Entrepreneurship process

• A job is a temporary solution to the long term

economic problems……..
 Some Statistics
•Afghanistan is going through economic contraction

•The sixth youngest country with 65% of the population

under 30.
•Unemployment high among women and youth (Around 35%)

•Each year an estimated 450,000 youth enter the job market.

•Aid declining
•Needs a vibrant private sector.
2-2

The Entrepreneurial Process has 4

distinct phases

1. Identification and evaluation of the

opportunity:
2. Development of the business plan
3. Determination of the required
resources
4. Management of the resulting
enterprise
•If opportunity
doesn't’t knock,
build a door 
 What is An Opportunity?
An opportunity is a favorable
set of circumstances that
creates a need for a new
product, service or business.
Opportunity Defined
OR
A situation that enables an
entrepreneur to offer
marketable products or services
to interested buyers or end users
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Essential qualities or Dimensions to an opportunity

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 Window of opportunity

• Timely, not too early, or too

late.
• Opportunities depend upon
acting at right time. Too early
or too late are sure ways to fail
Ways to Identify an Opportunity

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 First Approach: Observing Trends
– Trends create opportunities for entrepreneurs to
pursue.
– The most important trends are:
• Economic forces.
• Social forces.
• Technological advances.
• Political action and regulatory change.
– It’s important to be aware of changes in these
areas.
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 Tesla, Inc.
Energy storage company
Economic trends: increasing
gas prices
Social trends: Desire to be
green
Technology advancement:
Battery and motor
improvement

Political and regulatory

trends: favorable treatment
and support for alternative
energy systems.
First Approach: Observing Trends

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 Trend 1: Economic Forces

Example of Economic Trend

Creating a Favorable Opportunity
Economic trends help • Growth in GDP (rising
determine areas that economies)
are ripe for new • Level of disposable
startups and areas that Income
• Consumption pattern
startups should avoid. • High or low interest rates
• Increasing or decreasing
energy prices (oil prices).

2-21
 Trend 2: Social Forces

•Formation of online
Social trends alter how communication and social
people and businesses networks
behave and set their •Number of marriages
priorities. These trends •Number of divorces
provide opportunities for •Number of births
new businesses to •Number of deaths
accommodate the •Buying habits (less book
changes. reading)
•Life expectancy

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Social, Cultural, Demographic & Environmental Forces (cont’d)

• Demographic changes (likes and dislikes, age, income

etc).
• Recycling(paper , glass), air and water pollution are
environmental issues.
 Trend 3: Technological Advances
1 of 2

Examples of Entire Industries

Advances in technology
frequently create business
opportunities.
Once a technology is
created, products often
emerge to advance it.
that Have Been Created as the
Results of Technological
Advancements
• Computer industry
• Internet
• Biotechnology
• Digital photography
•Mobile phones

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Trend 4: Political Action and Regulatory Changes
1 of 2

General Example
Political action and Laws to protect the environment
regulatory changes also have created opportunities for
provide the basis for entrepreneurs to start firms that
opportunities. help other firms comply with
environmental laws and
regulations.
Tax rates (Tax law changes e.g.
income tax, sales tax, wealth
tax)

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 Tesla, Inc.
Energy storage company
Economic trends: increasing
gas prices
Social trends: Desire to be
green
Technology advancement:
Battery and motor
improvement

Political and regulatory

trends: favorable treatment
and support for alternative
energy systems.
 Examples from students…
• observing trends
• What can be the general
examples around.
• What are the examples in the
class
 Second Approach: Solving a Problem
1 of 2

–Sometimes identifying opportunities

simply involves noticing a problem
and finding a way to solve it.
–These problems can be pinpointed
through observing trends and through
more simple means, such as intuition,
serendipity, or change.
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 Problem solving
• Problems can be recognized by
observing the challenges that
people encounter in their daily
lives. Solution to the problem
represent a business opportunity
 Problem solving
• Difficult to carry your laptops or camera every where to
capture moments/music or watching some important
news
– cellphone
• Waiting in an elevator is boring.
– Run advertisement and news on small LCD TV screen.
• Children are going online and being preyed upon.
– Personal control safety software
• Cellphone battery life is limited and charging is annoying
– Solar chargers, power banks etc
• And many more………
 Solving a Problem
2 of 2

• A problem facing the U.S. and

other countries is finding
alternatives to fossil fuels.
• A large number of
entrepreneurial firms, like
this wind farm, are being
launched to solve this problem.

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 Examples
• Solving problems
• What can be the general
examples around?
• What are the examples in the
class ?
 Third Approach: Finding Gaps in the Marketplace
1 of 2

– A third approach to identifying

opportunities is to find a gap 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 doesn’t
represent a large enough market to be of
interest to mainstream retailers or
manufacturers.
– Focus group 2-33
 Examples
• Finding gaps
• What can be the general
examples around?
• What are the examples in the
class ?
 Personal Characteristics of the
Entrepreneur
Characteristics that tend to make some people
better at recognizing opportunities than others

Prior Experience Cognitive Factors

Social Networks Creativity

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 Prior (industry)Experience

– Several studies have shown that prior

experience in an industry helps an entrepreneur
recognize business opportunities.
• By working in an industry, an individual may
spot a market niche that is underserved.
• It is also possible that by working in an
industry, an individual builds a network of
social contacts who provide insights that
lead to recognizing new opportunities.
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 Cognitive Factors
– Studies have shown that opportunity
recognition may be an innate skill or cognitive
process.
– Some people believe that entrepreneurs have a
“sixth sense” that allows them to see
opportunities that others miss.
– This “sixth sense” is called entrepreneurial
alertness, which is formally defined as the
ability to notice things without engaging in
deliberate search.
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 Social Networks

– The extent and depth of an individual’s social network

affects opportunity recognition.
– People who build a substantial network of social and
professional contacts will be exposed to more
opportunities and ideas than people with sparse
networks.
– In one survey of 65 start-ups, half the founders reported
that they got their business idea through social contacts.
• Strong Tie Vs. Weak Tie Relationships
– All of us have relationships with other people that are
called “ties.”
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 Social Networks
2 of 3

• Nature of Strong-Tie Vs. Weak Tie Relationships

– Strong-tie relationship are characterized by frequent
interaction and form between coworkers, friends, and
spouses.
– Weak-tie relationships are characterized by infrequent
interaction and form between casual acquaintances.
• Result
– It is more likely that an entrepreneur will get new business
ideas through weak-tie rather than strong-tie relationships.

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 Social Networks
3 of 3

Why weak-tie relationships lead to more new business ideas

than strong-tie relationships
Strong-Tie Relationships
These relationships, which
typically form between like
minded individuals, tend
to reinforce insights and
ideas that people already
have.
Weak-Tie Relationships
These relationships, which
form between casual
acquaintances, are not as
apt to be between like-
minded individuals, so
one person may say
something to another that
sparks a completely new
idea.
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 CRITERIA FOR EVALUATION AND SELECTION for an
OPPORTUNITY

1. Can make money and has potential for growth

2. Less competition
3. Good fit between entrepreneur and
opportunity
4. Has competitive advantage
5. Workable and efficient
6. Not against the norms and values of the
community
7. Conform with laws and regulations
 Creativity
1 of 2

– Creativity is the process of generating a

novel or useful idea.
– Opportunity recognition may be, at
least in part, a creative process.
– For an individual, the creative process
can be broken down into five stages, as
shown on the next slide.

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Five-Steps to Generating Creative Ideas
Creativity
2 of 2

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• Extras
Step 5: Evaluation in terms of OS framework
& short listing ideas (cont’d)
• 7 approaches to generation of ideas
1. Natural resources
2. Existing anticipated industries
3. Market driven
4. Service sector scanning
5. Extension/ modification of present work content
6. Creative effort
7. Other ways
Step 5: Evaluation in terms of OS framework &
short listing ideas (cont’d)
1. Natural resources – to convert into profitable
enterprises
– Forest
– Horticulture
– Agro-waste
– Marine or aqua
– Mineral
– Animal
– Wind
– Sun
– Human
Step 5: Evaluation in terms of OS framework &
short listing ideas (cont’d)
1. Natural resources – must pay attention to:
1. Exploitation
2. Resource quantification & life
3. Resource stability
4. Critical infrastructure for resource utilization
5. Commodity/ trading dimension
6. Legal dimension
7. Other considerations
8. Where will you pick resource based ideas?
Step 5: Evaluation in terms of OS framework &
short listing ideas (cont’d)
2. Existing anticipated industries
– Similar projects
– Raw material for existing industry
– Further processing of output of existing industry
– Projects based on waste or by- products of existing
industry
– Packaging materials
– Service requirements
– Projects based on skills/ technology developed through
existing industry
Step 5: Evaluation in terms of OS framework &
short listing ideas (cont’d)
2. Existing/ anticipated industries – keep following in
view
– Outlook for existing industry of your interest
– Nature of decision making
– Projects in the pipeline
– Motivated feedback
– Look beyond local industries
Step 5: Evaluation in terms of OS framework &
short listing ideas (cont’d)
3. Demand driven or market driven opportunities
– Trade flows
– Import substitution
– Growth products
– Product positioning/ differentiation
– Exports, 100% export
– Networking
Step 5: Evaluation in terms of OS framework &
short listing ideas (cont’d)
4. Service sector opportunities
– Existing industrial enterprises
– Medium and large projects in pipeline
– Public utility orgs.
– Social infrastructure
– Business enterprises catering to community needs
– Citizens
– households
Step 5: Evaluation in terms of OS framework &
short listing ideas (cont’d)
5. Creative effort
– Development of problem solving products/ services
– Exploitation of new technology or material to meet a widely
felt need
– Creating a demand for a psychological product
– Technical extension of an established product concept
– Introducing products/ services alien to region or country
 Final selection
• Basic guidelines
– Imperfect knowledge
– Comprehensive comparison

• Key issues
– Technology comfortability
– Degree of difficulty of market position
– Risks
– Profitability
– Government dependence
– Success & risks calculated
 Final selection – Errors in selection
1. “Me too” syndrome
2. Undifferentiated enterprise
3. Failure to grasp key elements of success
4. Lack ownership
5. Inaccurate information
6. Unwillingness to step back
• EXTRA
Problem solving
Problem solving
Problem solving
 Examples of How Changes in the Environment Provides Openings for
New Product and Service Opportunities
Structure of Number of teenagers higher than number Cyber cafes, Cineplex's, recording studios
Population and of elderly and children
Income
People have higher purchasing power Passenger cars, household furniture, DVD

Social Increase incident of housebreaking Grills, alarm, sensor, security systems

Increase interest in fitness
Increase mobility of population
Increasing predominance of dual-income
families leaves less time to cook at home
Technological Advances in biotechnology
Advances
Development of the internet
Increase pressure to improve
economicperformance
Government Increased driving standards
Policies and
Fitness center, dancing class, in-house
exercise equipment, health food store
Hand phone, laptop computers
Restaurants, food delivery services
Biotech-related pharmaceutical products,
foodproducts, veterinary products
E-commerce, improved communication
Online marketing, cost control services
Smoke emission control, helmet, seatbelt
 PEST may have different Forms
• PESTEL separates out legal from political
activity and adds environment.
• STEEPV adds Values (fashion,
education, banking, telecommunication
industry etc)
• SPENT adds Natural Environment
• STEEPLE adds Ethics
Full View of the Opportunity Recognition
Process

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