CHAPTER 4: OPPORTUNITY

RECOGNITION

FUNDAMENTALS OF ENTREPRENEURSHIP (ENT300)

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 Chapter objectives
The objectives of this chapter are to:
i. provide an understanding of a viable business opportunity by identifying,
observing and analyzing relevant variables and trends in the environment
that can be a source of good opportunities
ii. provide students with knowledge and skills in analyzing and identifying the
most attractive and suitable business opportunities using SWOT analysis and
strategic planning method
iii. provide students with skills in developing a business model to capture and
turn a business opportunity into a viable business start-up

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 Chapter content
4.1 What is opportunity?
4.2 Emergence of opportunity
4.3 Opportunity recognition process
4.4 Opportunities in Cyber Entrepreneurship
4.5 SWOT Analysis
4.6 Business Model Canvas

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 4.1 What Is Opportunity

• Opportunity is defined as a situation that enables

an entrepreneur to offer marketable products or
services to interested buyers or end users

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 Types Of Situational Factors

• Product or service is still not in existence

• Product or service is already in the market but

failed to satisfy the customers – so need to be
improved

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 4.2 Emergence Of Opportunity

 When people decide they have certain needs and want to be

satisfied, or when people discovered a problem of some kind
that can be helped by a product or service.
 The presence of unfulfilled needs and want and/or problems
alerts the entrepreneur to the potential opportunity.
 The entrepreneur later creates a business that is able to fulfill
the needs or want and/or solve the problem

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 Opportunity Recognition

• Opportunity recognition is a process that

involved the search for and discovery of
business opportunities

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 Approach to opportunity
recognition/identification

1. Observe changes in the environment

2. Recognize a need that customers have that is not being

satisfied

3. Recognize problems and find ways to solve it (Discover of

opportunity)

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4.3 Opportunity Recognition Process

Search for Recognize

Changes in needs and Discovery of
the wants, and Opportunity
environment solutions

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 Observing Changes In The Environment

• Changes in the environment give rise to needs and

wants and/or problems, and an opportunity
emerges

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 Observing Changes In The Environment

Important environment forces to observe include:

i. Economic forces
ii. Social forces
iii. Technological advances
iv. Political and regulatory statues

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 Illustration- Environmental changes

• Good economic condition

– demand of luxury cars, home
• Increase number of working couples
– demand on maid, babysitter, nursery
• ICT development
– demand of IT gadgets/computer, repairs, knowledge, spare parts

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Examples of How Changes in the Environment Provides
Openings for New Product and Service Opportunities

Structure of Population and Income

Number of teenagers higher than number Cyber cafes, cineplexes, recording studios
of elderly and children
People have higher purchasing power Passenger cars, household furniture, DVD

Social
Increase incident of housebreaking
Increase interest in fitness
equipment,
Increase mobility of population
Increasing predominance of dual-
income families leaves less time to
cook at home
Grills, alarm, sensor, security systems
Fitness center, dancing class, in-house exercise
health food store
Handphone, laptop computers
Restaurants, food delivery services

Technological Advances
Advances in biotechnology Biotech-related pharmaceutical products, food
products, veterinary products
Development of the internet E-commerce, improved communication
Increase pressure to improve economic Online marketing, cost control services
performance

Government Policies and Regulations

Increased driving standards Smoke emission control, helmet, seatbelt
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 Recognize Needs And Wants
• Opportunity occurs whenever
there is a need and want to
fulfill. The term “needs” refer
to basic needs that the
consumer must have in order
to live while the term “wants”
refers to a personal desire for
something that is more than a
basic need.

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 Recognize Problem & Find Solution
• Problems can be recognized by observing the
challenges that people encounter in their daily lives.
Solution to the problem represented a business
opportunity

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 Ability To Search And Discover Business
Opportunities
• Experience and exposure
• Knowledge and skills
• “Special alertness”
• Social network
• Creativity
• Vigilant/Observant

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 Mechanism To Identify Opportunities

• Customers
• Retailers and distributors
• Business associates
• Bankers
• Consultants
• Employees
• Others
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 Evaluation And Selection Process

• The evaluation and selection process involves

judging the viability of the opportunity and
assessing its potential.

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 Criteria For Evaluation And Selection

i. Can make money and has potential for growth

ii. Less competition
iii. Good fit between entrepreneur and opportunity
iv. Has competitive advantage
v. Workable and efficient
vi. Not against the norms and values of the
community
vii. Conform with laws and regulations
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 4.4 Opportunities in Cyber Entrepreneurship
• Unlimited online opportunities
Examples:
i. Web designing
ii. Web hosting
iii. Online business
iv. Cyber business- eg. maintenance services and
accessories
v. Using social media for business - e.g Twitter or
Facebook, Instagram
vi. Online market places
vii. Training and consultancy
 4.5 SWOT Analysis

• SWOT Analysis helps identify and position the key internal and
external factors considered important in achieving
organizational objectives.
• The SWOT Analysis is an excellent, simple, communication tool
that is referenced repeatedly to organize organizational
information, hurdles, and potential solutions.

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 4.5 SWOT Analysis

• Internal Factors are the identified strengths and weaknesses

internal to the organization and relative to achieving a specific
objective.

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 4.5 SWOT Analysis

• External Factors are the opportunities and threats from the

environments external to the organization and usually not
under the direct influence of the organization itself.

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• SWOT is a classical categorization technique that is often just the
starting point for more in-depth analysis. It simply allows users to
compile and list internal and external factors so that critical
thinking can be exercised and important factors and objectives are
matched for further treatment such as:
– Exploring new initiatives
– Making decisions about strategies and the best path of new
policies/initiatives
– Identifying areas for change
– Refining and redirecting efforts of the company/association

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 SWOT Analysis Application

Examples of SWOT analysis can be used to assess:

i. A business idea
ii. A company (its position in the market, etc.)
iii. A new market or launching a new product
iv. A method of sales distribution
v. Launching a new product or brand

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 How To Use SWOT Analysis:
Strengths

To carry out a SWOT Analysis write down answers to the

following questions. Where appropriate, use similar questions:
i. What competitive advantages do you have?
ii. What do you do well and naturally?
iii. What resources do you have access to?
iv. What do people see as your strengths?

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 How To Use SWOT Analysis
Weaknesses:

• To carry out a SWOT Analysis write down answers to the following questions.
– What could you do to improve them?
– What do you miss badly?
– What you should avoid?
• Look at this from an internal and external basis:
– Do other people seem to perceive weaknesses that you do not see?
– Are your competitors doing any better than you?
• It is best to be realistic now, and face any unpleasant truths as soon as possible.

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 How To Use SWOT Analysis
Opportunities:

• To hold out a SWOT Analysis write down solutions to the

following queries.
• Where are the good opportunities facing you?
• What are the interesting trends you are mindful of

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 (cont.) How To Use SWOT Analysis
Opportunities:

• Useful opportunities can arrive from such things as:

– Changes in technology and markets on both a broad and narrow scale
– Changes in government policy related to your line of business
– Changes in social practices, population profiles, life style alterations, etc.
• Local Events
• A useful approach to looking at opportunities is to look at your strengths and ask
yourself whether these open up any opportunities. Instead, attend at your
weaknesses and ask yourself whether you could open up opportunities by doing
away with them.

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 How To Use SWOT Analysis
Threat:

• To hold out a SWOT Analysis write down solutions to the following queries:
– What obstacles did you face?
– What is your competition doing differently?
– Are the required specs for your job, products or services changing?
– Is changing technology threatening your status?
– Cause you have bad debt or cash-flow problems?
– Could any of your weaknesses seriously threaten your job?
• Bearing out this analysis will often be illuminating - both in terms of pointing out
what needs to be managed, and in putting problems into perspective.

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 SWOT Analysis
STRENGTHS
List your WEAKNESSES
+ advantages List your
+ unique and low cost + disadvantages, limitations
resources What could you improve
+factors mean that you “get +factors lose you sales
the sale”

THREATS
OPPORTUNITIES
List your
List your
+ external trouble for the
+ chances to improves business
performance
+ obstacles do you face
+good opportunities can you
spot + what your competitors are
doing

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 Sample input for SWOT analysis
POSITIVE
INTERNAL STRENGTHS
FACTORS
- Your specialist marketing
expertise
- A new, innovative product or
service
- Location of your business
- Any other aspect of your business
that adds value to your product
or service
EXTERNAL OPPORTUNITIES
FACTORS
- A developing market such as the - A new competitor in your home
internet
- Mergers, joint ventures or
strategic alliances
- - moving into new market
segments that offer improved
profits
- A new international market
- A market vacated by an
ineffective competitor
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NEGATIVE
WEAKNESSES
- Lack of marketing expertise
- Undifferentiated products or services
- Location of your services
- Poor quality goods or services
- Damaged reputation
THREATS
market
- Price wars with competitors
- A competitor has a new, innovative
product or service
- Competitors have superior access
to channels of distributions
- Taxation is introduced on your
product or services
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 4.6 Business Model Canvas

• The Business Model Canvas is a strategic management and

lean startup template for developing new or documenting
existing business models. It is a visual chart with elements
describing a firm's value proposition, infrastructure, customers,
and finances.

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• The Canvas is popular with entrepreneurs and intrapreneurs for business model
innovation. Fundamentally, we find it delivers three things:
• Focus: Stripping away the 40+ pages of ‘stuff’ in a traditional business plan, we’ve
seen users of the BMC improve their clarify and focus on what’s driving the business
(and what’s non-core and getting in the way).
• Flexibility: It’s a lot easier to tweak the model and try things (from a planning
perspective) with something that’s sitting on a single page.
• Transparency: Your team will have a much easier time understanding your business
model and be much more likely to buy in to your vision when it’s laid out on a single
page.

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END OF CHAPTER 4

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