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Entrepreneur Opportunity Identification and Evaluation PDF
Entrepreneur Opportunity Identification and Evaluation PDF
Module 21: Opportunities for Entrepreneur and Identifying & Selecting the
Best Opportunity
Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi
QUADRANT-I
Module 1:Rural Entrepreneurship
1. Learning Outcome
2. Introduction
3. Concept of an Opportunity
4. Need for Opportunity Identification & Selection
5. Business Opportunities in various sectors
6. Identifying a Business Opportunity
7. Opportunity Selection
8. Summary
1. Learning Outcome
After completing this module students will be able to:
i. Understand the concept of Opportunity.
ii. Understand the Need for Opportunity Identification & Selection
iii. Know the various business opportunities
iv. Understands the Opportunity Identification and Selection
3. Concept of an opportunity
In general, the word opportunity means a favourable situation or a circumstance provided to do
something for the advancement or progress. Therefore, business opportunity is a favourable chance
available for an entrepreneur to run the business and earn profits at a given point of time in particular
environment. For an entrepreneur opportunity means a product or a project. Therefore, identification of
opportunity, product or a project is similar.
An entrepreneur may come across a large number of profitable opportunities but he has to select the
most possible and hopeful project. Therefore, Project identification and selection are the important
phases for an entrepreneur.
Peter Drucker has explained the three types of opportunities in this context, as following:
a. Additive Opportunities: these are the opportunities which are realted to the use of the available
resources without making any changes. Therefore, there is very less risk in such opportunities.
b. Complementary Opportunities: These are related to the introduction of the new ideas which
directs the change in the available arrangement. There is a greater risk in such opportunities.
c. Breakthrough Opportunities: These are related to the huge change in the existing arrangements
which thus involve huge risk.
To identify the possible projects, one has to go through the following steps:
a. Brainstorming: This technique was originally used by Alex Osborn in 1938 in an American
company to persuade innovative thinking in a group of six to eight people. Through this method a large
number of ideas are generated without any criticism. In this method, people are encouraged to produce
Idea generation phase helps in opportunity scanning and opportunity identification and thus helps in
identifying and idea and thus converting it into an opportunity. At the idea stage, there is a just an Idea
of what to do but at the opportunity stage, entrepreneur actually converts his idea into opportunity by
gaining insight into what actually to do. For e.g: Arjun and Raman are friends. Raman is working a
company and Arjun is still searching for the job. Raman suggested Arjun to start a business, this is
called an Idea. Later on after analyzing the various businesses, when Arjun has decided to go to start a
transport business, then it is an opportunity. Therefore, this phase helps in identifying the opportunity.
Identifying a business opportunity is complex and very risky task. Therefore, prospective entrepreneur
has to go through various analysis. Before selecting the best opportunity, an entrepreneur explore and
analyse all business opportunities. For analyzing the available business opportunities, following
explorations can be done:
a. Environment exploration: This means the study of the environment factors that has an impact on
the business. This includes the study of the economic factors like gross domestic product, national
income, per capita income, social factors like demographic features, lifestyle, values, beliefs etc.
technological factors like, labour intensive technology, capital intensive technology etc. political
environment like, political parties, stability of the government, personal interest of the politicians etc
and the legal environment i.e. laws and regulations.,
7. Opportunity Selection
As soon as the project identification ends, project selection starts. In the project identification phase, an
entrepreneur may have identified different opportunities which he considers good for him. In this
phase, he/she has to select the best opportunity out of the identified ones which is most promising and
most profitable under the given conditions. Project selection refers to the balanced choice of a project
where the cost ratio is low and profits are more. This is the most important phase as the whole project
depends on this phase only.
The prospective entrepreneur should conduct SWOT analysis to select the best opportunity. He/she
should anaylse the strengths, weaknesses, competitive advantages (opportunities) and challenges
(threats) offered by each of the idea. On the basis of this analysis, the most suitable project opportunity
is selected. The prospective entrepreneur should select the best opportunity with the help of the
following criteria:
a. Investment Size: It means the cost of the project. In terms of Investment, an entrepreneurs should
choose between the small scale, medium-scale and large-scale business on the basis of the funds he can
raise from the various sources and the amount he is investing. Entrepreneur should choose the project
which suits best of his investment.
b. Location: The location of the project should be such that which provides advantages. It should be
such that is near to the market, transport facility is easily available. It should be at the places where
there are the facilities of Industrial Development Corporation and other agencies. The proposed
location should have variety of skilled and cheap human resources.
c. Technology: Entrepreneur should give due consideration to the technology required for the project.
He/She should select the project which requires the verified and easily available technology.
d. Equipment: An entrepreneur should choose the best equipments for the project and should take the
advice of the experienced consultant. The cost and quality of the equipments should be within the
budget.
e. Marketing: An entrepreneur should choose the project which has wide scope to enter into the
market and can help in making good market share and profits. He should not go for the projects which
are having cutthroat competition and are difficult to enter as a beginner.
8. Summary
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