Business Opportunity Identification & Selection Process
Introduction What enterprise do I setup…? What…? How…” this.., that..
Purpose of the Paper How does an entrepreneur go about identifying of idea? This paper is intended to help one think and chart out an identification work plan for himself/herself. It does not provide oversimplified answer because opportunity – identification in it is an open-ended task. In practice, you might be able to utilize parts of it for actual opportunity identification and selection work. It suggest to absorb and retain what you can.
An entrepreneur may select a business through a chance event or through a natural extension of his present occupation, viz., engineering goods and undertaking its production. But every one is not so lucky. But entrepreneur needed to understand the process because all does not belong to the class of entrepreneur to whom opportunities present themselves so easily. Process Steps to select the business opportunity
Preparation of personal profile
Development of Opportunity selection frame work
Generation of Idea
Snap investigation of Idea
Evaluation in terms of OS frame work & short listing of Ideas
Preparation of Personal Profile Step One You are the one who has to make an enterprise idea work. You have a certain idea attitude to business. So first write about yourself. Name : Sai Kiran Edu.: Masters (Hotel Management) Work Experience: 3 years Hotel Manager
This profile which would provide you a springboard for your decision making framework and should include: Preparation of Personal Profile
Other Academic / Practical interests:
Objective for establishing an enterprise:
Attitude of risk – taking:(high, low or medium) &
Development of Opportunity selection frame work Being open to any opportunity under the sun might means not taking any action at all. It is imperative that you develop your own list of criteria for opportunity identification and selection. Step Two
Development of Opportunity selection frame work The list of criteria should include: Step Two
Linkage in economic growth
Generation or Identification of Ideas The range and depth of ideas you pick up are determined by various factors like the nature of your exposure to business environment, you business acumen, vision, confidence and scanning capability. Step Three Now the task is of hitting upon idea : The heart of opportunity identification and selection process.
Generation or Identification of Ideas There are no sure-fire ways of picking up opportunities. The methods will help you stretch you mind, get started on an identification journey and cover the ground rapidly. The sources of idea generation :- Step Three
Existing or anticipated industries
Service sector scanning
Extension/Modification of present work content
Creative Effort and other ways
Snap Investigation of Ideas An idea is not enough, you must examine its preliminary viability. You talk the following: Entrepreneur engaged in Identical business Potential Customers Knowledgeable officials in agencies assisting industry. Consultants Machine Suppliers Step Four
Your investigation should enable you to answer the questioned listed Snap Investigation of Ideas
Its application or uses.
Possible scales of operation.
Project cost respective to the scale of operation.
Unit Scale price
Degree of technological complexity
What exactly is the product or service?
And any other information you can collect without incurring too much expenditure
Evaluation of OS framework & short listing Ideas Evaluation is possible once you complete snap investigation of ideas. You can now try the viability of these ideas in terms of your own opportunity selection (decision making) framework. There is a room for initiative judgment or gut feeling. Step Five
You answer the following questions before you reach even a tentative conclusion: Evaluation of OS framework & short listing Ideas
Do you think you will be able to learn and get grip over this business
Will it pose, because of its basic character, serious problems in terms of securing term-loans/working capital assistance from the financial institutions or a commercial banks?
What are the key determinants of success and risk factors?
Pre-feasibility Study Step Six Now you develop a reasonably comprehensive and detailed picture of project idea. How do you do this? You undertake a pre-feasibility study, but this is a optional stage as in course of initial investigation sufficient information is collected and analysis is carried out but it depends upon the circumstances.
Opportunity Selection You have now reached the most critical point of opportunity identification and selection process, the cumulating point. Step Seven Until now, it was exploration, elimination, information gathering and analysis.you have acquired a good understanding of the strengths, weaknesses and gray areas of alternative business opportunities. It is time you made up your mind.
Is the product / service an established idea or an innovative one?
How do you go about this? Answer the following 30 questions. 2. Does the project-cost match your investment preparedness? 3. Is the technical know-how a critical element? 4. If yes, how easy it is difficult to acquire? 5. How easy or difficult it is to absorb the technology? 6. What is the product / service – use? Step Seven
8. What are the expected geographical boundaries of your market? 9. What is the market position in terms of size, segment and features 10. Is the demand year round or seasonal? 11. How volatile is the selling price? 12. What is the degree of competition? 13. What is the basis of competition (price, quality, service, delivery, schedule)? 7. Who are your customers? (Industry / Household) 14. Is there scope for positioning your enterprise? Step Seven
15. What is the possible extent of competitive advantage/disadvantage of a new enterprise in relation to the existing enterprises? 16. What is the position in terms of existing / likely substitutes? 17. What is the amount of initial / regular sales-promotion effort / expenditure required? 18. How depended is the project on imported input / export market? In what ways? Technical know how? Machinery? Raw material? Market? 19. Are the raw materials easily available? Step Seven
20. How volatile is the raw material? 21. Is there speculative trading in either raw material or finished goods? 22. What location do you have in mind? 23. How do you view location in terms of industrial infrastructure (water, power, effluent, disposal facility), commercial amenities and social facilities? 24.What is the profile and size of manpower requirement? How easy or expensive to is to get it? Step Seven
25. Is the project critically dependent upon on some infrastructure if so, what is the position of such infrastructure (international cargo space for a perishable export item)? 26. Will the loaning agencies support it? 27. What is the future outlook for the sector of industry to which the project belongs? 28. Are there any cartels or other privileged groups among existing entrepreneurs, customers, raw material, suppliers or know-how suppliers? 29. How long will it take to establish the project? Step Seven
30. What is the government policy in terms of - Entry restrictions. - Technical standards. - Control over price and distribution of goods(Pharmaceuticals). - Control over price and distribution of raw-material (molasses). - Excise, VAT and Taxation. - Subsidies and financial incentives - Credit Policy You may not require to answer all these but these will put you in a clearer frame of mind. Step Seven
Conclusion Thus the constraint what business to set up – identification of a right kind of business opportunity can be removed with this exercise.