OPPORTUNITY RECOGNITION

10/29/2013

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OPPORTUNITY
An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. Examples: 1. Capturing emotion, not characters- Disney 2. Sells lifestyle, not Apparel – Polo Ralph Lauren 3. Capitalizing on the E- Readers space with Kindle - Amazon

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service or business that adds value to its buyers 3 .Timely Durable Attractive 10/29/2013 Anchored in a product.

• At some point. 10/29/2013 4 . and new entrants flow in. and the window of opportunity (for new entrants) closes. • Once the market for a new product is established. the market matures.WINDOW OF OPPORTUNITY • The term “window of opportunity” is a metaphor describing the time period in which a firm can realistically enter a new market. its window of opportunity opens.

IS EVERY IDEA AN OPPORTUNITY? • An idea is a thought. impression. or notion • May or may not meet the criteria of an opportunity. IDEA OPPORTUNITY 10/29/2013 5 .

IDENTIFYING AND RECOGNIZING OPPORTUNITIES OBSERVING TRENDS SOLVING A PROBLEM FINDING GAPS IN THE MARKET PLACE 10/29/2013 6 .

OBSERVING TRENDS 10/29/2013 7 .

• You must analyze the impact of economic changes on your business by seeing it from all aspects. • When studying how economic forces affect opportunities. Individual sectors of the economy have a direct impact on consumer buying patterns. car and furniture goes up.ECONOMIC FORCES • Economic forces affect consumers’ level of disposable income. the sale of houses. 10/29/2013 8 . it is important to evaluate who has money to spend and who is trying to cut costs • For example : When interest rates fall.

• The increasing diversity in the workplace. • The increase in the number of cell phone users.SOCIAL FORCES There are various social forces that affect your business : •Family and work patterns. • The increasing focus on health care and fitness. • The globalization of industry. • New forms of entertainment. 10/29/2013 9 . • The aging of the population. • The proliferation of computers and the Internet.

• Once a new technology is created. • Advances in technology are usually correlated with economic and social changes to create opportunities. new businesses form to take the technology to a higher level. 10/29/2013 10 .TECHNOLOGICAL ADVANCES • Entire industries have emerged as the result of technological advances.

POLITICAL AND REGULATORY CHANGES Political and regulatory changes provide the basis for new business opportunities. 10/29/2013 11 . laws that protect the environment have created opportunities for entrepreneurs to start firms that help other firms comply with environmental laws and regulations. • For example.

SOLVING PROBLEMS Notice a problem Find a Solution Pinpointed through observing trends. or chance. 10/29/2013 12 . intuition. serendipity.

BUSINESSES CREATED TO SOLVE A PROBLEM 10/29/2013 13 .

10/29/2013 14 . • A gap can also occur when customer needs are not being met at all.GAPS IN THE MARKETPLACE • A gap in the marketplace is often created when a product or service is needed by a specific group of people but does not represent a large enough market to be of interest to mainstream retailers or manufacturers.

PERSONAL CHARACTERISTICS OF THE ENTREPRENEUR Characteristics that tend to make some people better at recognizing opportunities than others Prior Experience Social Networks Cognitive Factors Creativity 10/29/2013 15 .

Prior Industry Experience • Prior Industry Experience – Several studies have shown that prior experience in an industry helps an entrepreneur recognize business opportunities. • It is also possible that by working in an industry. an individual may spot a market niche that is undiscovered. 10/29/2013 16 . There are several explanations for this. • By working in an industry. an individual builds a network of social contacts who provide insights that lead to recognizing new opportunities.

– This “sixth sense” is called entrepreneurial alertness.Cognitive Factors • Cognitive Factors – Studies have shown that opportunity recognition may be an innate skill or cognitive process. which is formally defined as the ability to notice things without engaging in deliberate search. 10/29/2013 17 . – Some people believe that entrepreneurs have a “sixth sense” that allows them to see opportunities that others miss.

– People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks. Strong-Tie Vs. half the founders reported that they got their business idea through social contacts. – In one survey of 65 start-ups.Social Networks – The extent and depth of an individual’s social network affects opportunity recognition.) 10/29/2013 18 .” (See next slide. Weak-Tie Relationships – All of us have relationships with other people that are called “ties.

10/29/2013 19 . tend to reinforce insights and ideas that people already have.Social Networks Why weak-tie relationships lead to more new business ideas than strong-tie relationships Strong tie relations • These relationships. so one person may say something to another that sparks a completely new idea. which typically form between like-minded individuals. are not as apt to be between like-minded individuals. Weak tie relations • The relationships. which form between casual acquaintances.

PROCESS PREPARATION INCUBATION INSIGHT EVALUATION ELABORATION 10/29/2013 20 .CREATIVITY • Creativity is the process of generating a novel or useful idea. It is also the process of generating an innovation from a new idea.

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*500* fastest growing private companies. 10/29/2013 22 .Where Do Entrepreneurs Get Their Ideas?    Discovered through systematic research for opportunities Swept into the PC revolution Discovered serendipitously:  Built temporary or casual job into a business (7%)  Wanted as an individual consumer (6%)  Happened to read about the industry (4%)  Developed family member’s idea (2%)  Thought up during honeymoon in Italy (1%) 5% 4% 20% 71% Source: 100 founders of the 1999 Inc.

Acquaintances.Brainstorming. Trade Shows and Conventions Patent Brokers and Product Licensing Information Services Friends. and Other Social Contacts Federal and Provincial Government Agencies and Departments Using Creative Thinking.SOURCES OF NEW BUSINESS IDEAS Previous Job Hobbies Personal Observation Deliberate Search Publications Inventor’s Shows. focus groups 10/29/2013 23 .

10/29/2013 24 . • The session should move quickly. – A brainstorming “session” typically involves a group of people. and should be targeted to a specific topic. – Rules for a brainstorming session: • No criticism.BRAIN-STORMING – Is a technique used to generate a large number of ideas and solutions to problems quickly. • Freewheeling is encouraged. • Leap-frogging is encouraged.

who uses the internal dynamics of the group environment to gain insight into why people feel they way they do about a particular issue. 10/29/2013 25 .FOCUS GROUPS • A focus group is a gathering of five to ten people. who have been selected based on their common characteristics relative to the issues being discussed. • Although focus groups are used for a variety of purposes. • These groups are led by a trained moderator. they can be used to help generate new business ideas.

which is a physical or digital repository for storing ideas. and evaluating ideas by designating a specific person to screen and track them—for if its everybody’s job. • Encouraging Creativity at the Firm Level – Creativity is the raw material that goes into innovation and should be encouraged at the organizational and individual supervisory level. 10/29/2013 26 .ENCOURAGING NEW IDEAS • Establishing a Focal Point for Ideas – Some firms meet the challenge of encouraging. it may be no one’s responsibility. – Another approach is to establish an idea bank (or vault). collecting.

Opportunity evaluation phase Evaluating an opportunity (Can it be developed into a full-fledged new venture?) • Talk to potential target customers • Discuss it with production or logistics managers • Conduct feasibility analysis Market potential Product concept testing Focus groups Trial runs with end users 10/29/2013 27 .

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