CMIE6213 Product Innovation &

Entrepreneurship

LECTURE 3

Dr Nizaroyani Saibani
Mechanical and Manufacturing Engineering Department, FKAB
 CHAPTER OBJECTIVES
• Explain the meaning of entrepreneurial
opportunities
• Identify the types of opportunity recognition
• Explain the approaches and techniques to
recognise entrepreneurial opportunities
• Describe the process of recognising, analysing
and choosing an entrepreneurial opportunity
 WHAT IS OPPORTUNITY RECOGNITION?

• An opportunity is the recognition that an item or

service can be made to be of value to someone and
can be turned into profits.
• Some people argued that an opportunity is similar to a
business idea.
• It is important to understand that there is a difference
between an opportunity and an idea
• An idea is a thought, impression, or notion, which may
or may not meet the criteria of an opportunity.
TYPES OF OPPORTUNITY RECOGNITION
High
(Learning ability, social network)
Entrepreneur Characteristics

FUTURE COMPETITION

POTENTIAL CRACK

High
Low
Market Environment
(Market saturation)
TYPES OF OPPORTUNITY RECOGNITION
MARKET ENTREP.
TYPES WHY? IMPACT
ENV. CHARACTER

New or inexperienced
Lack learning ability.
POTENTIAL Low Low entrepreneurs engaging in
Limited social network.
small enterprises.

Good learning ability. Experience entrepreneurs

FUTURE Low High Wider social network. engage in large
Market is not saturated. enterprises.

Lack of learning ability. Require entrepreneurs to

Narrow social network. have the ability of acquiring
CRACK High Low
Market involves well- knowledge andcreating
established industries. wider social networks.

Large number of pioneer

Entrepreneurs’ learning
that are already
abilities are high.
COMPETITION High High established with good
Broader links with social
learning, talented and
networks.
broad network.
CRITERIA OF OPPORTUNITY RECOGNITION

Attractive Durable

OPPORTUNITY

Timely Anchored to
create value
APPROACHES TO RECOGNISING
OPPORTUNITY
 IDENTIFYING GAPS IN THE
MARKETPLACE

• Politics and Regulatory factor

• Economic factor
• Social factor
• Technological factor
• Environmental factor
• Competitive factor
 PORTER FIVE FORCES

Threat of substitute
products

Rivalry among Potential of new

Power of competing entrants into the
customers firms industry

Power of suppliers
 CHANGING ENVIRONMENTAL TRENDS

CHANGING ENVIRONMENTAL RESULTING NEW BUSINESS, PRODUCT,

TREND AND SERVICE OPPORTUNITIES

Economic trends Tuition centres, private schools, private tuition,

Increase households allocation for tuition services portal.
children education.

Social trends Motivational programs that include both parents

Less time spent within a family due to and children, tuition centres that offer adult
fragmented activities between parents classes (language, skills) together with school
and children. tuition.

Training services for halal compliance,

Legal and regulations
consultancy services for halal certification,
Halal requirement.
supply of halal ingredients or supply.
 SWOT ANALYSIS
• A SWOT analysis which is also known as SWOT matrix is a structured
method used to evaluate the strengths, weaknesses, opportunities and
threats involved in identifying opportunities for a new business venture.

• SWOT analysis is useful as an assessment tool and a good SWOT analysis

allows better decision making in situations such as:-
• Exploring avenues for new initiatives
• Making strategic decisions for execution
• Identifying possible areas for change in response to dynamic business
situation
• Refining and redirecting efforts of a business plan
 EXAMPLE OF A SWOT TEMPLATE
Strengths Weaknesses

Financial resources
Human capital
Lack of funding
Recognition or image
Low employee loyalty or morale
Networking
Low capacity
Stakeholders
Leadership

Opportunities Threats

Economic growth
Demand trend increasing
Social media support Increasing energy cost
Government support Environmental issues
Changes in customer consumption Political instability
pattern Health threats
Technological breakthrough
OPPORTUNITY RECOGNITION PROCESS

Preparation Incubation Insight Evaluation Elaboration

 Eureka!
 Business
idea
conceived
 Problem
solved
OPPORTUNITY RECOGNITION PROCESS
• Background. Experiences, knowledge.
Preparation • A conscious effort to develop expertise in a field of interest, as well
as sensitivity to the issues and problems in that field.

• Entrepreneur contemplates an idea or a particular problem.

Incubation • A conscious or unconscious activity.

• The moment of recognition when an idea is born.

• Pushes the process forward, or compels an entrepreneur to
Insight return to the incubation and preparation stages for further
consideration.

• An idea is analysed for its viability.

• Ideas are tested through various forms of investigation -
Evaluation preliminary market testing, financial viability analysis and/or
feedback.

• The stage at which an idea is actualised - the idea is transformed

into something of value.
Elaboration • Involves selecting options, finalising choices, and organising
resources.
Main reference: Chapter 3, Rosilah H., Norngainy T., Mohd Hizam H., Wan Mimi Diyana W. Z. (pnyt) et. al. 2018. Principles of
Entrepreneurship and Innovation, 4th Ed. Pusat Citra UKM