The document discusses identifying business opportunities through environmental scanning. Chapter 2 covers defining business opportunities, the process of identifying, evaluating and selecting opportunities, and scanning the external environment. It describes scanning the macro environment including population trends, import/export data, local resources, and development projects. The micro environment is also important to study, including oneself, community values, legal issues, competition and capital requirements when screening business opportunities.

1. BAEB501 : ENTREPRENEURSHIP
CHAPTER 2:
BUSINESS OPPORTUNITIES
© 2010 Cosmopoint

2. Chapter 2: Business Opportunity
Topic Outlines
2.1 Introduction
2.2 Definition
2.3 Tasks in Business Opportunities
2.4 Process of Identifying, Evaluating and Selecting
2.5 What is your business?
2.6 Identifying the needs and wants of customers
2.7 Scanning the Environment and Evaluating of Self and the
Community
2.8 Screening of Business Opportunities
2.9 Selecting a Business Opportunity and Preparing a
Business Plan
2.10 Environmental Scanning
2.11 Self Evaluation
2.12 Values/Norms of the Community
2.13 Screening of Business Opportunities
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3. Chapter 2: Business Opportunity
Learning Outcomes
At the end of this chapter, students should be able to:
 Define of entrepreneurship
 State the different outcomes of entrepreneurship
 Explain the role of entrepreneurship in economic growth
 Explain the aspects of the entrepreneurial process
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4. Chapter 2: Business Opportunity
2.1 Introduction
How do you relate
it to yourself as a What is
student? opportunity?
What do you
understand about
Business
opportunities?
How can you
find business
opportunities?
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5. Chapter 2: Business Opportunity
2.2 Definition
 demands and preferences.
Business opportunities
is said to exist when
there is a room to offer
a product or services
in a particular market
which fulfills
customers’
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6. Chapter 2: Business Opportunity
2.3 Tasks in Business Opportunities
 There are 3 major tasks involve in seeking business opportunities
such as:
1) IDENTIFYING
for example: Product? Business? Customer?
2) EVALUATING
for example: Choices? Environment?
3) SELECTING
for example: what product? Target customer?
© 2010 Cosmopoint Slide 6 of [11] Topics

7. Chapter 2: Business Opportunity
2.4 Process of Identifying, Evaluating and Selecting
There are 4 major steps to be taken by an entrepreneur
in identifying, evaluating and selecting a business
opportunity. These can be categorized as:
Step 2: Scanning
Step 1: Identifying the
needs and wants of environment and
customers evaluating
Step 3: Screening of Step 4: Selecting a business
Business opportunities opportunity preparing
business plan.
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8. Chapter 2: Business Opportunity
2.5 What is your business?
 Which field have you decided for your business?
For example:
Food, Clothing, Security, Education, Health, Transportation,
Recreation, Entertainment, Information Technology, Construction,
Cleaning Services, Etc.
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9. Chapter 2: Business Opportunity
2.6 Identifying the needs and wants of customers
 After decided which field you want to involve in, then you have to
identify your customer wants and needs.
 Are you going to produce a PRODUCT or SERVICES?
© 2010 Cosmopoint Slide 9 of [11] Topics

10. Chapter 2: Business Opportunity
2.7 Scanning the Environment and Evaluating of Self and the Community
Environment
 Population Structure, Income and Taste, Import Export Data, Local
Resource and Technology
 Industrial Linkages, Development Projects by the Public and
Private Sector, New Government Ruling, Social Problems, Media
and the Internet.
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11. Chapter 2: Business Opportunity
2.8 Screening of Business Opportunities
 Oneself
 Experiences, Knowledge and Skills,
Financial, Interest, Networking
 Community
 Values/Norms
 Perception
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12. Chapter 2: Business Opportunity
2.8 Screening of Business Opportunities
 Legal
 Getting to know whether
your product is legal
 Monopolistic Power/ Level
of Competition
 e.g. Mandarin Oranges during
Chinese New Year
 Capital Requirement –
e.g money/assets
 Risks
– Business risks
- Financial risks
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13. Chapter 2: Business Opportunity
2.9 Selecting a Business Opportunity and Preparing a Business Plan
 Administrative/Organization Plan
 Marketing Plan
 Operations/Production Plan
 Financial Plan
 Implementation
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14. Chapter 2: Business Opportunity
2.10 Environmental Scanning
 Scanning the environment from the macro and micro perspectives.
© 2010 Cosmopoint Slide 14 of [11] Topics

15. Chapter 2: Business Opportunity
2.10 Environmental Scanning
 Structure of the population, income and tastes.
 Considering the higher population of your target customers. E.g.:
Teenagers
 Considering of your target customer income. E.g.: high income
person? Medium income? Low income?
 Changes in the taste of customers will result in creation of
business opportunities.
© 2010 Cosmopoint Slide 15 of [11] Topics

16. Chapter 2: Business Opportunity
2.10 Environmental Scanning
 Study on import and export
data
 The continuous increase in
value and quantity of a
product or service being
imported and exported
reflects a potential market,
both local and international.
 The same goes for policies
on import substitution
industries, and export
promotion can be seen as
an opportunity that is
profitable.
© 2010 Cosmopoint Slide 16 of [11] Topics

17. Chapter 2: Business Opportunity
2.10 Environmental Scanning
 Study on local resources and
technological breakthrough.
 Can help to set up small or large
scale of business.
 Industrial Linkages
 PROTON Cars for example can
create other business
opportunities such as supplier or
spare parts, car rental service, taxi
company, component industry,
tyres.
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18. Chapter 2: Business Opportunity
2.10 Environmental Scanning
 Development projects by the
public and private sectors
 For example: the North South
Highway Project, Kuala
Lumpur International Airport
Project, Government Complex
of Putrajaya, PROTON
Township, can create a lot of
business opportunities.
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19. Chapter 2: Business Opportunity
2.10 Environmental Scanning
 Searching for business
opportunities in local and foreign
newspapers, and magazines as well
as on the internet.
 For examples: Google the
business opportunities at
search engines or through any
business/government website,
Magazine like Times,
BusinessWeek, Personal Money,
Newspapers like the Edge, NST,
New York Times.
© 2010 Cosmopoint Slide 19 of [11] Topics

20. Chapter 2: Business Opportunity
2.10 Environmental Scanning
 The study of local social problems
 Problems pertaining to security, child
care, loafing, transportation, drug
addiction and so on can create
profitable business opportunities.
 New Government Policies and
Regulations
 Rules and regulations pertaining to
the emission of smoke control, speed
traps, black box for express buses,
helmets and seat belt will create
business opportunity.
© 2010 Cosmopoint Slide 20 of [11] Topics

21. Chapter 2: Business Opportunity
2.11 Self Evaluation
 A successful entrepreneur should have
the following:
 Experience
 E.g structural engineer turn to
be a contractor. So he got
experiences in construction
field.
 Knowledge and skills
 Contractor should have
considerable knowledge and
skills from technical side and
managerial side of the business.
© 2010 Cosmopoint Slide 21 of [11] Topics

22. Chapter 2: Business Opportunity
2.11 Self Evaluation
 Financial Situation
 Entrepreneur should analyze his financial situation in order to
run a suitable business and applying for loan purposes.
 Interest
 Entrepreneur should identify his interest field before
proceeding to run a business. E.g machine, cosmetic, IT,
photography, etc.
 Networking
 Entrepreneur should have good relationship with politician, top
ranking management, bank/insurance officer, suppliers.
© 2010 Cosmopoint Slide 22 of [11] Topics

23. Chapter 2: Business Opportunity
2.12 Values/Norms of the Community
 Product 4D.
 This business is a profitable
opportunity and legal but it is
against the values of the
Malays community and the
Muslims.
 Poultry Farm
 Located at residential will
definitely be rejected because
of hygiene concern, smelly.
© 2010 Cosmopoint Slide 23 of [11] Topics

24. Chapter 2: Business Opportunity
2.12 Values/Norms of the Community
 Legality
 Imitation VCD is illegal. So you have to
make sure your product/service is legal.
 Monopolistic Power and Level of Competition
 Understand whether it is a monopoly
product.
 Capital Requirement
 Whether your capital is sufficient enough or
need you apply for loan
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25. Chapter 2: Business Opportunity
2.13 Screening of Business Opportunities
 Risks
 Business Risks
 Risks that transferred to another party
 E.g Insurance for your business/shop
 Risk that can be controlled
 E.g product quality, Labor turnover
 Risk that can not be controlled
 E.g Natural disaster like flood, earthquake
Economic downturn
© 2010 Cosmopoint Slide 25 of [11] Topics

26. Chapter 2: Business Opportunity
2.13 Screening of Business Opportunities
 Risks
 Financial Risks
 Liquidity Level
 Mean cash in hand.
 Loans
 Plans to borrow money, you must also
be willing to pay back the loan, even
though profit is always volatile.
 Credit
 Giving credit to customer will cause
entrepreneur to face risk of not getting
back his money.
 Foreign Exchange
 Entrepreneur has to face the risk of a
fall and rise in exchange rate. E.g.
Today exchange of RM3.15 = AUD 1
may not the same rate as tomorrow.
© 2010 Cosmopoint Slide 26 of [11] Topics

27. Chapter 2: Business Opportunity
 THE END
© 2010 Cosmopoint Slide 27 of [11]