Chapter

5(RITZ,APOLLO,RAJDHAN
I AND APEX)
Identifying and Analyzing
Hisrich
Opportunities Peters

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Shepherd
Introduction

 Entrepreneurs find it difficult to both

manage and expand the venture they
created.
 To expand a venture, entrepreneurs need
to:
 Identify opportunities for domestic and
international expansion.
 Develop different management skills.
 Infuse new entrepreneurial spirit
(intrapreneurship)(intrapreneurship is acting like
an entrepreneur in a large organization)
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Introduction (cont.)

 Factors contributing to international

expansion:
 Opening up of controlled economies to market-
oriented enterprise.
 Self-interest of organizations as well as the
impact of external events and forces.
 Developing countries need training and
education as well as infrastructure to support
their development and growth in the next
century.

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Opportunity Recognition and the
Opportunity Assessment Plan
 The key to successful domestic and
international entrepreneurship is to develop
an idea that has a market with a need for
the product or service idea conceived.
 Opportunity assessment is often best
accomplished by developing an opportunity
assessment plan.
 An opportunity assessment plan is not a
business plan.

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Opportunity Recognition and the
Opportunity Assessment Plan (cont.)
 An opportunity assessment plan has four
sections:
 The first section develops the idea, analyzes competitive
products and companies, and identifies the unique selling
propositions(pratigya,prastab).
 The second section focuses on the market—its size,
trends, characteristics, and growth rate.
 The third section focuses on the entrepreneur’s and
management team’s skills and experience.
 The final section develops a time line indicating the steps
to successfully launch the venture.

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Information Sources

 General Information
1)Government agencies
Ministry of agencies
Department of industry
Department of cottage and small industries
Office of the registrar of companies
Nepal bureau of standards and metrology
Nepal tourism board
Other valuable Web sites include:
meroanswer.com,biruwa.net,nlocate.com etc.

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Special agencies of government

 Industrial promotion Board

 Nepal industrial development finance
 National productivity and economic
development centre
 Microenterprise, cottage, and small
industries promotion board

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Institutional Finance

 Commercial bank
 Development bank
 Employee provident fund
 Citizen’s investment trust

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Consultancy service

 Institute of charter accountants of Nepal

 Centre for economic and development and
administration
 Nepal engineering consultancy service

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Marketing services

 Trade and export promotion centre

 Ready-made garment export promotion
committee
 Carpet and wool development board

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Industrial estates

 Balaju Bhaktapur
 Hetauda Birendranagar

 Patan Dhankuta
 Nepalgunj Rajbiraj
 Dharan
 Pokhara
 Butwal

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Information Sources (cont.)

 Industry and Market Information

 Plunkett - Industry data, market research,
trends, statistics on markets, and forecasts.
 Frost and Sullivan - Industry specific information.
 Euromonitor – Information on consumer market
sizes, marketing parameters, companies, and
brands.
 Gartner - Information on technology markets.
 Gale Directory Library - Industry statistics and
information on nonprofit organizations and
associations.

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Information Sources (cont.)

 Competitive Company and Product

Information
 Business Source Complete - Provides company
and industry information by scanning the
Datamonitor reports.
 Hoovers - Provides information on both large
and small companies
 Mergent - Provides detailed company and
product information

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Information Sources (cont.)

 Government Sources
 Census reports
 www.cbs.gov.np
 Export/import authority
 www.tepc.gov.np
 www.nepalexport.org.np

 www.iedi.org.np(small business promotion project)

 www.doind.gov.np(department of industry)
 www.ocr.gov.np(office of company registrar Nepal)

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Information Sources (cont.)

 Search Engines
 There are many key terms for searching the
needed industry, market, and competitive
information.
 Trade Associations
 Good source for country-specific industry data.
 Trade Publications
 Provide information and insights on trend,
companies, and trade shows from a local
perspective of the particular market and market
conditions.
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The Nature of International
Entrepreneurship
 International entrepreneurship is the
process of an entrepreneur conducting
business activities across national
boundaries.
 The activities necessary for ascertaining and
satisfying the needs and wants of target
consumers take place in more than one country.

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The Importance of International
Business to the Firm
 International business has become
increasingly important to firms of all sizes.
 A successful entrepreneur must be able to:
 Fully understand the difference between
domestic and international business.
 Respond accordingly thereby successfully “going
global.”(improves decision making and
strategies for organization and even for
countries)

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International versus Domestic
Entrepreneurship
 Economics
 In a domestic business strategy, the entire
country is organized under a single economic
system and has the same currency.
 Creating a business strategy for a multicountry
area means dealing with differences in:
 Levels of economic development.
 Currency valuations.
 Government regulations.
 Banking, venture capital, marketing, and distribution
systems.

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International versus Domestic
Entrepreneurship (cont.)
 Stage of Economic Development
 Certain factors significantly impact a firm’s
ability to successfully engage in international
business such as:
 Fundamental infrastructures.
 Banking facilities and systems.
 Educational systems.
 Legal system.
 Business ethics and norms.

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International versus Domestic
Entrepreneurship (cont.)
 Balance of Payments Current Account
 With the present system of flexible exchange
rates, a country’s current account (the
difference between the value of a country’s
imports and exports over time) affects the
valuation of its currency.
 The valuation of one country’s currency affects
business transactions between countries.

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International versus Domestic
Entrepreneurship (cont.)
 Type of System
 Difficulties in doing business in economies that
are developing, or in transition.
 Use of barter or third-party arrangements in
these countries to increase business activity.
 Barter - A method of payment using nonmoney items.
 Third-party arrangements - Paying for goods indirectly
through another source.

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International versus Domestic
Entrepreneurship (cont.)
 Political-Legal Environment
 Political risk analysis - An assessment of a
country’s political policies and its stability prior
to entry.
 Types of political risks:
 Operating risk.
 Transfer risk.
 Ownership risk .
 Conflict and changes in the solvency(ability to pay
debts) of the country.

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International versus Domestic
Entrepreneurship (cont.)
 A country’s legal system regulates:
 Its business practices.
 The manner in which business transactions are
executed.
 The rights and obligations involved in any business
transaction between parties.
 Critical areas for every entrepreneur:
 Property rights.
 Contract law.
 Product safety.
 Product liability.

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International versus Domestic
Entrepreneurship (cont.)
 Language
 One of the biggest problems for the
entrepreneur is finding a translator.
 Significant problems can occur with careless
translation.
 Care should be taken to hire a translator whose
native tongue is the target language and whose
expertise matches that of the original authors.

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Technological Environment

 The variation and availability of technology

are often surprising, particularly to an
entrepreneur from a developed country.
 New products in a country are created
based on the conditions and infrastructure
operant in that country.

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Figure 5.1 - Various Aspects of
Culture

Figure 5.1
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Available Distribution Systems

 Factors to be considered in determining the

distribution system for a country:
 Overall sales potential.
 Amount and type of competition.
 Cost of the product.
 Geographical size and density.
 Investment policies.
 Exchange rates and controls.
 Level of political risk.
 Overall marketing plan.

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Motivations to Go Global

 Profits.
 Competitive pressures.
 Unique product(s) or service(s).
 Excess production capacity.
 Declining home country sales.
 Unique market opportunity.
 Economies of scale.
 Technological advantage.
 Tax benefits.
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Strategic Effects of Going Global

 Physical and psychological closeness to the

international market affects the way
business occurs.
 Cultural variables, language, and legal
factors can make a foreign market that is
geographically close seem psychologically
distant.

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Strategic Effects of Going Global
(cont.)

 Issues involved in psychological distance:

 The distance envisioned by the entrepreneur
may be based more on perception than reality.
 Closer psychological proximity(relationship)
makes it easier for an entrepreneurial firm to
enter a market.
 There are more similarities than differences
between individual entrepreneurs regardless of
the country.

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Foreign Market Selection

 One good market selection model employs

a five-step approach:
 Develop appropriate indicators.
 Collect data and convert into comparable
indicators.
 Establish an appropriate weight for each
indicator.
 Analyze the data.
 Select the appropriate market from the market
rankings.

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Market indicator(previous)

 Market indicators are quantitative factors

that predict the future behaviour of market
indices. Market indicators are used in
technical analysis to forecast market
trends. Market indicators are ratios and
formulas that explain current gains and
losses in stocks market.

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Entrepreneurial Entry Strategies

 Exporting
 Indirect exporting.
 Direct exporting.
 Non equity Arrangements
 Licensing.
 Turn-key projects.
 Management contracts.

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Entrepreneurial Entry Strategies
(cont.)

 Direct Foreign Investment

 Minority Interests.(50% ownership by another
company)
 Joint Ventures.
 Majority Interest.(over 50%)
 Mergers:
1)Horizontal merger.(A horizontal merger is
a merger or business consolidation that occurs between firms
that operate in the same space, as competition tends to be
higher and the synergies and potential gains in market share
are much greater for merging firms in such an industry.

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Entrepreneurial Entry Strategies
(cont.)

2)Vertical merger(A vertical merger, also known as

a vertical integration, is a merger between a
manufacturer and a supplier within the same industry.
3)Product extension merger(The product extension
merger allows the merging companies to group together
their products and get access to a bigger set of
consumers.
4)Market extension merger(.The main purpose of the
market extension merger is to make sure that the
merging companies can get access to a bigger market
and that ensures a bigger client base.

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Entrepreneurial Entry Strategies
(cont.)

5) Diversified activity merger( new market by

different two or more than two companies
having the same nature of product even
though they can add new product as well to
that market

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Entrepreneurial Partnering

 Foreign entrepreneurs know the country

and culture.
 They can facilitate business transactions and
update the entrepreneur on business, economic,
and political conditions.
 Good partners share the entrepreneur’s
vision, are unlikely to exploit the
partnership, and can help the entrepreneur
achieve his or her goals.

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Barriers to international trade
 The most common barriers to international trade are tariffs, quotas and
nontariff barriers.
 A tariff is a tax on imports, which is collected by the federal government and
which raises the price of the good to the consumer. Also known as duties or
import duties, tariffs usually aim first to limit imports and second to raise
revenue.
 A quota is a limit on the amount of a certain type of good that may be
imported in to the country. A quota can be either voluntary or legally
enforced.
 Nontariff barriers include quotas, regulations regarding product content or
quality, and other conditions that hinder(to stop) imports. For instance, US
prohibits the importation of unpasteurized cheese from France, is it
protecting the health of American consumer or protecting the revenue of the
American cheese producer?

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Trade Barriers to International (cont.)

 Entrepreneur’s Strategy and Trade Barriers

 Trade barriers increase entrepreneurs’ costs of
exporting products or semifinished products to a
country.
 Voluntary export restraints may limit
entrepreneurs’ ability to sell products in a
country from production facilities outside the
country.
 Entrepreneurs may have to locate assembly or
production facilities in a country to conform to
local content regulations.

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Implications for Global
Entrepreneurship(conclusion,suggestion)
 It helps how to raise capital
 How to be competitive in the sector
 How women entrepreneurs create social impact
 Learn from the successes, failures and mistake of
successful entrepreneurs
 Attract foreign investment into the country
 Gain knowledge on protecting intellectual capital
 Create links between local and foreign investors
……………………….THE END…………………………..

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