BUSINESS OPPORTUNITY AND SELECTION Dr. Hashim Hussein

Opportunity Identification & Selection (OIS) :The Process  OIS 7 Step Process: 1.Preparation of personal profile 2.Development of OS (decision making) framework 3.Generation of ideas 4.Snap investigation 5.Evaluation in terms of OS (decision making), framework & short listing of ideas 6.Pre-feasibility studies 7.Opportunity selection

Step 1.: Preparation of Personal Profile About the entrepreneur:  May include following details: 1.Background : Personal, educational, experience, personality 2.Objectives for establishing enterprise 3.Investment preparedness 4.Attitude to risk taking 5.Personal considerations

Step 2: Development of opportunity selection (OS) framework  Investment  How much are you willing to invest?  P & P expenses  Contingency & escalation  Working capital margin  Technology sophistication  Quality & Quantity of technology to acquire

Step 2: Development of opportunity selection (OS) framework (cont’d)  Managerial/ Organization demands  Size or intensity or organizational task  How skills & expertise match?  Market Competition  Market research  Aggressiveness & determination to ‘sell’  Export industry consideration

Step 2: Development of opportunity selection (OS) framework (cont’d)  Sector preference  Government intervention/ dependence  Implementation time  Profitability  Degree of risk & its form  Location  Personal considerations  Taboos/ Religious Sentiments

Step 2: Development of opportunity selection (OS) framework (cont’d)  Lifestyle  Relative importance of money  Amenability takeover by children  Speculative orientation

Step 3: Generation or identification of ideas  To hit up ideas – the heart of OIS process  Strong creative dimension to be present  Stretch one’s mind for opportunity  Idea generation

Step 4: Snap Investigation of Ideas  Idea not enough – must examine preliminary viability  Preliminary investigation  Questions like:  What exactly is the product or service?  Application & uses  Possible scales of production or operation  Project cost to a given scale of production/ operation

Step 4: Snap Investigation of Ideas  Market / competition  Unit sale price  Degree of technological complexity  Expected annual turnover  Expected profit margin (range) And any other information you can collect without incurring too much expenditure

Step 5: Evaluation in terms of OS framework & short listing ideas  Will you be able to learn and get grip over business?  Securing term loans, financial assistance or commercial bank… will it pose a problem?  Key determinants: success & risks  Must cross check all judgments

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)  Portion a highly individualistic process  Generation of ideas will depend on  Interest in sending opportunity over time  Sense of urgency of business enterprise  Ability to harness courses of knowledge & information  Vision & creativity  Lateral thinking

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)  7 approaches to generation of ideas 1.Natural resources 2.Existing anticipated industries 3.Market driven 4.Service sector scanning 5.Extension/ modification of present work content 6.Creative effort 7.Other ways

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d) 1. Natural resources – to convert into profitable enterprises  Forest  Horticulture  Agro-waste  Marine or aqua  Mineral  Animal  Wind  Sun  Human

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d) 1. Natural resources – must pay attention to: 1.Exploitation 2.Resource quantification & life 3.Resource stability 4.Critical infrastructure for resource utilization 5.Commodity/ trading dimension 6.Legal dimension 7.Other considerations 8.Where will you pick resource based ideas?

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d) 2. Existing anticipated industries  Similar projects  Raw material for existing industry  Further processing of output of existing industry  Projects based on waste or by- products of existing industry  Packaging materials  Service requirements  Projects based on skills/ technology developed through existing industry

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d) 2. Existing/ anticipated industries – keep following in view  Outlook for existing industry of your interest  Ancillary parent industry syndrome  Captive arrangement  Nature of decision making  Projects in the pipeline  Motivated feedback  Look beyond local industries  Well trenched non- local supply industries

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d) 3. Demand driven or market driven opportunities  Trade flows  Import substitution  Growth products  Product positioning/ differentiation  Exports  Basis of import  Competitive advantage, not just potential  100% export  Networking

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d) 4. Service sector opportunities  Existing industrial enterprises  Medium and large projects in pipeline  Commercial establishment  Public utility orgs.  Social infrastructure  Business enterprises catering to community needs  Government/ quasi- government orgs. & local bodies  Citizens  households

Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d) 5. Creative effort  Development of problem solving products/ services  Exploitation of new technology or material to meet a widely felt need  Creating a demand for a psychological product  Technical extension of an established product concept  Creating a demand implicit in emerging lifestyle  Technical work  Introducing products/ services alien to region or country  Value addition through technical or managerial innovation

Final selection  Basic guidelines  Imperfect knowledge  Comprehensive comparison  Key issues  Technology comfortability  Degree of difficulty of market position  Risks  Profitability  Government dependence  Success & risks calculated

Final selection – Errors in selection 1. “Me too” syndrome 2. Fallacy of numbers 3. “Story of an elephant” syndrome 4. Square peg in a round hole 5. Undifferentiated enterprise 6. Failure to grasp key elements of success 7. Lack ownership 8. Catch the first bus 9. Inaccurate information 10. Unwillingness to step back