IDENTIFICATION OF BUSINESS

OPPORTUNITIES
Objectives:

• To understand the importance of Business Identification

• To understand and appreciate market analysis, technical

analysis, financial analysis and economic analysis

• To apply these principles for a proposed Business

Opportunity

Entrepreneurship 1
and Management, RVCE
 Identification of Business Opportunities
Introduction:
• Opportunity to be your boss, to provide a product or
service, to implement your ideas
• Two types of entrepreneurs

Know exactly what they Not very clear to

Want to do Begin with
•Looking for an opportunity or •In the process of concretizing
•Resources a business idea
•May have developed skills for •Require training
chosen field.
•Familiar with industry customs
practices
Entrepreneurship 2
and Management, RVCE
 Identification of Business Opportunities
Introduction:
• Motivation – is it adequate to keep you going for the
next one or two years?

• Viability – global vs. local

• Basic market research – factor which is the key

• Testing in the market – Moving forward depends on this

• Expert consultation – Concretizing the whole idea

• Look out for competition – Be aware of this

Entrepreneurship 3
and Management, RVCE
 Identification of Business Opportunities
Some typical business opportunities:
• Green business: focuses more on prevention of pollution

• Biotechnology: industrial use of organisms

• Events management: Arranging Weddings to Beauty contests

• IT Enabled services: BPO, now KPO, knowledge driven

• Food Processing: Fruits, vegetables storing, processing,

transport

• Mineral water, courier, Insurance, Telecom, Herbal products,

Tourism, Vermiculture, Plastics etc.
Entrepreneurship 4
and Management, RVCE
 Identification of Business Opportunities
Feasibility:
• Researching – learning more about your industry and
about the resources available

• Market assessment – Is there a market? Where it is? How

much you can tap?

• Profitability Assessment – How much does it cost?

Lengthy “red ink” period following start-up, can you afford
to fail?

• Financing assessment – Fixed and working Capital

• Legal assessment – What are the legal liabilities in the

business?
Entrepreneurship 5
and Management, RVCE
 Market Feasibility
The analysis requires two important questions to be
answered

What would be the demand of the proposed product or

service in the future?

 What would be the market share?

Analyst should use wide variety of information and

forecasting tools
• Consumption trends in past, present consumption level
• Past and present supply position
• Production alternatives, constraints
• Imports and exports
Entrepreneurship 6
and Management, RVCE
 Market Feasibility

• Structure of competition

• Elasticity of demand

• Consumer behavior, intentions, motivations, attitudes

preferences

• Distribution channels, marketing policies

• Administrative, technical and legal constraints

Entrepreneurship 7
and Management, RVCE
 Demand Estimation

• Opinion Polling Method

• Life Cycle Segmentation Analysis

Under Opinion Method there are four different techniques

• Complete enumeration survey

• Sample survey
• Sales experience method
• Vicarious method

Entrepreneurship 8
and Management, RVCE
 Complete enumeration survey

• All probable customers are approached and the

demands are estimated

• Gets you first hand and unbiased information

• Tedious, costly and cumbersome

• All prospects will not be cooperative

Entrepreneurship 9
and Management, RVCE
 Sample Survey

• Only some representative consumers (sample) are

approached

• It is less tedious, less cumbersome compared to

earlier method

• Care should be taken to identify true representative

sample

Entrepreneurship 10
and Management, RVCE
 Sales experience Method

• Sample Market is surveyed

• Results are projected to the universe

• Selection of sample market is critical

• For e.g., Bombay will be different from say Agra

Entrepreneurship 11
and Management, RVCE
 Vicarious Method

• Not direct contact, through dealers who will have a

feel of their customers

• Dealers opinion is then projected

• Suffers from likely bias on the part of dealers

These are the techniques under Opinion Polling Method

Let us look into Life cycle analysis…

Entrepreneurship 12
and Management, RVCE
 Life Cycle Segmentation Analysis

• Introduction of the product

• Growth

• Maturity

• Saturation

• Decline

Considering the five stages, the sales at different stages may

be estimated

Entrepreneurship 13
and Management, RVCE
 Other aspects of market analysis

• Planning the process of marketing the product

• Organization of the marketing process

• Corrective action whenever results deviate

• Demand, market share etc are out of control whereas

marketing strategy, marketing process are largely under
control

Entrepreneurship 14
and Management, RVCE
 Technical Feasibility
• Have the preliminary tests and studies been done?

• Has the availability of raw materials, power etc been

established?

• Is the scale of operation or capacity optimal?

• Are the machineries and equipments chosen appropriate?

• Has provision made for effluent treatment made?

• Is the proposed layout, building and plant sound?

• Is technology current, efficient?

Entrepreneurship 15
and Management, RVCE
 Technical Feasibility

• Technical collaborations made if any

• Availability of technical and engineering services

• The extent to which diversification and expansion proposals

will result in fuller utilization of capacity and economies of
scale

• Availability of work force as per required skill and

arrangements for training-in-plant and outside

Entrepreneurship 16
and Management, RVCE
 Financial Feasibility
• Investment outlay and cost of the project

• Fixed Capital and working capital

• Means of financing

• Projected profitability

• Cash flows

• Investment worthiness

• Level of risk

Entrepreneurship 17
and Management, RVCE
 Financial Feasibility

• Cost of production

• Return on investment

• Projected profitability

• Effective controls

• Budgeting

• Pricing

Entrepreneurship 18
and Management, RVCE
 Economic / Social Feasibility

• Judging a project from social point of view

• Focus on social costs and benefits

• Monetary cost and monetary benefits vs.

social cost and benefit has to be carefully
made

Entrepreneurship 19
and Management, RVCE
 Economic / Social Feasibility
Following questions are to be raised and answered

• What are the direct economic benefits and costs of the

project measured in terms of shadow ( Efficiency) prices
and not in terms of market prices?

• What would be the impact of the project on the distribution

of income in the society?

• What would be the impact of the project on the level of

savings and investment in society?

• Contributions to self-sufficiency, employment and order in

society?
Entrepreneurship 20
and Management, RVCE
 Economic / Social Feasibility
Following questions are to be raised and answered

• What is the likely damage caused to the environment?

• What is the costs involved in containing this damage?

Entrepreneurship 21
and Management, RVCE
 Case Studies

1. Determining the Market Demand for a Health Club

Reference – 1, Page - 447

2. Market Feasibility

Reference – 1, Page - 448

Entrepreneurship 22
and Management, RVCE
 References

• Poornima Charantimath – Entrepreneurship Development

Small Business Enterprises, 2006, Pearson Education

• S S Khanna – Entrepreneurial Development, 3rd Ed, 2001,

S Chand & Co

• Vasant Desai – Dynamics of Entrepreneurial Development

and Management, 4th Ed, 2007

Entrepreneurship 23
and Management, RVCE