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CHAPTER 6. OPPORTUNITY IDENTIFICATION. Objectives. The objectives of this chapter are to: provide an understanding of a viable business opportunity by identifying, observing and analysing relevant variables and trends in the environment that can be a source of good opportunities
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CHAPTER 6 OPPORTUNITY IDENTIFICATION
Objectives The objectives of this chapter are to: • provide an understanding of a viable business opportunity by identifying, observing and analysing relevant variables and trends in the environment that can be a source of good opportunities • provide students with knowledge and skills in analysing and identifying the most attractive and suitable business opportunities using SWOT analysis and strategic planning method • provide students with skills in developing a business model to capture and turn a business opportunity into a viable business start-up
Learning Outcomes At the end of this chapter, students should be able to: • develop generic skills in identifying and capturing opportunities in their career and life • apply generic analytical skills such as the application of SWOT analysis to their work • be creative and innovative in developing new business models or marketable products • work in groups effectively and harmoniously • inculcate a life-long attitude and commitment toward continuous self-improvement and professional development throughout their career
Introduction • Fundamentally, all business organizations exist to provide a service or product to their customers at a price which can give profit to the entrepreneurs and provide value to the customers. Therefore, most business opportunities evolve and develop from an effort to fill a gap in the form of needs, wants and creation of value to the customers.
Scanning the Environment • Improvement of existing products or introduction of better quality new products. • Fulfilling the gaps of needs, wants and creation of value to customers. • Opportunities based on local market or business advantage such as supply and demand, competition, cost advantage, quality advantage, reputation and brand advantage, etc. • Opportunities based on macro factors such as • technology • demographic, geographic and psychographic factors • political • trend, etc.
Business Ideas The following are examples of possible sources of business ideas: • Based on work experience. • Based on hobby and interest. • Based on chance encounters or observations while travelling. • Based on family business. • Based on suggestion from spouse, siblings and friends. • Based on business networks. • Based on local needs, wants, problem or finding gaps in the market place. • Based on market trend or market growth potential. • Based on copying successful business model.
Business Ideas (cont.) • Based on franchise business. • Based on searching and seeking of good opportunities in the environment. • Based on experimentation, trial and error methods and better product development. • Based on building internal strengths such as skills, capability, experiences, resources and networks so that you become the best and most suitable person to capture the opportunity. These additional strengths that you build may make opportunities seek you or single you out from your competitors. • Based on readings from magazines, books and internet. • Looking for good existing business for sale.
Screening, Analysis and Selection of the Opportunities • By nature, business environment is always like a competitive game, only the best will win the competition. • In order to win the game, an entrepreneur must choose a sector that suits his interest, aspiration, strength, capabilities and resources and find a market opportunity that offers him attractive and positive factors such as a sizable market, high growth market and minimum competition. • He needs to identify a business that he enjoys doing and has the skills to produce high quality product and can make this product at a cheaper cost and thus, can sell at an attractive price and in the process, makes some profit and contributes better value to the customers.
Critical Success Factors of an Entrepreneur • Entrepreneurial characteristic and traits such as being hardworking, alert to opportunities, perseverance, willing to take calculated risks, tolerance for ambiguity, high need for achievement, internal locus of control, goal oriented, etc. • Knowledge and experience in the field. • Soft skills such as leadership, communication and negotiation skills.
Critical Success Factors of an Entrepreneur (cont.) • Adequate resources such as capital and human resource. • Good networking with potential customers, suppliers, experts, potential workers, bankers and investors. • Good viable business opportunities with many positive and attractive environmental factors such as market size, market growth, minimum or tolerable competition, good support system and a good business concept, strategy, sound business plan and meticulous execution details.
Strategic Planning For Small Business Strength, Weakness, Opportunities and Threat (SWOT) Analysis • Using the SWOT analysis, an entrepreneur can identify attractive and favourable business opportunities that match his/her strengths.
Strategic Planning For Small Business (cont.) Strength, Weakness, Opportunities and Threat (SWOT) Analysis
