ENTREPRENURSHIP

Course code: ABM 213

Prepared by AGM 28.09.18

• ANDREA GONDWE MJUMA

• agmjuma82@gmail.com
• 0881 921 175
Unit 4: Creativity, Business Idea
generation and Opportunity
Evaluation
• By the end of the topic, we should be able to:
1) Explain business idea generation
2) Discuss the meaning of opportunity, theories of an opportunity and
window of opportunity
3) Describe creativity and creativity techniques
4) Explain barriers and how to address them and promote creativity
5) Explain how to evaluate a business opportunity
A. Business idea generation
• Business idea the perception that a course of action is potentially
profitable or value adding
• Business idea is not the same as an opportunity
• Business idea is like a seed from which a business may develop
• Business idea generation is a process of finding a significant solution
to a problem or to generating solutions to a problem
• Business idea generation flourishes from no/few restrictions and no
evaluation or criticism so that ideas continue to flow and not shut up
A. Business idea generation
• Sources of ideas for an entrepreneur:
B. Business Opportunity
• An opportunity is a market gap left in the market by firms that
currently serve in that market (Timmons, 2000)
• Market gaps left are open due to technological inertia, cultural inertia,
and economic inefficiency and entrepreneurs take advantage of
presented opportunities
• An opportunity is problem-based & relates to solution that is offered
to address a problem and customers are willing to pay for it
• Causal nature of opportunities needs to be assessed to understand
what leads to the existence of an opportunity
B. Business Opportunity
• Existing unresolved problems
1) Unsatisfied and common customer needs;
2) Shortcomings or weaknesses of possible competitors or
suppliers to competitors;
3) Changes in the environment that might create needs,
such as political or economic changes or even changes in
the international market; &
4) Shortcomings or weaknesses of possible competitors or
suppliers to those competitors
B. Business Opportunity
• Baron (2004:1) defines a viable business opportunity as a
perceived means of generating economic value that has not been
previously explored and is not currently being exploited by
others and meets a need or desire
• Three central aspects of an opportunity which can be identified
from the definition of Baron
1) Potential to make profit;
2) Newness-product, service or technology that did not exist
before; &
3) Perceived desirability-moral and legal acceptability of
product/service in society
B. Business Opportunity
• An idea becomes an opportunity if it is characterized as
1) attractive-structure, size, capacity and cost structure in
the market is attractive
2) durable –it must continue in a particular condition and
not wear out soon
3) timely –presented to the market at the opportune time
4) anchored in a product or service that creates or adds
value for its buyer or end user
C. Theory of Entrepreneurial
Opportunity
• two fundamental theories explain how opportunities occur:
discovery and creation theory
• Discovery theory sees an opportunity as rising from the
shifts or changes in external factors in the market or industry
e.g. regulation, technological changes, changes in consumer
preferences)
• These opportunities await to be discovered through a
systematic scanning of the environment
• Eentrepreneurs make high risky decisions as they do not
have all the required information to judge business risks
!!!Changes in the external
environment
• Political: e.g change of leadership, style of government
• Economic conditions: income levels of consumers, inflation rate
(cost of living); bank interest rates
• Social: changes in tastes/preferences of customers, cultural
practices/beliefs (western culture), population increases
• Technological advancements e.g. internet, production machines ets
• Environmental factors (natural resources): discovery of minerals;
climate change and variability (droughts, violent storms etc)
• Legal factors: new laws and regulations
C. Theory of Entrepreneurial
Opportunity
• Creation theory: entrepreneurs create opportunities through
their actions, reactions and experiments around new
products, services, and business models
• Entrepreneurs act and monitor how customers respond to
those actions
• Entrepreneurs identify a customer problem and seek a
solution
• If the creative solution has commercial potential, then there
is a business opportunity.
Window of Opportunity
• Market gaps represent window of opportunity
• Firms leave a gap in the market by not completely providing
services and products to meet all the needs of customers,
the gap represents a window
• The size of the window be feasible, viable while it remains
open long enough for an entrepreneur to take proper
advantage by entering the market
• Entrepreneur must see, locate, measure, open and close the
window of opportunity and provide better products or
services to the end users or buyers
Creativity
• Creativity is derived from the Latin word “creare” which
means to “produce or create something new”
• Imagination is key in creativity to develop new ideas, new
things or new solutions.
• The thinking process in creativity is usually unconventional as
previously accepted ideas are questioned and sometimes
rejected or modified. Creativity is unusual, uncommon,
unique and has something with surprise value.
• Creativity combines related & unrelated ideas into new and
unusual ideas
D. Theoretical developments in
the creativity
• There are different creativity techniques that can help an
entrepreneur to think, act more creatively and generate
ideas, these include
• Creative thinking process (Wallas, 1926); Rossman (1931)
and Alex Osborn (1953) developed the creative thinking
process further (See page 50 of Manual)
E. The Entrepreneurial Creative
Process
• six steps of entrepreneurial creativity process based on work
of various theorists
1) Preparation: analyze the problem/situation
2) Information gathering: gather information about the
entrepreneur himself or herself, problem or situation
that has been described in (1)
3) Idea generation: generate possible solutions for
problem
4) Evaluation of ideas: asses the benefits of the ideas to
select the best
E. The Entrepreneurial Creative
Process
• six steps of entrepreneurial creativity process based on work
of various theorists
• Implementation (innovation and invention): turn the idea
into reality
• Experimentation: test out the most promising idea by
creating the business, packaging the product and testing it
out in the market, developing the service, and making it
available to customers.
F. Myths & Barriers to Creative
Process
• Myths:
1) Creativity is limited to a small number of people
2) Only creative people always have good ideas
3) Money is a creativity motivator
4) Time pressure fuels creativity
5) Competitive situations foster creativity
6) Fear forces breakthroughs
F. Myths & Barriers to Creative
Process
• In addition to the myths, there are also obstacles which stand in
the way of people their creative abilities
1) Fear of failure: fear of making mistakes or of taking risk
2) Negative beliefs and habits: tendency to focus on negative
aspects of a problem
3) Making assumptions There is preference for judging idea
rather than generating them
4) Following rules “This is how we have done it in the past and no
other way would work”
5) Environment not willing to risk;
6) Lack of financial support; &
7) Cultural barriers
G. Methods for generating new product
or service ideas
• Accumulation of knowledge: Investigation and gathering of
information precedes a successful business idea through
extensive reading of magazines, newspapers, books,
conversations with others working in both related and
unrelated fields, and attending workshops and meetings
• Observations Entrepreneurs could generate viable business
ideas by simply observing
• Brainstorming: Involves 2 or more people in a brainstorming
session that develop freely as many alternatives as they can
to realize the objective or solve the problem
G. Methods for generating new product
or service ideas
• Nominal group technique: Often used in decision-making
process is a method of generating and prioritizing ideas. In
this technique, all group members must be present and are
required to operate independently
• Delphi technique: Delphi technique is similar to the nominal
group technique with the difference that the members are
not required to be physically present