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Chapter 2 on Entrepreneurship


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Chapter 2 on Entrepreneurship

  1. 1. Entrepreneurship studies – Chapter 2 © Cosmopoint International University College, School of Business – 2007
  2. 2. Business Opportunities <ul><li>What is a Business Opportunity? </li></ul><ul><ul><li>A business opportunity is said to exist when: </li></ul></ul><ul><ul><ul><li>There is a possibility of offering a new product or service in a particular market. </li></ul></ul></ul><ul><ul><ul><li>The product or service fulfills the demands and preferences of the customers. </li></ul></ul></ul><ul><ul><ul><li>Where the product can be used to solve their problem. </li></ul></ul></ul>
  3. 3. Business Opportunities <ul><li>When and Why is there a need to offer a product or service in a particular market: </li></ul><ul><li>When? </li></ul><ul><ul><li>Changes in Environmental Factors </li></ul></ul><ul><ul><ul><li>Political and Legal </li></ul></ul></ul><ul><ul><ul><li>Economic </li></ul></ul></ul><ul><ul><ul><li>Social </li></ul></ul></ul><ul><ul><ul><li>Technological </li></ul></ul></ul><ul><li>Why? </li></ul><ul><ul><li>Because Environmental Factors effect customers’ demand for particular product or service. </li></ul></ul>
  4. 4. Business Opportunities <ul><li>The Process of Identifying, Evaluating and Selecting a Business opportunity. </li></ul><ul><ul><li>Identify the needs and wants of customers. </li></ul></ul><ul><ul><li>Scanning (examining) the environment and evaluating of self (entrepreneur) and the community. </li></ul></ul><ul><ul><li>Screening (Process of evaluating) of business opportunities. </li></ul></ul><ul><ul><li>Selecting a business opportunity </li></ul></ul><ul><ul><li>Preparing a Business Plan. </li></ul></ul>
  5. 5. <ul><li>Identify the needs and wants of the customer </li></ul><ul><li>Human needs and wants </li></ul><ul><ul><li>A need is something that is basic in life, for example we need food, clothing and shelter. </li></ul></ul><ul><ul><li>But as human we also have wants that is, there is a desire or craving something that is far better than basic items. </li></ul></ul><ul><ul><li>Wants are shaped by : </li></ul></ul><ul><ul><ul><li>Our life style </li></ul></ul></ul><ul><ul><ul><li>Level of Education </li></ul></ul></ul><ul><ul><ul><li>Purchasing power </li></ul></ul></ul><ul><ul><ul><li>Personality of the person </li></ul></ul></ul>Business Opportunities
  6. 6. Business Opportunities <ul><li>Human needs and wants </li></ul><ul><ul><li>Human needs and wants are unlimited and are of all types. </li></ul></ul><ul><ul><li>Society affluence lead to increase to human wants and needs </li></ul></ul><ul><ul><li>More business opportunities arises. </li></ul></ul><ul><ul><li>Thus entrepreneurs must take this opportunity to provide products and services </li></ul></ul><ul><ul><li>Entrepreneurs must be sensitive to changes in customers’ needs and wants in order to be aware of new business opportunities. </li></ul></ul>
  7. 7. <ul><li>Scanning the environment and evaluating of self and the community. </li></ul><ul><ul><li>Environmental Scanning (ES) </li></ul></ul><ul><ul><ul><li>ES can lead to an idea that can be converted into a business opportunity. </li></ul></ul></ul><ul><ul><ul><li>Two approaches are used and what are they? </li></ul></ul></ul><ul><ul><ul><ul><li>Scan the environment by micro perspective </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Scan the environment by macro perspective </li></ul></ul></ul></ul><ul><ul><ul><li>From the macro perspective for example the agricultural sector can offer business opportunity in forestry, fishing, plantation, and livestock breeding. </li></ul></ul></ul>Business Opportunities
  8. 8. <ul><li>Scanning the environment and evaluating of self and the community. </li></ul><ul><ul><li>Environmental Scanning (ES) </li></ul></ul><ul><ul><ul><li>But from micro perspective every industry can offer specific business opportunities. </li></ul></ul></ul><ul><ul><ul><li>For example in the case of forestry an entrepreneur can be involved in: </li></ul></ul></ul><ul><ul><ul><ul><li>Logging </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Manufacturing of veneer plywood </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Processing of sawn timber </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Manufacturing of furniture. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Making wooden doors and frames. </li></ul></ul></ul></ul>Business Opportunities
  9. 9. <ul><li>Another approach of scanning the environment is by looking at the following factors: </li></ul><ul><ul><li>Structure of the population, income and tastes. </li></ul></ul><ul><ul><li>Examine the import and export information of a country. </li></ul></ul><ul><ul><li>Study and examine types of local resources and technological breakthrough. </li></ul></ul><ul><ul><li>Examine the Industrial linkages. </li></ul></ul><ul><ul><li>Examine the development projects by the public and private sectors. </li></ul></ul><ul><ul><li>Newspaper and magazines – local and foreign as a source of business opportunities </li></ul></ul>Business Opportunities
  10. 10. <ul><li>Another approach of scanning the environment is by looking at the following factors: </li></ul><ul><ul><li>Examine what the local issues and social problems </li></ul></ul><ul><ul><li>Examine what new government policies and regulation have impact on small business. </li></ul></ul>Business Opportunities
  11. 11. <ul><li>Self Evaluation </li></ul><ul><ul><li>Besides Environmental scanning one is to do a self evaluation to identify what skills, experience is available in an entrepreneur that can be used in business development and engagement. </li></ul></ul><ul><ul><li>Skill competency, experience, knowledge that match the business opportunities. </li></ul></ul>Business Opportunities
  12. 12. <ul><li>The factors that need to be considered are as follows: </li></ul><ul><ul><li>Experience </li></ul></ul><ul><ul><li>Knowledge and Competency Skills </li></ul></ul><ul><ul><li>Financial Status and situation </li></ul></ul><ul><ul><li>Interest – likes and dislikes </li></ul></ul><ul><ul><li>Networking – circle of friends and associates </li></ul></ul><ul><ul><li>Cultural values and norms of the community. </li></ul></ul>Business Opportunities
  13. 13. <ul><li>Screening of Business Opportunities </li></ul><ul><ul><li>By using the process of screening business opportunities will help the entrepreneur to select a business opportunity that he or she can focus on totally and be dedicated to it success. </li></ul></ul><ul><ul><li>This process involves four factors as follows: </li></ul></ul><ul><ul><ul><li>Legal within the law of the country. </li></ul></ul></ul><ul><ul><ul><li>Monopolistic Power and Level of Competition. </li></ul></ul></ul><ul><ul><ul><li>Capital Requirements must be adequate to business undertaking </li></ul></ul></ul><ul><ul><ul><li>Risk factor </li></ul></ul></ul><ul><ul><ul><li>Liquidity Level </li></ul></ul></ul><ul><ul><ul><li>Loans </li></ul></ul></ul><ul><ul><ul><li>Credit facilities for customers. </li></ul></ul></ul><ul><ul><ul><li>Foreign Exchange Rate – volatile or stable currency rate. </li></ul></ul></ul>Business Opportunities