ENTREPRENEURSHIP DEVELOPMENT IInd Yr., STUDY NOTES - UNIT 1

Unit 1 –ENTREPRENEURIAL OPPORTUNITY IDENTIFICATION 

Introduction

 An Entrepreneur will always look for business opportunities in his Environment. He continuously seen his environment for opportunities, identifies it and seizes them. This initiative embodies in an entrepreneur and is regarded as his inherent feature. In this unit we deal with the basic concepts and elements of business opportunities, factors involved in sensing it, different sources available and implementation of the idea.

1.Concept of Business Opportunity

A private bus operator has introduced AC bus in his available route that is between Palakkad and Thrissur. He is only charging normal rates when compared to other private buses plying in the same route. A lot of ordinary passengers utilize this opportunity to beat the heat which is surging above 40 degree Celsius in Palakkad District.

• Why did the operator introduces the A/C bus?
• Will this improve profit earning capacity of business? How?
• Is there any increase in value addition and consumer satisfaction?

From the above case, you can see that the owner has sensed a business opportunity.
Business Opportunity refers to an attractive and accessible economic idea which could be implemented to create a business, earning profit through customer satisfaction, leading to further growth.

2.Sensing Entrepreneurial opportunity( Sources)

1. i)Knowledge of potential customer needs - it can be known through customer feedback about existing products and services they have been using and would want to use in future. Solution of a problem often leads to an Opportunity.
2. ii) Watching emerging trends/ changes happening in social, legal, technological and political aspects, will create new business opportunities. E.g. Health consciousness of people has led to numerous multi-speciality hospitals. Changing perception relating to education led to the growth schools of international standards.
3. iii) Innovation --It includes creating new things of value as well as new and creative processes that add value to the existing products or services. For example, from computers to tablets.
4. iv) Success stories of known entrepreneurs.
5. v) Studying Governent's promotional schemes and facilities offered to run some specific business enterprises.
6. vi) Availability of inputs at cheaper rate. Eg. Certain seasonal fruits like mango, jackfruits etc. can be processed and stored which can be sold in off season.
7. Vii) A new product introduced by competitor
8. viii) Their own or partners' past experience in a particular business line.
9. ix) Going through certain professional magazines catering to specific interest s like electronics, computers etc.
10. x) Making visits to trade fairs and exhibitions displaying new products and services.

3. Business Opportunity vs Business Idea 

After going through the above process, one might have been able to generate some ideas that can be considered to be pursued as ones business enterprise. At this juncture he has to differentiate between business idea and business opportunity. At the idea stage, there is simply an idea about what to do. But at the opportunity stage, idea has
actually been germinated about what to do and how to do. An idea become a business opportunity only when the following conditions are satisfied :-

1. (1) An attractive and acceptable rate of return on investment 
2. (2) Practicability of the idea·
3. (3)Competence of the entrepreneur to encash the opportunity· 
4. (4)Potential of future growth

4. Transformation of idea in to opportunity

This simply means that knowledge, skills, competencies and creative thinking needed to develop an idea are backed by factors critical for market success. When knowledge , skills, competencies, and creativity are strategically applied, a viable venture is born.
Assessment activity
A sizeable population in India depends on two wheelers for travelling. And most of these people will not be able to offered a car which is tagged with heavy price. A company in India has conceived a business idea and invented a car at a considerably low price when compared to middle segment cars.

1. 1. Name the company which has secured this business opportunity?
2. 2. What are the sources that lead the company to such an invention?

5.Environment scanning

Careful monitoring of an organization's internal and external environment for detecting early signs of opportunities and threats that may influence its current and future plans.

6. Needs and Importance of Environmental Scanning

1. 1. It helps to understand the actual happenings in the environment
2. 2. It helps to identify Strength Weakness Opportunity Threats of a Business idea.
3. 3. It acts as a tool in understanding, forecasting and decision-making in all situations.
4. 4. It helps an Entrepreneur to act quickly.

7. Process of Environment Analysis 

Spotting an Opportunity Scanning of Environment Identification of Project Starting a Business

8. Business Environment 

Business environment means the sum total of all individuals or institutions (consumers, competitors, suppliers, govt etc.) and other forces ( economic, social, political, legal etc) that are outside the control of a business enterprise but that may affect its performance. Business environment consists of two levels, i.e., Micro environment and Macro environment.

Activity : Suppose an airline is planning to expand the business. Can you list out some PESTEL factors that the company will consider as part of environmental scanning
Political- Terrorism , Landing right in foreign country
Economic ? ……………………………………………..
Social ? …………………………………………….
Technological ? ……………………………………………..
Ecological ? ……………………………………………..
Legal ? ……………………………………………..

9. PESTEL Model 

Macro Environments are summarized by “PESTEL” model. It is an analysis of the Political, Economic, Social, Technological, ecological and legal factors in the External environment of an organization, which can affect its activities and performance.

10.Market assessment

Market Assessment consists of

• 1.Demand.
• The demand assessment is based on the size of market, groups of consumers, tastes and preferences of the consumers etc of the market being targeted.

• 2.Supply and nature of competition
• It is a complete picture of the product made available in the market by all the existing players and their respective share in the market. It should also take in to account future competitors.

• 3. Cost and Price of product
• Cost and price of the proposed product should be compared with cost and price of the competitors

• 4. Project Innovation and Change
• Market assessment require a study of prevailing innovations; and changes being carried out by existing entrepreneurs using technological advancements in the field.

11.Trend spotting

Trend Spotting refers to identification of new trends which helps an Entrepreneur to understand the market and produce goods or services with the market trends. Trend Spotting is an immediate identification of new trends like Fashions, Activities, Designs, Assumptions, etc.

• 1.Read Trends:- Entrepreneurs regularly read the leading publications and going through websites affecting their business in order to identify new trends in their field.
• 2.Talk Trends:- Talking to people from different walks of life like Industry, trade association, social network, etc helps in trend spotting..
• 3.Watch Trends:- Watching and observing the customers in the market place, Eg: eating habit of the people, their dress code etc.
• 4.Think Trends :- Entrepreneur should put together all the sources of information (Read trends, Talk trends and Watch trends)and start thinking about potential trend that may emerge in future.