Entrepreneurship studies – Chapter 2 © Cosmopoint International University College, School of Business – 2007

Business Opportunities What is a Business Opportunity? –A business opportunity is said to exist when: There is a possibility of offering a new product or service in a particular market. The product or service fulfills the demands and preferences of the customers. Where the product can be used to solve their problem.

Business Opportunities When and Why is there a need to offer a product or service in a particular market: When? –Changes in Environmental Factors Political and Legal EconomicSocialTechnologicalWhy? –Because Environmental Factors effect customers’ demand for particular product or service.

Business Opportunities The Process of Identifying, Evaluating and Selecting a Business opportunity. – Identify the needs and wants of customers. –Scanning (examining) the environment and evaluating of self (entrepreneur) and the community. –Screening (Process of evaluating) of business opportunities. –Selecting a business opportunity –Preparing a Business Plan.

Identify the needs and wants of the customer Human needs and wants –A need is something that is basic in life, for example we need food, clothing and shelter. –But as human we also have wants that is, there is a desire or craving something that is far better than basic items. –Wants are shaped by : Our life style Level of Education Purchasing power Personality of the person Business Opportunities

Human needs and wants –Human needs and wants are unlimited and are of all types. –Society affluence lead to increase to human wants and needs –More business opportunities arises. –Thus entrepreneurs must take this opportunity to provide products and services –Entrepreneurs must be sensitive to changes in customers’ needs and wants in order to be aware of new business opportunities.

Scanning the environment and evaluating of self and the community. –Environmental Scanning (ES) ES can lead to an idea that can be converted into a business opportunity. Two approaches are used and what are they? –Scan the environment by micro perspective –Scan the environment by macro perspective From the macro perspective for example the agricultural sector can offer business opportunity in forestry, fishing, plantation, and livestock breeding. Business Opportunities

Scanning the environment and evaluating of self and the community. –Environmental Scanning (ES) But from micro perspective every industry can offer specific business opportunities. For example in the case of forestry an entrepreneur can be involved in: –Logging –Manufacturing of veneer plywood –Processing of sawn timber –Manufacturing of furniture. –Making wooden doors and frames. Business Opportunities

Another approach of scanning the environment is by looking at the following factors: –Structure of the population, income and tastes. –Examine the import and export information of a country. –Study and examine types of local resources and technological breakthrough. –Examine the Industrial linkages. –Examine the development projects by the public and private sectors. –Newspaper and magazines – local and foreign as a source of business opportunities Business Opportunities

Another approach of scanning the environment is by looking at the following factors: –Examine what the local issues and social problems –Examine what new government policies and regulation have impact on small business. Business Opportunities

Self Evaluation –Besides Environmental scanning one is to do a self evaluation to identify what skills, experience is available in an entrepreneur that can be used in business development and engagement. –Skill competency, experience, knowledge that match the business opportunities. Business Opportunities

The factors that need to be considered are as follows: –Experience –Knowledge and Competency Skills –Financial Status and situation –Interest – likes and dislikes –Networking – circle of friends and associates –Cultural values and norms of the community. Business Opportunities

Screening of Business Opportunities –By using the process of screening business opportunities will help the entrepreneur to select a business opportunity that he or she can focus on totally and be dedicated to it success. –This process involves four factors as follows: Legal within the law of the country. Monopolistic Power and Level of Competition. Capital Requirements must be adequate to business undertaking Risk factor Liquidity Level Loans Credit facilities for customers. Foreign Exchange Rate – volatile or stable currency rate. Business Opportunities