Entrepreneurship for

Engineers
Hawassa University Institute of Technology
Department of Industrial Engineering

2012/2020
Target Group: 5th year
 Hydraulics & Water Resource Engineering
 Water Resource & Irrigation Engineering
 Biosystems Engineering

PPT #2 By: Sitotaw A.

 Chapter 2
Entrepreneurship vs
Project Identification and Selection
Chapter Overview

2.1 Generating Business Ideas and

Opportunities
2.2 Screening Ideas/selection
2.3 SWOT- Analysis
2.1. Generating Business Ideas and
Opportunities
A. Sources of New Ideas
Some of the more useful sources of new business ideas are discussed
below.
• Observing the Market: a number of ideas can be generated just
by observing the available demand and/or supply of a
product/service.
• Consumers: A consumer knows best what he wants and the
habit/test which are going to be popular in the near future.
consumer is the foundation of a business and it is he who keeps it
going.
• Developments in other Nations: People in underdeveloped
countries generally follow the fashion trends of developed
countries. An entrepreneur can discover good ideas by keeping in
touch with developments in advanced nations.
• Study of Project Profiles: A careful scrutiny of project files is very
helpful in choosing the lines of business.
Cont. …
• Government Organizations: Government can be helpful in
finding out and developing new product ideas in two ways.
– Providing Advice and Assistance: Development banks, state
industries, development/investment corporations, technical
consultancy organizations, investment centers, export
promotion agencies, etc. provide advice and assistance in
technical, financial, marketing and etc.
– Formulating Regulations and Policies: Government identifies the
priority sectors for investment through five years plans,
industrial policy resolutions and guidelines for industry.
• Existing Companies: Entrepreneurs should also establish a more
formal method for monitoring and evaluating the products and
services being offered by existing or new companies, which
uncovers ways to improve on these present offerings resulting in
a new venture being formed.
Cont. …
• Distribution Channels: Members of the distribution channels are
also excellent sources for new ideas. Because of their familiarity
with the needs of the market, channel members frequently have
suggestions for completely new products.
• Trade Fairs and Exhibitions: National and international trade fair
are very good sources of business ideas. At these fairs, producers
and dealers in the concerned industry put up their products for
display and/or sale. A visit to these fairs provides information
about new products.
• Hobbies/Interests: A hobby is a favorite leisure-time activity or
occupation. Many people in pursuit of their hobbies or interest
have founded business.
• Mass Media: you may well find business for sale at the commercial
advertisement in a newspaper, magazines, television and the like.
 B. Methods of Generating New Ideas
• Conducting Research: An entrepreneur can primarily generate
new business ideas by conducting targeted research.
• Focus Groups: This method consists of a moderator leading a
group of people through an open, in-depth discussion on the
new product area in either a directive or non-directive manner
by the moderator.
• Brainstorming: The entrepreneur can gather a group of people
to discuss and generate new ideas. The aim is to generate as
many ideas as possible –the wilder the idea the better.
• Problem Inventory Analysis: For instance, consumers or group
members are provided with a list of problem from a general
product category. They are then asked to identify and discuss
products in this category that have the particular problem.
2.2. Screening Ideas
Screening Ideas
Business ideas/opportunities need to be screened and assessed
for viability once they have been identified or generated since
some may stand out as much more suitable than others. The
scarce resource forces us to rank more desirable idea(s) among
others.
Hence, in the process of screening business ideas,
First, write down at least ten business ideas on your observations.
Secondly, make a first selection of three business ideas from your list
of possible business ideas.
The simplest method of evaluating ideas involves constructing
tables, which allow us to compare the advantages and the
disadvantages of the various ideas.
The comparison table may comprise the following points:
Cont. …
a. Marketability/Demand:
– Is there a market for the idea?
– Are there any customers-people with money are able to buy the
product?
– Can you provide what they need or want?
b. Profitability of the Idea if Implemented:
c. Availability of raw material and resources:
– The raw material needed to successfully meet the opportunity must
be assessed.
– possible sources of the raw materials at reasonable cost and effort
shall be considered.
d. Personal Goals and Competence of the Entrepreneur:
– Do you really want to venture into a business?
– Do you have what it takes?
– Are you motivated enough?
 Cont. …
e. Ease of Implementation: The entrepreneur should consider the points:
– Procedures for registration;
– Need of providing different documents to different bodies,
– Legal requirements, and
– Need of employing qualified persons for the purpose of acquiring recognition or
official approval
f. Financial Requirements:
g. Risk Exposure Criteria:
– Whether the product can readily be copied or imitated if found very profitable by
others.
– Competitors who have more resources and expertise may retaliate if threatened
by the new business.
– The envisaged business may suffer from unforeseen factors such as unavailability
of raw materials.
 Cont. …
h. Government Priority and Support:
– Is the envisaged business under the government’s list of priorities for promotion
of investment and employment generation?
– Is a possibility of getting government support such as tax exception or reduction
loan on reduced rate of interest or other support such as market access,
technical or advisory services?

In the third stage of idea screening, after the above-

mentioned parameters are evaluated, new business start-up
can go into a finer crosschecking of the key variables
(Critical success Factors) affecting the success or the failure
of the business.
– For example, not only consider just raw materials but
also seasonal availability of raw materials, lack of
standard of raw materials, unpredictability of raw
materials supply and the like.
2.3. SWOT- Analysis
SWOT- Analysis
• This means “STRENGTHS – WEAKNESSES – OPPORTUNITIES –
THREATS”.
• We need to identify all our/environment advantages and
disadvantages so we know ourselves intimately.
• A SWOT analysis is a technique to identify and evaluate
project/business ideas in terms of their potential strengths,
weaknesses, opportunities and threats.
• It will help you to focus on your strengths, minimize weaknesses,
and take the greatest possible advantage of opportunities
available.
• Establishing yourself as a successful entrepreneur depends, in
part, upon choosing a good idea. (good for market and
entrepreneurs)
 Cont. …

• Undertaking SWOT analysis will enable you to:

1. Continue with the selected idea and make a full feasibility
study;
2. Make change to the business idea; or
3. Drop the business idea completely.

• Scope of SWOT analysis

– In general, SWOT analysis involves external and internal
environmental analysis.
 External Environmental Analysis
(Opportunity & Threat Analysis)

• There are a number of external factors that provided

opportunity and/or pose threats towards establishing and
running a business.
• The process of business environment analysis include
i. Scanning,
ii. Monitoring,
iii. Forecasting, and
iv. Assessing
i. Scanning
• The goal of scanning is to detect change that is
already under way.
• Successful scanning catches important changes (O&T)
giving the new venture enough lead-time to adapt.
• The entrepreneur scans innumerable source of data:
– Journals, network news, newsletter, special reports, and
documentaries
– Browsing the Internet
– “people to people” interactive scanning,
• Scanning gives the entrepreneur sensitivity to
environmental conditions that sometimes look like
intuition.
ii. Monitoring
• Monitoring is the process of tracking the evaluation
development and sequence of critical events that affects
the survival and profitability of the future new business.
• Data from the scanning process are input into the
monitoring process.
• Specific trends and events identified for the new venture
are monitored in real time to confirm or disprove
predictions about how they will affect the firm.
• Monitoring is less general and therefore more focused than
scanning.
• The outcome of the monitoring is a detailed model of how
various elements in the external environment that can
influence and affect the firm.
iii. Forecasting
• Forecasting enables the entrepreneur to develop reasonable
projections for the future. This can be projections for elements
such as the level of prices, the direction of interest rates, or
future scenarios for cause and effect.
• Inputs for forecasts are the data from monitoring. When
forecasting is used to help search for new business
opportunities, the following five-step process is suggested.
– Choose the environmental variables that are critical to the new
venture.
– Select the source of the data for the forecast.
– Evaluate various forecasting techniques based on its cost and
complexity.
– Integrate forecast results into your plan for the creation of the
new venture.
– Keep track of the critical aspects of your forecast.
iv. Assessing

• Assessing the environment is the most difficult and important

of the four tasks of environmental analysis.
• Assessing the environment involves interpreting the data/
information made above.
• Since interpretation is an art form, people would interpret
opportunities differently so that there are few facts that people
would agree.
 Source of Opportunities and Threats
a. Source of Opportunities

The most important thing to notice about the business environment is

change. Changes in the business environment offer opportunities for
entrepreneurs. Existing firms have their resources, strategy and organization
structure geared for the past or current environment. When a change
occurs, it is frequently easier for the new firm to spot the change.
1. Unexpected Events
2. The Incongruous - things that “ought to be” but are not
3. The Process Need
4. Changes in Technology
5. Demographic Changes - Demographic changes are changes in
the population or subpopulation of society
6. Changes in Perception
7. New Knowledge- is often seen as the ‘superstar’ of
entrepreneurial opportunity
 b. Source of Threats

 Threats of Substitutes

 Threats of Integration- when the existing firms (competitors) have

strong relationship with suppliers, customers and the community.

 Entry Barriers
Opportunities:
Where appropriate, use such questions as:
– Where are the good opportunities facing you?
– What are the interesting trends you are aware of?
Useful opportunities can come from such things as:
– Changes in technology and markets on both a broad
and narrow scale
– Changes in government policy related to your field
– Changes in social patterns, population profiles,
lifestyle changes, and etc.
– Local Events
Threats:
• What are your competitors doing?
• Are the required specifications for your job,
products or services changing?
• Is changing technology threatening your
position?
• Do you have bad debt or cash-flow problems?
• Could any of your weaknesses seriously
threaten your business?
 Internal Environmental Analysis
(Strength & Weakness Analysis)
Strengths:
• What advantages do you have?
• What do you do well?
• What relevant resources do you have access to?
• What do other people see as your strengths?
Weaknesses:
• What could you improve?
• What do you do badly?
• What should you avoid?
• Reading Assignment

Read the details on:

– The Creative Process
– The SWOT Analysis