Unit II (14 Hours) Opportunity / Identification & Product Selection

1. Introduction
2. Concept: Entrepreneurial Opportunity Search & Identification 3. Criteria to Select a Product First Online Test 4. Conducting Feasibility Studies 5. Project Finalization 6. Sources of Information Second Online Test
1

Introduction
Steps in Setting up a new Business Venture/ Enterprise Process Model
The entrepreneurial process involves all the functions, activities, and actions associated with the perception of opportunities and creation of organizations to pursue them. Scanning the environment for identification of business opportunities Development of Product or Service idea Assessment of feasibility of the idea Preparation of Business Plan Resource Mobilization Project Commissioning and Launch

The Long Road to Success

Ideas opportunities feasibility business plan implementation evaluation modification management

Ideas

Opportunities

Feasibility Screening (Proof of concept followed by Financial viability screening)

Business Plan

Implementation (financing, resourcing)

Evaluation

In terms of entrepreneurship, and the entrepreneurial process, the phenomenon of opportunity recognition is critical in that a major step in any entrepreneurial venture creation process is the recognition of the opportunity by the entrepreneur. Opportunity recognition can be defined as perceiving a possibility for new profit through the founding and formation of a new venture, the significant improvement of an existing venture. From this broad definition opportunity recognition can be considered as an activity that can occur both prior to establishment of a firm, and also post founding of a firm (throughout the life of the firm, and throughout the life of the entrepreneur).

Within the definition are two concepts, an idea and an entrepreneurial opportunity , that lead to the possibility for new profit which need to be distinguished. An idea for a business does not necessarily equate to an entrepreneurial opportunity, although it is always at the heart of an opportunity as an idea is the first step in the process of creating an opportunity. Therefore scholars suggest we can think of the idea as a stepping-stone that leads to an opportunity.

Entrepreneurial Opportunity Search and Identification

It is quite possible that many of the promising ideas might not make commercial sense.

It involves close examination of the environmental conditions

and their impact upon the business idea. This analysis may advice to modify, adapt, rearrange, substitute, combine, reverse, etc.
6

Opportunity Search and Identification: Markets arise

for new products & services from wants & needs of consumers. Observe surroundings and consciously question how to resolve issues that come across. Develop sensitivity to changes around yourself. Carefully scan environment to gather ideas. Scanning the Environment may include the following for identification of business Opportunities: International Environment Domestic Environment Macro Environment Sect oral Analysis SWOT Analysis

10

Idea versus Opportunity

Ideas are a dime a dozen Opportunities are business ideas that offer the potential for a return on invested capital that more than offsets the costs of that capital on a risk-adjusted basis.

11

Ideas versus Opportunities

Ideas Harvest heavy metal contaminants out of river bottoms using plants Opportunities Sell pollution solution technologies to companies under environmental cleanup orders.

12

The Entrepreneurial Process

Identification and Evaluation of Opportunities:
Opportunity assessment Creation and length of opportunity Real and perceived value of opportunity Risk and return of opportunity Opportunity versus personal goals and skills Competitive environment

13

Finalizing a Product/Service:
The identification of opportunity follows the process of developing & selecting the product or service idea, which takes into account the following factors: Market growth rate Market size

Demand variability
Industry profitability Industry rivalry Global opportunities Macro-environmental factors etc
14

PROCESSING & SELECTION OF IDEA-

products which pass through all the

tests(be technically feasible, commercially

viable) are considered for final

selection.

15

Criteria to Select a Product

The selection of the right product is very essential for being successful in the business vanture. Various factors influence the entrepreneur in selecting the right product. These decisive factors/ criteria are: Personal traits and experience of the entrepreneur

Skilled & unskilled labour positions Availability of ready market Availability of raw materials & machinery Government policies- subsidies & incentives Scope for further expansion Demand projections Cost projections Competition Required investment Profitability etc
16

17

Feasibility Process
Identify problem or opportunity Initiate feasibility study Define scope, identify constraints and objectives

Make recommendation

Evaluate alternatives

Carry out Feasibility study

Accept project Reject project Delay project Refocus project Outsource project Proof of concept only

18

Feasibility Reports
These discuss the practicality, and possibly the suitability and compatibility of a given project, both in physical and economic terms. They also discuss the desirability of the proposed project from the viewpoint of those who would be affected by it. Report writers must come to a conclusion, and must recommend that some action is taken or is not taken and/or that some choice is adopted or is rejected.

19

This is a suitable format (or contents) of a feasibility report:

1. Abstract 2. Summary 3. Contents list (including a separate list of illustrations) 4. Glossary 5. Introduction (purpose and scope) 6. Discussion (the main body providing the evidence - use appendixes if necessary) 7. Conclusions (flowing naturally from the discussion) 8. Recommendations (flowing naturally from the conclusions) 9. References (if necessary) 10. Appendixes

20

21

22

Project Finalization
All complex projects consist of three basic phases: the initial (or preparatory) phase; the project (or work) phase; and the finalization phase. Each of these phases has its own challenges and pitfalls. These can be avoided by having a clear picture of what should be achieved in each of these phases. A project plan is finalized when it is formally accepted and approved by the project sponsor and other designated stakeholders. Formal approval acknowledges that all the deliverables produced during the Plan Stage are complete, reviewed and accepted.

23

 The project plan is important because it provides baseline information such as the budget, schedule and management plans for executing and controlling the project. A signed project plan represents a commitment to continue and to dedicate the required time and resources toward the project. It ushers the way into the Execute and Control Stage.

24

/ Information

25

26

Generating New Business Ideas

Techniques include:
Group brainstorming/lateral thinking exercises Research observation, enquiry, play, prototype, experiment Focus groups Surveys Analysis of and reflection on trends:
Economy Society social trends Technology Science Political and regulatory changes

27

28