OPPORTUNITY RECOGNITION

10/29/2013

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

10/29/2013

Timely

Durable

Attractive

10/29/2013

Anchored in a product, service or business that adds value to its buyers

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. Once the market for a new product is established, its window of opportunity opens, and new entrants flow in. At some point, the market matures, and the window of opportunity (for new entrants) closes.
10/29/2013 4

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

IDENTIFYING AND RECOGNIZING OPPORTUNITIES

OBSERVING TRENDS
SOLVING A PROBLEM FINDING GAPS IN THE MARKET PLACE
10/29/2013 6

OBSERVING TRENDS

10/29/2013

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

SOCIAL FORCES
There are various social forces that affect your business : Family and work patterns. The aging of the population. The increasing diversity in the workplace. The globalization of industry.

The increasing focus on health care and fitness.

The proliferation of computers and the Internet. The increase in the number of cell phone users.

New forms of entertainment.

10/29/2013

TECHNOLOGICAL ADVANCES
Entire industries have emerged as the result of technological advances.

Once a new technology is created, new businesses form to take the technology to a higher level. Advances in technology are usually correlated with economic and social changes to create opportunities.
10/29/2013 10

POLITICAL AND REGULATORY CHANGES

Political and regulatory changes provide the basis for new business opportunities. For example, laws that protect the environment have created opportunities for entrepreneurs to start firms that help other firms comply with environmental laws and regulations.

10/29/2013

11

SOLVING PROBLEMS
Notice a problem

Find a Solution Pinpointed through observing trends, intuition, serendipity, or chance.

10/29/2013

12

BUSINESSES CREATED TO SOLVE A PROBLEM

10/29/2013

13

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. A gap can also occur when customer needs are not being met at all.

10/29/2013

14

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. There are several explanations for this.
By working in an industry, an individual may spot a market niche that is undiscovered. 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.

10/29/2013

16

Cognitive Factors
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.

10/29/2013

17

Social Networks
The extent and depth of an individuals 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. (See next slide.)

10/29/2013

18

Social Networks
Why weak-tie relationships lead to more new business ideas than strong-tie relationships

Strong tie relations

These relationships, which typically form between like-minded individuals, tend to reinforce insights and ideas that people already have.

Weak tie relations

The 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.

10/29/2013

19

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.

PROCESS
PREPARATION INCUBATION INSIGHT EVALUATION ELABORATION

10/29/2013

20

10/29/2013

21

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 members idea (2%) Thought up during honeymoon in Italy (1%)

5% 4% 20%

71%

Source: 100 founders of the 1999 Inc. *500* fastest growing private companies.
10/29/2013 22

SOURCES OF NEW BUSINESS IDEAS

Previous Job Hobbies Personal Observation

Deliberate Search
Publications Inventors Shows, Trade Shows and Conventions Patent Brokers and Product Licensing Information Services Friends, Acquaintances, and Other Social Contacts Federal and Provincial Government Agencies and Departments Using Creative Thinking- Brainstorming, focus groups
10/29/2013 23

BRAIN-STORMING
Is a technique used to generate a large number of ideas and solutions to problems 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. Freewheeling is encouraged. The session should move quickly. Leap-frogging is encouraged.

10/29/2013

24

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. These groups are led by a trained moderator, who uses the internal dynamics of the group environment to gain insight into why people feel they way they do about a particular issue. Although focus groups are used for a variety of purposes, they can be used to help generate new business ideas.

10/29/2013

25

ENCOURAGING NEW IDEAS

Establishing a Focal Point for Ideas Some firms meet the challenge of encouraging, collecting, and evaluating ideas by designating a specific person to screen and track themfor if its everybodys job, it may be no ones responsibility. Another approach is to establish an idea bank (or vault), which is a physical or digital repository for storing ideas. 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

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

10/29/2013

28