OPPORTUNITY ANALYSIS

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Made By: Shruti Das, Aman Ghai

2/19/13

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.

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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

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Can all IDEAS be converted into OPPORTUNITY?

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A prospective entrepreneur may be able to generate several business ideas, but all may not be converted into opportunities. A business ideas based on customers 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.

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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.

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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. Ability to harness different sources of information. Vision and creativity.

ii.

iii.

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Ability to perceive and preserve basic ideas 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.

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Basic ideas emerge from different sources as discussed below:

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 caf 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.
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Ability to harness different sources of information

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 BBCs 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 2/19/13 the worldwide development rights from the inventor. His

VISION AND CREATIVITY

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.

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Selection of a business idea

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. 2/19/13 It is potentially a good idea to start with a product that could

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.
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Approaches to generating ideas

While exploring different sources of business ideas, an entrepreneur can use the following approaches to generate ideas:
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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.

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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
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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. Yesterdays fantasize about space tourism are todays reality. Many inventions are born out of such dreams.

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

IDEA FIELDS

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

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.

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-

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 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 , ecommerce, 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.

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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

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 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.
Actio n

SUSTAINABLE

Resources Tale nt
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DEVELOPMENT

Techniq u-e 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.

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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 buyers 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.
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 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?

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 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 RESOURCESAvailability 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.

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Market Assessment

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.

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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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