ENTREPRENEURIAL PROCESS: The process through which a new venture is created by an

entrepreneur is called Entrepreneurial Process.

Phase I of Entrepreneurial Process: Recognition of opportunity

Opportunity: Opportunities are solutions for the real life problems. Population is dealt by the
business and they make the market therefore the issues of the population like medical
dispensary, transport issue, schooling, utilities etc can be recognized as an opportunity if firms
can create solutions for them.

Time and motion studies:

1. Opportunity assessment:

The company has to identify the opportunity by considering the problems of every dimensions
of the Industry which our population is facing (like medical dispensary, transport issue,
schooling, utilities etc). we will then pick one problem for which we can provide the solution,
than we will further narrow down the broad problem (like if we took education, so it’s a broad
problem we will narrow it down to private/public institution then specific university, then its
specific department), and analyze its relative advantages and disadvantages (that can be done
through brainstorming, incubation, research and analysis) after which we will analyze the
experimental cause and effect and observe the effect and after all that we will finally generate
an idea.

-research and analysis can be done through focus groups, surveys and observations.

2. Creation and length of opportunity:

Creation is the lead time that is required to create the venture. Lead time is not specific for all
the industries, it is determined by considering the characteristics of the market structures, size
of the investment, number of buyers and sellers etc. The market structure is classified into four
following types:

 Pure monopoly: There’s high investment therefore the lead time is 5-7 years it includes
industries like utilities, shaukat khanam, telecom etc
 Perfect competition: There is small size of investment, no barriers to entry, large buyers
and seller, high competition so venture take lower lead time.
 Monopolistic market: which includes textile industries, sub-part assembling industries,
FMCG industry etc. here the lead time is 1 year.
 Oligopoly: which includes steel industries, automobile, cement, oil refinery industries
etc. here the lead time is 2 years.
LENGTH: length of the opportunity is basically growth of the venture. How much you can
handle its cost in relation to its growth in future. The cost of the venture (scope) will be
analyzed by using projected statement prepared by the company. We have to identify the
extent of the growth of the industry because when industry is growing the company will grow
but when industry cripples the growth of the company stops.

3. Risk and return of opportunity:

Risk: There are certain risks that must be considered as we are now transferring from individual
venture to a business. These risks are career risk, financial risks (less amount of capital as most
of it is spent on business), family risks (venture not supported by the family), and psychic risk
(depression as the business might not grow well).

Return: The firm will consider the ways it will get its return like abnormal income, chances of
expansion, scope of diversification, allocation of existing resources on different activities etc.

4. Opportunity vs Personal skills:

Here we’ll see if the opportunity matches the personal skills or not. Before starting a venture,
first we have to recognize the opportunity then match the skills to it, meaning we must have
the necessary skills to enter in that venture and exploit that opportunity, if not then that would
be a disaster. Some organizations don't have the skills but still enter into different ventures
(diversification) for risk minimizing whereas some have the basic know-how of the industry.

5. Real vs perceived value of opportunity:

Real value is the actual value whereas perceived value is the estimated value. Here we’ll see
what we have planned and what was implemented and what should be the projected values.
When starting a new venture, it is important to do the planning premises for the venture.
Hence we have to estimate projected/perceived values but those estimations will not always
yield the accurate result i.e. we have no idea that whether the perceived value would be the
real value in the future. Therefore we have to suggest the alternative courses of action to deal
with that.

6. Competitive:

Here you will examine your competitors. Competitors are of 3 types, direct competitors (are the
same brands competition e.g. Coke vs Pepsi), indirect competitors (are the substitute
competition e.g. Tapal vs Pepsi) and general competitors (in which all the companies involved
are competing amongst the customers which limits the purchasing power e.g. wheat vs Tapal,
wheat vs airplane maker etc.