Unit II (14 Hours) Opportunity / Identification & Product Selection1. 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 2 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 3 . Opportunity recognition can be defined as “perceiving a possibility for new profit through the founding and formation of a new venture. and also post founding of a firm (throughout the life of the firm. 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. the significant improvement of an existing venture”. and throughout the life of the entrepreneur). From this broad definition opportunity recognition can be considered as an activity that can occur both prior to establishment of a firm.In terms of entrepreneurship. 4 . that lead to the possibility for new profit which need to be distinguished. Therefore scholars suggest we can think of the “idea” as a stepping-stone that leads to an opportunity. An idea for a business does not necessarily equate to an entrepreneurial opportunity. 5 . although it is always at the heart of an opportunity as an idea is the first step in the process of creating an opportunity. an “idea” and an entrepreneurial opportunity ”.Within the definition are two concepts. adapt. It involves close examination of the environmental conditions and their impact upon the business idea. substitute. etc.Entrepreneurial Opportunity Search and Identification It is quite possible that many of the promising ideas might not make commercial sense. This analysis may advice to modify. reverse. rearrange. combine. 6 . Carefully scan environment to gather ideas.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. Scanning the Environment may include the following for identification of business Opportunities: International Environment Domestic Environment Macro Environment Sect oral Analysis SWOT Analysis 7 . Develop sensitivity to changes around yourself. 9 . 10 . 11 .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. 12 .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. 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 . 15 .PROCESSING & SELECTION OF IDEA- products which pass through all the tests(be technically feasible. commercially viable) are considered for final selection. Various factors influence the entrepreneur in selecting the right product.Criteria to Select a Product The selection of the right product is very essential for being successful in the business vanture.subsidies & incentives Scope for further expansion Demand projections Cost projections Competition Required investment Profitability etc 16 . 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. 17 . 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 Process Identify problem or opportunity Initiate feasibility study Define scope. They also discuss the desirability of the proposed project from the viewpoint of those who would be affected by it. 19 . both in physical and economic terms. and possibly the suitability and compatibility of a given project.Feasibility Reports These discuss the practicality. and must recommend that some action is taken or is not taken and/or that some choice is adopted or is rejected. Report writers must come to a conclusion. use appendixes if necessary) 7. Discussion (the main body providing the evidence . Recommendations (flowing naturally from the conclusions) 9. Contents list (including a separate list of illustrations) 4.This is a suitable format (or contents) of a feasibility report: 1. Glossary 5. Summary 3. Conclusions (flowing naturally from the discussion) 8. References (if necessary) 10. Appendixes 20 . Abstract 2. Introduction (purpose and scope) 6. 21 . 22 . These can be avoided by having a clear picture of what should be achieved in each of these phases. reviewed and accepted. Formal approval acknowledges that all the deliverables produced during the Plan Stage are complete. and the finalization phase.Project Finalization • All complex projects consist of three basic phases: the initial (or preparatory) phase. A project plan is finalized when it is formally accepted and approved by the project sponsor and other designated stakeholders. Each of these phases has its own challenges and pitfalls. the project (or work) phase. 23 . • The project plan is important because it provides baseline information such as the budget. It ushers the way into the Execute and Control Stage. 24 . 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. / Information 25 . 26 . experiment • Focus groups • Surveys • Analysis of and reflection on trends: – – – – – Economy Society – social trends Technology Science Political and regulatory changes 27 . prototype. play. enquiry.Generating New Business Ideas • Techniques include: • Group brainstorming/lateral thinking exercises • Research – observation. 28 .