMPETITION IN THE MARKET- The Entrepreneur has to
analyze the extent and intensity of competition in the market.
Identification of products or services where competition is low.
 TYPES OF TECHNOLOGY REQUIRED- What type of
technology is required to the product? Whether training and
application of such technology will be locally available or will it
have to be supported from other places?

 ANNUAL TURNOVER AND PROFIT MARGIN- Every
business idea needs to be examined on the basis of expected
annual turnover(sales) and profit margin.
 AVAILABILITY OF FINANCIAL RESOURCES-
Availability of viable opportunity and adequate rate of return
motivate and entrepreneur to undertake entrepreneurial activity
but with the condition that he has to have some seed capital of
its own, personal contacts,etc.
 DEGREE OF RISK- There are different types of risk
involved in the business. These risks are technical risk,
economic risks, social risk and environmental risk.

 Demand of product or service: the demand assessment will
be based on the size of market being targeted. It may be local
market, market at state level or national/ international market.
It would also involve a study of the target groups of consumers
, their preferences, taste and other related variables like age
,level of income etc.
 Supply position and extent of competition in the market:
by supply position we mean the total o quantities of the
product made available in the market by all existing players.
The entrepreneur should also take in the account future
supplies from possible entrants in the field. All the suppliers
constitute competitors to the entrepreneur. So their
manufacturing capacity, chances of increase or decrease in
supplies, their financial position etc need to examined closely.

 Cost of production: the cost of producing a product place an
important role in the choice of product by the entrepreneur. It
is the cost of production that will determine the price of the
product and its comparison with available products in the
market.
 Technological innovation and change: the entrepreneur must
make a forecast of technological innovation and change in the
concerned field to visualize changes in product quality and
cost of production.

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