ENTREP – Midterms
- During which entrepreneurial intentions
OPPORTUNITY RECOGNITION PROCESS
Concept of Opportunity
accdg. To Cambridge dictionary:
Opportunity: “a situation or occasion that
makes it possible to do something that you
want to do”
Three elements in this definition:
1. You want to do something
- Establish your own business
enterprise
2. There are conditions for the realization
of the objective
3. You must make decisions or take action
from these conditions to realize your
objective
From a business perspective:
Opportunity: “an exploitable set of
circumstances with uncertain outcome
requiring a commitment of resources and
involving exposure to risk”
(www.businessdictionary.com)
↳ this definition does not only fulfill the three
elements above but also provides specific
features of a business opportunity
↳ opportunity will not automatically lead to a
realization of your objective
↳ an opportunity can only be considered as a
possibility of realizing your objective
5 STAGES OF OPPORTUNITY RECOGNITION
↳ accdg to Hills, Shrader, & Lumpkin
 Precondition – PREPARATORY STAGE
- during which the individuals assess his
knowledge of the market.
- his prior knowledge of the market is
extensively shaped by his educational
background
- factors that can provide individual with
valuable information on the market he
wants to enter
 formal training
 personal experiences including travel
 previous employment
 Conception – GESTATION PHASE
and ideas are generated, using logic,
creative thinking, or both
- Creativity is the capacity of the mind to
reprocess and recreate new ideas by
connecting ideas from existing products or
services
 Visioning
- Provides the individual a hunch that can
serve as an opportunity for business
- This comes about as ideas become clearer
and how the logic of connections leads the
individual to a new idea
 Assessment
- Involves the evaluation on whether the idea
can be realized or not
- Aside from the resources needed and
technology to be used, the paramount
question to the individual is whether the
idea can really be actualized
 Realization
- Suggests the production of a prototype
- This is the stage when the mental construct
or idea is now felt in its tangible of physical
form
FACTORS IN OPPORTUNITY RECOGNITION
Hisrich, Peters, Shepherd (2010) – crafted a
framework on recognizing opportunities.
According to them, a successful recognition of
business opportunities is influenced by three
major factors:
(a) Market awareness
(b) Entrepreneurial readiness
(c) Connections
a. MARKET AWARENESS
- Prior knowledge of the market
- Refers to personal exposure to
market and its components
including customers and suppliers
- Information on the market can be
acquired from formal training
- Tools on market analysis are usually
learned from business training
programs and business education
 -Environmental scanning – can
provide information about the
market, customer needs, and
emerging product lines
- Experience can also be a major
source of understanding the market
b. ENTEPRENEURIAL READINESS
- Entrepreneurial awareness
- Refers to the variety of features of
an individual to start a business
venture
- Covers all types of resources that
the individual possesses including
financial, physical, and human
resources
- Readiness also includes the ability
of the individual to take risks and
manage uncertainties once the
enterprise is operational
- Entrepreneurial readiness not only
has a direct impact on opportunity
recognition but it also has an
indirect effect as it interacts with
previous knowledge on the market
c. CONNECTIONS
- Networks
- Business opportunity recognition is
heightened when the individual has
a diversity of networks
- Connections include:
 Families
 Friends
 Business associates
OPPORTUNITY ASSESSMENT – the process of
evaluating the likelihood that the opportunity
can be realized
- Whether this opportunity is feasible to
implement
ELEMENTS IN OPPORTUNITY ASSESSMENT:
 PRODUCT OR SERVICE – a business is
primarily the potential of introducing a new
product or service to the market
- the new product or service can be a
result of various creative ways of
differentiating an existing product
or service
TYPES OF PRODUCTS/CLASSIFICATION
OF PRODUCTS:
1. Convenience goods - products that
consumers purchase repeatedly and
without much thought
*basic commodities – products for
daily use
2. Shopping goods – commodities
consumers typically spend more
time researching and comparing
before purchase. Ex: clothes, car,
phone, etc
3. Specialty goods – the only product
of its kind in the market which
means consumers typically don’t
feel the need to compare and
deliberate as much as they would
with shopping products. i.e. apple
products
4. Unsought goods – good that people
aren’t typically excited to buy.
There are existing but customers
are not considering to buy the
products. i.e. medicine, coffin
 MARKET OPPORTUNITY – refers to the
appraisal of the characteristics of the
market.
 COSTING AND PRICING – a product which
may be considered valuable by consumers
may not be affordable
- the cost of production as well as the unit
price of the commodity is very important in
the assessment phase
- the price of a product or service would
depend on the cost of raw materials and
other factors of production
 PROFITABILITY – the primary motivation of
venturing into business is to earn profit.
- Profitability is based on how the
market will receive your product
and the cost of producing it
 RESOURCE REQUIREMENTS – two types of
inputs used in production: intermediate
inputs and factor inputs
- Intermediate inputs: also called raw
materials that need further processing.
Aside from cost, the concerns on raw
materials are on their availability,
accessibility, and reliability
- Factor inputs: include labor, capital, and
technology. The main concerns on factor
inputs are on their productivity and costs
 RISKS – are uncertain situations that can
increase the probability of loss or failure of
a business venture.
- Risks can come from within (internal risks)
and from outside (external risks)
- Internal risks: emanate from management
of resources, can be prepared and
controlled
- External risks: arise from various
environments affecting business, can be
managed
 ENTEPRENEURIAL COMMITMENT – related
to the commitment of the individual to
pursue the realization of its business idea
- Commitment may include the motivations
of the individual, his skills, experience,
resources, and the amount of time he can
devote in the operation of the business.
- the seriousness of the individual can define
his commitment
ELEMENTS IN OPPORTUNITY ASSESSMENT
 PRODUCTS OR SERVICE
 COSTING AND PRICING
 PROFITABILITY
 RESOURCE REQUIREMENTS
 RISKS
 ENTEPRENEURIAL COMMITMENT
OPPORTUNITY PATHWAYS:
 Rational approach/traditional
approach – systematic; suitable for
macroenterprises
 Intuitive approach – unsystematic;
suitable for microenterprises
PRODUCT PLANNING AND DEVELOPMENT
PROCESS – HISRICH, PETERS, AND SHEPHERD
(2010)
↳ two main phases: precommercialization
phase, commercialization phase
FOUR STAGES OF THE
PRECOMMERCIALIZATION PHASE
 Idea stage
- Idea
- Evaluate
 Concept stage
- Laboratory development
- Evaluate
 Product development stage
- Pilot production run
- Evaluate
 Test marketing stage
- Semicommecial plan trials
- Evaluate
a. Idea stage – formation of business ideas
b. Concept stage – refinement of business
ideas and visualization of an idea that can
serve as business opportunity
*feasibility study/market study – used to
determine if there is a demand for the
product or service
c. Product development stage – business idea
is concretized with the production of a
prototype
d. Test marketing stage – the product/service
is introduced in the market
COMMERCIALIZATION STAGE: PRODUCT LIFE
CYCLE
Accdg to Vernon – Product life cycle hypothesis
- Any product has life and similar to
any living organism, it has its birth
and its consequent death
 Introduction – product is formally
introduced in the market
 Growth – product is recognized by the
market
 Maturity - product is widely accepted
 Decline – product may start to lose its
market power
MARKETING PLAN
A document containing the marketing
objectives, marketing strategies, and the
activities that will be undertaken to execute
these strategies