RCA 204, Innovation & EntrepreneurshipUnit III: Opportunity / Identification and Product Selection (8 Hrs) Meaning and concept of Entrepreneurial Competency, Developing Entrepreneurial Competencies, Entrepreneurial Culture, Entrepreneurial Mobility, Factors affecting Entrepreneurial mobility, Types of Entrepreneurial mobility. Entrepreneurial Opportunity Search and Identification; Criteria to Select a Product; Conducting Feasibility Studies; Project Finalization; Sources of Information _____________________________________________________________________________________ MEANING OF ENTREPRENEURIAL COMPETENCY The business operation is considered to be very complex in a competitive business environment, which is constantly changing with fast technological advancements. An entrepreneur is expected to interact with these environmental forces which require him to be highly competent in different dimensions like intellectual, attitudinal, behavioral, technical, and managerial aspects. Entrepreneurs are therefore permanently challenged to deploy a set of competencies to succeed in their entrepreneurial endeavors. Entrepreneurial competencies are defined as underlying characteristics possessed by a person, which result in new venture creation. These characteristics include generic and specific knowledge, motives, traits, self-images, social roles, and skills that may or may not be known to the person. That is, these characteristics may be even unconscious attributes of an individual. Some of these competencies are innate while others are acquired in the process of learning and training and development. Definition “Entrepreneurial competencies can be defined as underlying characteristics such as generic and specific knowledge, motives, traits, self-images, social roles, and skills that result in venture birth, survival, and/or growth.” – Bird (1995) Types of Competencies: Prepared by Neelam Rawat RCA 204, Innovation & Entrepreneurship The competencies may be classified into following categories: 1. Personal entrepreneurial competencies 2. Venture initiation and success competencies a) Enterprise launching competencies b) Enterprise management competencies Personal Entrepreneurial competencies It is the personal characteristics of an individual who possess to perform the task effectively and efficiently. Personal entrepreneurial competencies include the following: a) Initiative The entrepreneur should be able to take actions that go beyond his job requirements and to act faster. He is always ahead of others and able to become a leader in the field of business. He Does things before being asked or compelled by the situation and acts to extend the business into new areas, products or services. b) Sees and acts on opportunities An entrepreneur always looks for and takes action on opportunities. He Sees and acts on new business opportunities and Seizes unusual opportunities to obtain financing, equipment, land, work space or assistance. c) Persistence An entrepreneur is able to make repeated efforts or to take different actions to overcome an obstacle that get in the way of reaching goals. An entrepreneur takes Prepared by Neelam Rawat RCA 204. He expresses concern about costs vs. They generate new ideas or innovative solutions to solve problems and they take alternative strategies to solve the problems. h) Systematic Planning An entrepreneur develops and uses logical. They look for or find ways to do things faster or at less cost. They plan by breaking a large task into subtask and develop plans. i) Problem Solving Entrepreneurs identify new and potentially unique ideas to achieve his goals. Innovation & Entrepreneurship repeated or different actions to overcome an obstacle and Takes action in the face of a significant obstacle. They compare own work or own company’s work favorably to that of others. d) Information Seeking An entrepreneur is able to take action on how to seek information to help achieve business objectives or clarify business problems. then anticipate obstacles and evaluate alternatives. benefits of some improvement. They seek information or ask questions to clarify what is wanted or needed. change. They do personal research on how to provide a product or service. They personally undertake research and use contacts or information networks to obtain useful information. step-by-step plans to reach goals. f) Commitment to Work Contract An entrepreneur places the highest priority on getting a job completed. They take a logical and systematic approach to activities. or course of action. An entrepreneur states a desire to produce or sell a top or better quality product or service. e) Concern for High Quality of Work An entrepreneur acts to do things that meet certain standards of excellence that gives him greater satisfaction. An entrepreneur uses information or business tools to improve efficiency. j) Self-Confidence Prepared by Neelam Rawat . g) Efficiency Orientation A successful entrepreneur always finds ways to do things faster or with fewer resources or at a lower cost. They accept full responsibility for problems in completing a job for others and express concern for satisfying the customer. They make a personal sacrifice or take extraordinary effort to complete a job. reliability or other personal or company’s qualities. m) Use of Influence Strategies An entrepreneur is able to make use of influential people to reach his business goals. They also assert strong confidence in own company’s or organization’s products or service. Enterprise management competencies a) ENTERPRISE LAUNCHING COMPETENCIES Competency to understand the nature of business Prepared by Neelam Rawat . An entrepreneur can persuade or influence others for mobilizing resources. They stick to their own judgment while taking decision. Innovation & Entrepreneurship Entrepreneur with this competency will have a strong belief in self and own abilities. They asset own competence. obtaining inputs. Reference: http://www. organizing productions and selling his products or services. RCA 204. n) Monitoring Entrepreneurs with this competency normally monitor or surprise all the activities of the concern to ensure that the work is completed by maintaining good quality. They demand recognition and disciplines those failing to perform as expected. Entrepreneur must also possess the competencies required to launch the enterprise and for its growth and survival. Enterprise launching competencies b. o) Concern for Employee Welfare Entrepreneurs with this competency take action to improve the welfare of employees and take positive action in response of employee’s personal concerns. k) Assertiveness An entrepreneur confronts problems and issues with others directly. Entrepreneurs with this competency influence the environment (Individuals/Institution) for mobilizing resources organizing production and selling goods and services to develop business contacts. It is further divided into two categories of competencies: a.in/mbabba/entrepreneurial-competency/2/ 2. l) Persuasion Entrepreneurs with this competency successfully pursue others to perform the activities effectively and efficiently. Venture Initiation and success Competencies In addition to personal competencies.simplynotes. They express confidence in their own ability to complete a task or meet a challenge. Entrepreneur with this competency vindicate the claim to asset their own rights on others. planning.RCA 204. access. -To determine the finance necessary to start a new business. Competency to locate the business -To analyze customer transportation. -To follow the steps necessary to file for ownership of the business.e. relative to alternative site locations. -To analyze how to maximize the opportunities and minimize the risks of owning a business. -To work effectively with consultants. problem solving and creativity. -To recognize how a business plan should be organized. Competency to finance the business -To describe the source of information available to help in estimating the financing necessary to start a new business. Competency to a choose the type of ownership -To analyze the type of ownership of business. -To define politics and procedures for a successful multi-owner. Prepared by Neelam Rawat . -To determine own potential for management. -To prepare a loan application package. personnel and public relations. -To analyze the personal risks of owning a small business. -To select the provisions that is desired in the lease. Competency to plan the market strategy -To use goods classification and life cycle analysis as planning tools for marketing. -To identify and use the mechanisms for developing a business plan. -To complete a location feasibility study for the business. Competency to deal with the business -To determine the need for legal assistance. operations. Competency to determine the potential as an entrepreneur -To consider the personal qualification and abilities needed to manage own business. -To prepare an occupancy contrast for the business. -To evaluate the own potentials for decision-making. -To evaluate operations to improve decision making about marketing. parking and so forth i. -To use decision making tools and aid in evaluating marketing activities. Competency to develop a business plan -To identify how a business plan helps the entrepreneur. -To develop and modify marketing mixes for a business. -To prepare a project profit and loss statement and a projected cash flow statement for the new business. -To determine the cost of renovating or improving a site for the business. Innovation & Entrepreneurship -To analyze the personal advantage of owning a small business. Competency to obtain technical assistance -To prepare for using technical assistance. -To select professional consultants. -To acquire the information necessary to comply with the various rules and regulations affecting the business. payroll. -To describe the techniques used to prepare advertising and promotion -To analyze competitive promotional activities. Competency to promote the business -To create a long-term promotional plan. -To develop a training programme online for employees. -To plan a community relations programme. -To establish control practices and procedures for the business Competency to manage human resources -To write a job description for a position in the business. Competency to keep business records -To determine who will keep the books for the business and how they will be maintained. -To develop a plan for training and motivating sales people. -To plan a corrective interview with an employee concerning a selected problem. inventory. RCA 204. -To evaluate promotional effectiveness. -To develop a sales plan for the business. cash disbursements. -To identify the types of records that will be used in the business to record sales. -To develop policies for the business to comply with the Government rules and regulations. -Select the types of journals and ledges that you will use in the business. -To develop a list of personnel for employees in the business. -To describe double-entry bookkeeping. Competency to manage sales efforts. accounts receivable. b) ENTERPRISE MANAGEMENT COMPETENCIES Competency to manage the business -To plan goals and objectives for the business. -To evaluate the business records. accounts payable. budgets and other items. -To develop a diagram showing the organizational structure for the business. -To develop an outline for an employee evaluation system. -To develop policies and procedures for serving the customers. -To identify how a micro-computer may be used to keep he business records. Competency to comply with government regulations -To appraise the effects of various regulations on the business operations. Innovation & Entrepreneurship -To prepare sales contract (such a s credit sales or long term sales) that may be utilized in the contracts -To evaluate contracts. -To determine the need for protection of ideas and intentions. cash receipts. Prepared by Neelam Rawat . petty cash. -To identify financial control procedures. -To identify the components of breakeven point problem. -To develop a series of credit collection reminders and the follow up activities. -To describe how to find cash flow patterns.RCA 204. Competency to protect the business -To prepare policies for the firm that will help minimize losses due to employee theft. Competency Assessment: Prepared by Neelam Rawat . identifying and recognizing of what entrepreneurial behavior means. How to develop and sharpen the entrepreneurial competency is suggested in the following method or procedure consisting of four steps: 1. Competency to manage customer credit and collection -To analyze the legal rights and resource of credit guarantors. Competency Identification and Recognition: Acquisition of a new behavior like entrepreneurial behavior begins with understanding. robbery. vendor theft. Competency Identification and Recognition 2. bad cheques. DEVELOPING ENTREPRENEURIAL COMPETENCIES The competency results in superior performance. Competency finds expression in human behavior. The popular Kakinada experience conducted by McClelland and winter (1969) has proved beyond doubt that the entrepreneurial competency can be injected and developed in human minds through proper education and training. injury or product liability. Competency Assessment 3. amounts and costs of insurance needed by the firm. Development Intervention A brief description about each of these follows in turn: 1. shoplifting. -To describe how to prepare an owner’s equity financial statement. -To review microcomputer application for financial management. -To determine the kinds. 2. In other words. Competency Mapping 4. Innovation & Entrepreneurship Competency to manage the finances -To explain the importance of cash flow management. -To discuss information resources and systems that applies to credit and collection procedures. -To analyze trouble spots in financial management. -To analyze financial management ratios applicable to a small business. -To prepare a credit promotion plan. the first step involved in developing the entrepreneurial competency is first to identify and recognize the set of competencies required to effectively behave like an entrepreneur. -To develop various credit and collection policies. This is exhibited by one’s distinct behavior in different situations. the actual competencies possessed by an entrepreneur are examined against the required set of competencies to effectively behave or act like an entrepreneur.’ This may result in four possible situations as shown in the following Figure: Prepared by Neelam Rawat . the next step is now to see what entrepreneurial competencies the person actually possesses. This is presented as follows: A popular performance tool used to map the (entrepreneurial) competency is based on “Skill to Do / Will to Do’ chart. the ‘Ability to Do / No Ability to Do’ dimension of this comes within the purview of the “Entrepreneurial Competence’ and the “Will to Do /No Will to Do’ dimension comes within the purview of the ‘Entrepreneurial Commitment.”Skill to Do’ refers to the entrepreneur’s / individual’s ability to do the job and to Do’ refers to the entrepreneur’s individual’s desire or motivation to do the job. In other words. this is just like ‘training needs identification’ in case of HR training.RCA 204.’ In other words. Innovation & Entrepreneurship Once the set of competencies is identified and recognized to behave like an entrepreneur. In other words. the actual competencies possessed by an entrepreneur are compared with the competencies required to become a successful entrepreneur to ascertain the gap in the entrepreneurial competencies of an entrepreneur (Cooper 2000). Competency Mapping: Now. Where one stands with respect to a set of required competencies to act like an entrepreneur or what is the level of one’s competence can be ascertained by asking the relevant questions to a competence. 3. This is called in the human resource training and development lexicon as ‘Competency Mapping. but is not getting the desired results out of his efforts. Innovation & Entrepreneurship These four situations mean the following: (A) Ability to Do / Will to Do: Among all four situations. Thus. the entrepreneur either needs to continue like this or disappear from the entrepreneurial role. values and assumptions. Thus. internalizing and practicing a particular behavior or competence. the entrepreneur is qualified or possesses the ability to do his job but is not willing to perform the same. ‘competency building. He says that an organization’s culture is grounded in the founder’s basic beliefs. 4. feedback means to know the strengths and weaknesses of one’s new behavior. (C) Ability to Do / No Will to Do: Here. The entrepreneur is fully able. In simple terms. qualified and is performing his job as designed and desired. or say. the entrepreneur is putting out his efforts to perform the job. In a sense. (D) No Ability to Do / No Will to Do: The entrepreneur has deficiency in both ability and will (motivation). (B) No Ability to Do / Will to Do: In this situation. This helps one know how the new behavior has been rewarding. Values – what is worth having or doing – and vision – where we are going and how we will get there – and how it is communicated are vital ingredients in creating culture. one needs to make an introspection of the same in order to sharpen and strengthen one’s competency. INCREASE ENTERPRISE VALUE BY MAINTAINING YOUR ENTREPRENEURIAL CULTURE Edgar Schein (1990) says that the only important thing that leaders do may well by constructing culture. This is called ‘feedback’. It means he is lacking ability or skill to perform the job. the entrepreneur needs to be motivated to perform his job. Having entrepreneurship at the core of these values is fundamental and essential for the success of the Prepared by Neelam Rawat . This implies the lack of desire or motivation. Development Intervention: After understanding. it implies that the entrepreneur needs training. Thus. this is the ideal one. This enables one to sustain or give up the exhibition of a particular behavior or competence in his future life.e.RCA 204. He is supposed to be star or ideal performer as an entrepreneur. i. he is just like deadwood and his entrepreneurial job is in jeopardy. change and perseverance. achievement. To achieve this. the leader needs to: Define clearly what the values and vision are. All these influences Burns represents in following figure: Burns talks about five ‘high level’ elements that really set the culture of the organization apart as being entrepreneurial. Show concern and respect for the members of the organization. cognitive processes and behaviors. Values related to entrepreneurship include creativity.RCA 204. organizational processes. Innovation & Entrepreneurship entrepreneurial organization. This provides a clear focus on key issues and concerns for the organization. This reassures people who are concerned about change. demonstrating through actions that they are important. showing that they are reliable and can be trusted to do what they promise. Get everyone in the organization to understand the values and vision through effective communication practices. Bowman and Faulkner (1997) talk about organizational culture being formed or embedded in an organization from three influences. ownership. They represent the real DNA of the entrepreneur: creativity and innovation empowerment strong relationships continual learning Measured risk-taking. Guide the development of policies and programmes that support the vision. Encourage the enactment of the values and vision through their own personal actions – ‘walking the talk’ – acting consistently over time to develop trust. Prepared by Neelam Rawat . employee trips and parties.Be Humble Twitter Employees of Twitter can’t stop raving about the company’s culture. Deliver WOW Through Service 2. Create Fun and A Little Weirdness 4. Google It would almost seem wrong not to mention Google on a list of companies with great culture. Build Open and Honest Relationships With Communication 7. and sets the tone for many of the perks and benefits startups are now known for. Be Passionate and Determined 10. Rooftop meetings. Googlers are known to be driven. Ten core values are instilled in every team member as: 1.RCA 204. financial bonuses. entrepreneurial mobility may be classified as follows: Prepared by Neelam Rawat . Adobe Adobe is a company that goes out of its way to give employees challenging projects and then provide the trust and support to help them meet those challenges successfully. along with yoga classes and unlimited vacations for some. Pursue Growth and Learning 6. ENTREPRENEURIAL MOBILITY Entrepreneurial Mobility means movement of entrepreneurs from one location to another and similarly from one occupation to another. talented and among the best of the best. New employees are offered $2. These and many other perks are not unheard of in the startup world. and Open-Minded 5. Innovation & Entrepreneurship Examples: Zappos: Zappos has become almost as well known for its culture as it is for the shoes that it sells online. open presentations by high-level executives. gyms. Employees of Twitter can also expect free meals at the San Francisco headquarters. Free meals. What does that culture look like? It starts with a cultural fit interview.000 to quit after the first week of training if they decide the job isn’t for them. friendly coworkers and a team-oriented environment in which each person is motivated by the company’s goals have inspired that praise. Embrace and Drive Change 3. which affect the pace and pattern of entrepreneurship development. Google has been synonymous with culture for years. Do More With Less 9. which carries half the weight of whether the candidate is hired. Be Adventurous. Based on the movement and settlement of entrepreneurs (being human beings). Creative. Adobe's is a culture that avoids micromanaging in favor of trusting employees to do their best. a dog-friendly environment and so on. Build a Positive Team and Family Spirit 8. While it offers benefits and perks like any modern creative company. Explain the difference between opportunities and ideas. An experienced entrepreneur better perceives the available opportunities. better analyses his/her strengths and weaknesses and also understands the complexities involved in running an enterprise. Because a large size of enterprise will have the capability to start a new business at a new place. own resources. socio political situation.RCA 204. 3. These facilities include - a. Size of Enterprise: Entrepreneurial mobility is related to size of enterprise. Prepared by Neelam Rawat . environmental regulations. Occupational Mobility . b) Intra-generation occupational movement: When a person may move or leave from his/her own occupation during the operational career. Thus. He/she also enables to adjust with the different conditions more easily and clearly and communicate others in a better manner. 3. Availability of Facilities: The entrepreneurs may move from the areas with no or less facilities to the areas with more and better facilities. Govt. Infrastructural facility. This may take place in two forms: a) Inter-generation movement: When a person may move or leave from the principle occupation of his/her father. That technical knowledge and experience influences the entrepreneurial mobility. Locational Mobility . b. Innovation & Entrepreneurship 1. experience.means movement or changes in location. employment laws. Political Conditions: The entrepreneurial mobility is also influenced by the political factors. Larger business houses are found more mobile than smaller ones. market facilities. FACTORS AFFECTING ENTREPRENEURIAL MOBILITY There are following some important factors influence the entrepreneurial mobility in a given situation and time: 1. etc. infrastructure and labor. 2. labors. knowledge. is called Inter-generation movement. nearness to market.means movement or changes in occupation. trade restrictions and tariffs. such as tax policy. 5. Discuss the personal characteristics of entrepreneurs that contribute to their ability to recognize business opportunities. 2. Describe the three general approaches entrepreneurs use to identify opportunities.availability of raw materials. 4. This mobility depends upon some factors like availability of raw material. facilities . Training and Experience: An entrepreneur must be properly trained and must have some past experience in business or industry. political stability. is called Intra-generation occupational movement. 2. _____________________________________________________________________________________ PRACTICE EXERCISES: 1. Education: An entrepreneur must be educated person. an educated entrepreneur tends to be more mobile than an uneducated one. Intended as both a new convenience for consumers and a way to harvest more customer data to drive targeted advertising. 5. Opportunity identification can be defined as the cognitive process or processes through which individuals conclude that they have identified an opportunity. The moral of this lesson is that investors invest in business opportunities and ventures. and is distinct both from detailed evaluation of the feasibility and potential economic value of identified opportunities and from active steps to develop them through new ventures. Let us try to understand the difference. For one thing. Innovation & Entrepreneurship 4. and the card companies demanded such big fees for participating that Google reportedly lost money on every transaction. not business ideas. Successful entrepreneurs are good at turning ideas into opportunities. you can turn a business idea into a business opportunity by conducting market research and feasibility study on your idea. an impression of a concept or a notion that revolves around seemingly successful product or service. writing a business plan and assembling a business team that will work with you on your idea. Phone Prepared by Neelam Rawat . Only then will such idea become an opportunity that will attract investors and probably get the needed financing. It is essentially a situation in which new goods. He calls the problem “putting the ‘wow’ before the 'how. proper environment and protection from harsh rains or weather conditions.'" Google Wallet.RCA 204. raw materials. Why most innovations are great big failures? By Payne’s lights. sunshine. Discuss actions to take to encourage continuous development of new ideas in entrepreneurial firms. it involves digitizing credit cards. The gardener ensures that it gets good soil. An idea is like a seed. Opportunity is the care and nurturing that a gardener has to endeavor for to turn the seed into a sapling and then allow it to grow into a tall tree. It is important to note that opportunity identification is only the initial step in a continuing process. the product was designed to replace your old leather billfold with an all-digital phone-based app. Example: Colonel Sanders tried for many years to sell his chicken recipe idea but no one listened to him until he repackaged it and KFC (Kentucky Fried Chicken) was born. Identify and describe techniques entrepreneurs use to generate ideas. markets and organizational strategies can be introduced through the formation of new means. most innovations fail because their creators didn’t ask tough questions at the outset. ends or means-ends relationships. Now how do you turn a business idea into an opportunity? Well. Google Wallet had plenty of “wow” but the “how” has been its downfall. OPPORTUNITY SEARCH AND IDENTIFICATION Opportunity search means the extent to which possibilities for new ventures exist and the extent to which entrepreneurs have the Smooth way to influence their odds for success through their own actions. A thought that needs some amount of commercial validation before it shapes self into an opportunity. your idea needs to be attractive to your target customers who will buy your idea. what about your idea would make people want to buy it? Prepared by Neelam Rawat . though some of the structural factors impeding its success will be hard to ever overcome. and the executives who led the team have left the company. and is anchored in a product or service.” Payne writes. attractive. An opportunity is a favorable set of circumstances that creates the need for a new product. I am also referring to the idea itself. You first you need to identify who your target customers are for this idea to work. Does it create excitement? Does it have an attractive price point? Will the quality and ease of use meet or exceed the user’s expectations? Is it unique? Does it have attractive features and benefits? Basically. durable anchored in a product or service that creates or adds value for its buyer and user. as we defined it.RCA 204. An idea. An opportunity is attractive. “But for now. What is an opportunity?? An idea that is timely. which creates or adds value for its buyer or end user. is “Something imagined or pictured in the mind”. The debacle has so far cost Google at least $300 million. Innovation & Entrepreneurship companies. “Google Wallet is perhaps an idea ahead of its time. durable. Jeffrey Timmons Four Essential Qualities of an Opportunity Attractive Opportunity: First and foremost. The difference is that an idea may or may not represent an opportunity. blocked the service. it’s a great case study in what can go wrong” with any company’s world-beating idea when too many tough questions go unanswered—or unasked—at the start. When I say “attractive” I do not mean just aesthetics and a cool look and feel. seeing Google Wallet as a competitor in the potentially lucrative mobile- payments business. or business idea. service. The idea must also be attractive in the industry in which it is going to compete. timely. Creates Value: This is obviously one of the most important factors to generate sales. and BOOM! Now that same rag is sold in the clothing departments with minimal change to the textile’s manufacturing and production processes. Some may see this as just a rag for cleaning – thus just a cleaning product. embroidered with corporate branding. A scalable product can penetrate multiple markets and sometimes industries with many ways to grow. Businesses create products. Major trends to consider are economic trends. thus generating revenue for your business to be sustainable. aka willingness to pay. and the window of opportunity (for new entrants) closes. and various other externalities. and industry trends. OPPORTUNITY IDENTIFICATION Prepared by Neelam Rawat . Timely: Timely can get a little tricky as this is really an area of economics. does your product create perceivable value that is affordable? Do some research and talk to people in your target markets. but the mass market does not see things the same way as the innovators did. the market matures. technological trends. They have a $700 phone in their pocket. then people will not want to buy it. now that the prices have come down. Window of Opportunity The term “window of opportunity” is a metaphor describing the time period in which a firm can realistically enter a new market. This is common in the early adoption stages. so do they really want to spend another $200-$400 to read a text on their wrist? Is the time they save from having to pull their phone out of their pocket really worth $400? The watches do much more than that. It’s amazing how much you can learn if you just ask the right people. again. where products are looked at through a very simplified lens by the mass consumer. A PRODUCT and a BUSINESS are two very different things. However. demographics. “Is this the right time for my idea?” When analyzing this. At some point. A perfect example is the invention of the microfiber textile. Innovation & Entrepreneurship Durable: Durability of an idea from a business standpoint means that it can last as a business. Your idea must create value in order for people to purchase it. Once the market for a new product is established. Basically. social trends. it is always best to look at various trends. A big consideration here is the cost of the idea in relation to the value it creates for the customer. So.RCA 204. and new entrants flow in. this quality comes down to the question. more people are adopting this technology now that the price is beginning to match the perceived value. If it costs more than the value of the pain you are solving. Recently. consumers have been facing this issue with high-end smart watches. but a whole business built around one product that has little scalability is pretty much a dead end. its window of opportunity opens. psychographics. But it can also be cut into the shapes for clothing. Economic factors in trend: When looking at economic factors and how they affect opportunities. and business ideas is a fundamental piece of the opportunity recognition puzzle. There are two ways that entrepreneurs can get a handle on changing environmental trends: They can carefully study and observe them. When incomes are high in a particular group or there is disposable money available.RCA 204. Often. service. They can purchase customized forecasts and market analyses from independent research firms. Another gigantic market is the aging baby boomers. A great example of this would be the teen and pre-teen market. people are more willing to buy products and services that enhance their lives. When kids have money. new smart phones and all the other things that these kids buy are a huge market and therefore have opportunistic possibilities. downloadable music services. These folks have spent a lifetime saving money and preparing for their retirement and they have disposable income. Social Factors in trends An understanding of the impact of social forces on trends and how they affect new product. first you should evaluate who has money to spend. they buy stuff. the reason that a product or service exists has more to do Prepared by Neelam Rawat . Products and services such as designer clothing. Innovation & Entrepreneurship The first approach to identifying opportunities is to observe trends and study how they create opportunities for entrepreneurs to pursue. is expanding because of this new trend in the tendency to feel the need for data to be more protected than in the past. Instead. social networking sites like Facebook and Twitter aren’t popular because they can be used to post information and photos on a Web site. These problems can be pinpointed through observing trends and through more simple means. and access it via any Internet connection. for example. For example.net allows its customers to store data “offsite” on Box. OpenTable. and then realized that the solution to the problem represented a business opportunity. Many companies have been started by people who have experienced a problem in their own lives. Similarly. enables doctors to monitor critical patient information remotely on a smart-phone or computer. serendipity. it is vital that entrepreneurs keep on top of how new technologies affect current and future business opportunities. The backup data storage industry. GAPS IN THE MARKETPLACE Prepared by Neelam Rawat .com is a Web site that allows users to make restaurant reservations online and now covers most of the United States Political Factors: Political change also engenders new business and product opportunities.RCA 204. The proliferation of fast-food restaurants. global political instability and the threat of terrorism have resulted in many firms becoming more security conscious. An example of a start- up in this area is Box.net. In most cases the technology isn’t the key to recognizing business opportunities. For example. or change. Changes in social trends alter how people and businesses behave and how they set their priorities. These changes affect how products and services are built and sold. Box. They’re popular because they allow people to connect and communicate with each other. a recent start-up. the key is to recognize how technologies can be used and harnessed to help satisfy basic or changing needs.” SOLVING A PROBLEM Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it. The company’s founding was motivated by a desire on the part of doctors to stay in closer contact with their critical care patients while away from the hospital and while those patients are receiving treatment in locations outside a hospital. for example. which is a natural human tendency. Technological factors: Given the rapid pace of technological change. These companies need new products and services to protect their physical assets and intellectual property as well as to protect their customers and employees. the owner of the Dallas Mavericks. Advances in wireless technologies made the system possible.net servers. which was funded by Mark Cuban. Entire industries have emerged as the result of technological advances. such as intuition. Airstrip Technologies. Innovation & Entrepreneurship with satisfying a social need than the more transparent need the product fills. isn’t primarily because of people’s love of fast food but rather because of the fact that people are busy and often don’t have time to cook their own meals. A pre-feasibility is a preliminary version of a feasibility study. evaluation and choice. necessary machineries are set in motion. research institutes. The product with the highest chances of success as reflected in its demand will be selected. the following factors must be taken into consideration: 1. Innovation & Entrepreneurship A third approach to identifying opportunities is to find a gap in the marketplace. consulting firms.RCA 204. Prepared by Neelam Rawat . At this stage. It is similar to a feasibility study except that it is less detailed. In essence. Evaluation: Screening of the product ideas is the first step ill evaluation. Each identified product/investment opportunity needs to be adequately evaluated. In selecting product for your business venture. technically feasible and economically desirable. desk research and various types of management consensus procedures. time money and equipment required. etc The starting point for idea generation could be a simple analysis of the business’s strengths and weakness. These are idea generation. to a great extent the need to select a particular product. there must be existing obvious demand for the selected product. natural resources. Choice: A choice is made of product which has been found to be commercially viable. Supply-gap: The size of the unsatisfied market demand which constitute a source of business opportunity will dictate. A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers. Such criteria as potential value of the product. Idea Generation: Product ideas or investment opportunities come from different sources such as business/financial newspapers. technical and financial aspect is necessary at this stage to have a clear picture of the associated cost and benefits. universities. competitors. fitting of potential product into the business’s long range sales plan and availability of qualified people to handle its marketability need be thoroughly considered. A pre-feasibility study of the product market. Ideas could also be generated through brainstorming. CRITERIA TO SELECT A PRODUCT IN ENTREPRENEURSHIP There are three basic stages/steps involved in product/venture selection. It is usually carried out for large and complex product/project to determine whether to proceed to the more elaborate feasibility study. the company goal maybe the achievement of sale growth. competitor may introduce a competing product into the market unexpectedly. Innovation & Entrepreneurship 2. Fund: The size of the funds that can be mobilized is another important factor. However. The source quality and quantity of the raw materials needed are factors to be seriously considered. sell and distribute the product selected. For instance. For instance. Availability of Qualified Personnel: Qualified personnel to handle the production and marketing of the product must he available. a package of incentives from government for a product with 100% local input contents can change the direction of the business’s R & D and hence the product selected. This is achievable through competent hands. For instance. 4. often leads to product failure.RCA 204. There is need to know the technical implications of the selected product on the existing production line. 6. Adequate fund is needed to develop. The product must be marketable. Subtle changes in the market. a product may be selected on the basis of its ability to utilize idle capacity or complement the sale of the existing products. 7. sales stability or enhancement of the company’s social value. promote. Availability of and Access to Raw Materials: Different products require different raw materials. Causes of Product Failure A wrong choice when made. 8. available technology and even the labour force. Technical Implications: The production process for the product needs to be considered. 3. 5. Government Policies: This is quite often an uncontrollable factor. Lack of sound market appraisal Prepared by Neelam Rawat . produce. Profitability/Marketability: Most often. The product itself must be technically satisfactory and acceptable to the user. The cost of producing the product must be kept to the minimum by reducing wastages. Product failure may be caused as a result of one or combination of the following: Management oversight during the basic planning stages – initial research may be either inadequately done or bungled in the interpretation. Government objectives: The contributions of the product to the realization of the company’s short and long range objectives must be considered before selection. The choice of a particular product may require either acquisition of the machineries or refurbishing of the old ones. Are the raw materials available in sufficient quantities? Where are the sources of raw materials located? Are they accessible? Could they be sources locally or imported? Satisfactory answers should be provided to these and many other relevant questions. The focuses of government policies can significantly influence the selection of product. the product that has the highest profit potential is often selected. Prepared by Neelam Rawat .which is to increase the number of real or imagined product benefits. For Instance. technical advice. Conducting Feasibility Study Starting a new business project is inherently risky because there is no guarantee that a new company. is used to add value to the product. There are some possible alternatives of product modification. product or service will be profitable. Product Modification Product selection is one thing. but they can provide valuable insights that help managers make better decisions and avoid costly mistakes. The improvement may be in the appearance or end use. This is where product modification comes in because of the dynamic nature of the business environment. namely: Quality improvement– which aims at strengthening the competitive position of the product. Inadequate marketing support. Feature improvement. Innovation & Entrepreneurship Product problems and defect e.g.g. Feasibility studies are commonly used in the early stages of planning new ventures to help managers decide whether to go forward with new projects. A feasibility study is an analysis that attempts to assess whether a new project has the potential to succeed. giveaways competitions. However. etc. Often used by smaller companies competing with large ones. Promotional benefits e. the sustainability of the product in the market is another thing entirely. Feasibility studies technically aren't required to launch new ventures. the technique to use to modify a product is dependent upon the circumstance of the product in relation to the buyer.g. Lack of consumer education about the product. There need to at least stabilize the sale of the product. Style improvement – aims at improving the aesthetic appeal of the product rather than its functional performance. faster supply. Service improvement e. the manufacturing of a product that is too costly or too complicated. the company may have rated the product so high in the market that they cut back on promotion. breaking bulk. etc.RCA 204.