To understand that assessing an opportunity requires various techniques including both analysis and active learning To distinguish Internet opportunities from other opportunities To recognise common pitfalls in taking new venture ideas to the marketplace To identify critical factors involved in new venture development To examine the opportunity landscape and the factors that underlie and promote entrepreneurial opportunities To assess industry value chains and ecosystems from an opportunity perspective To examine Porter’s five forces model of competitive market analysis To compare opportunity profile analysis methods: critical questions analysis, feasibility criteria approach and comprehensive feasibility method To be alert to how an entrepreneurial ecosystem contributes to the opportunity landscape

1. Analyzing the positioning

3. Chapter 9
Assessment and
commercialisation of
entrepreneurial opportunities

4. Objectives
1. To understand that assessing an opportunity requires various techniques
including both analysis and active learning
2. To distinguish Internet opportunities from other opportunities
3. To recognise common pitfalls in taking new venture ideas to the marketplace
4. To identify critical factors involved in new venture development
5. To examine the opportunity landscape and the factors that underlie and promote
entrepreneurial opportunities
6. To assess industry value chains and ecosystems from an opportunity
perspective
7. To examine Porter’s five forces model of competitive market analysis
8. To compare opportunity profile analysis methods: critical questions analysis,
feasibility criteria approach and comprehensive feasibility method
9. To be alert to how an entrepreneurial ecosystem contributes to the opportunity
landscape

5. But first
What kinds of things would you
consider in predicting whether
a business idea will be
successful?
?

6. Is your idea truly worth
pursuing?
Characteristics of the
entrepreneur
• Personal reasons for start-up
The opportunity
landscape
• Trends, risks, market size
and resource availability
The nature of the
venture
• Differing scalability, growth
potential and performance

7. • Opportunities are already ‘out there’
waiting to be discovered.
• But the entrepreneur recognises
them due to superior knowledge of
the market, industry, technology
and/or networks.
• The entrepreneur has the advantage
of seeing things differently
Model 3: Alertness
Joseph von Mises,
popularised by Kirzner
This is a slide from Chapter 6

8. Modelling the
entrepreneurial
process
Hindle model show that
exploiting an opportunity is a
‘jerky’ process:
1. Spotting the opportunity
2. Evaluating it
3. Creating a business model
4. Moving from commitment to
achievement of value

9. Modelling the
entrepreneurial
process
•Three activities (on right):
strategic, personal and tactical.
•Each domain requires a
distinctive capacity (on left).
•The central function – that
distinguishes entrepreneurs
from other people – is
evaluation.

10. Beware of
‘analysis paralysis’!
• Over-evaluating an opportunity
such that that a decision is never taken
• Undermines entrepreneurial ambition and
breeds procrastination
• The tools in this book assist you to decide
whether the opportunity is realistic or not
and whether to move forward.
• Bottom line: an entrepreneur will never be
in a position to have all the facts.

11. How to recognise a profitable and viable
opportunity when you see one?
• Rules of thumb
– Join an exploitable market (Can you really
beat Microsoft?)
– Find a niche market catering for specialist
needs (Like the Body Shop)
– Open or join a new (growing) market
– Avoid overcrowded marketplaces
– Or be nimble and small in a large operator’s
market
– Offer a unique product or service

12. Critical factors in
assessing an opportunity (1)
1. Relative uniqueness of the
venture (amount of
innovation)
2. Relative investment size at
start–up (extent and timing)
3. Growth of sales: What is
the growth pattern anticipated
for new-venture sales and
profits?
– Is it a lifestyle venture or a high-
growth venture?
Does it truly
stand out head
and shoulders
above the
competition?

13. 4. Product availability (and
readiness for the
consumer)
5. Customer availability
(identified customers,
willing to pay)
Critical factors in
assessing an opportunity (2)
Does it truly
stand out head
and shoulders
above the
competition?

14. Common pitfalls
• Lack of objective evaluation
• No real insight into the market
• Inadequate understanding of
technical requirements
• Poor financial understanding
• Lack of venture uniqueness
• Ignorance of legal and
regulatory issues

15. Analysing the opportunity landscape
• Examine external conditions
that shape and influence an
opportunity
• Also called PEST and STEEP
• PESTEL analysis consists of
• Political
• Economic
• Sociocultural
• Technological
• Environmental
• Legal

16. • Unlike risks, there is little one can
do to mitigate uncertainty as there
is no past experience of it to rely
on.
• Technological uncertainty
• Strategic uncertainty
• First-time buyer uncertainty
• Short-time horizon and strategic
uncertainty
Analysing industry uncertainty

17. • A network of suppliers and buyers
• Each link in the chain
– carries the cost imposed by upstream suppliers
– contributes to the costs of the downstream purchasers.
• Every link must have a profit margin that enables a
price the end user is willing to pay.
Analysing the value chain

18. Analysing the value chain
• The more complex the
industry system, the
more factors are
introduced that may
influence sales, growth
and performance of the
business.

19. Analysing Porter’s
‘Five Forces’
Replace at
2nd pages

20. • Is it expensive for your competitor
to access proprietary technology?
• Do they have access to distribution
channels?
• Access to raw materials and skilled
labour?
• Do they lack experience?
• Will they have a hard time raising
capital?
Analysing the barriers to entry

21. Consideration of:
• the number of competitors
• the strength of each
competitor
• what drives the competition
• what the competition can do.
Analysing the competition

22. • A checklist approach
(Fig 9.6)
• List competitors and
consider factors:
– Advertising and promotional
policies/
– Availability/convenience
– Calibre of personnel
– Financial condition
– Location
Analysing the internal profile
– Price
– Product design
– Product uniqueness
– Production capability
– R&D position
– Raw material cost
– Relative product quality
– Reputation/image
– Service
– Variety/selection

23. • Examine the viability of the venture
• Consider criteria, such as:
– Is it proprietary?
– Are the initial production costs realistic?
– Are the initial marketing costs realistic?
– Does the product have potential for very
high margins?
– Is the time required to get to market and
to reach the break-even point realistic?
Analysing the
feasibility criteria

24. • External factors in addition to
those in the feasibility criteria
approach
• Including:
– Technical feasibility
– Market feasibility
Comprehensive feasibility analysis
See complete
Feasibility Study
outline in Appendix.

25. • Major areas of investigation:
– Full market potential and
identifying customers
– The extent to which the enterprise
might exploit this potential market
– Determine the opportunities and
risks associated with the venture.
Analysing the marketability
Are there customers
for seal fur coats?
Native Greenlanders
say yes!

26. • X-axis: viability of a venture’s ability
to generate revenue and profit.
• Y-axis measures the venture’s
durability-- ability to sustain itself
over time.
• Size of circle measures the
credibility measures the ability of the
venture’s founders and management
team to exploit the opportunity.
• This results in seven kinds of
ventures .
Analysing the positioning

27. Key concepts
(close your books)
• Describe how you would evaluate a new
business opportunity.
?