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TECHNOLOGY ENTREPRENEURSHIP (ENT600)

UNIT 3: OPPORTUNITY ANALYSIS

Entrepreneurship Dept/FBM (2009)

ENT600/Unit 3 Opportunity Analysis

Definition of Entrepreneurial Opportunity

Opportunities are an integral component of the entrepreneurial process


Entrepreneurial opportunities are defined as situations in which new products, services and processes can be introduced and sold at greater than the cost of production
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Concept of Window of Opportunity


Often when referring to opportunities, the term window of opportunity is used The entrepreneur must hit the window of opportunity for which the opportunity exists

Window of opportunity is defined as that too often short period of time during which an opportunity must be acted on or it will be missed
It also describes the time period in which a firm can realistically enter a new market
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Concept of Window of Opportunity The window of opportunity is deemed to be open or close to denote the degree of attractiveness or exploitation possibilities at a particular time The term open refers to the opportunity lending itself to be exploited at that time because it has value and potential for wealth creation The term close refers to the opportunity potential diminishes due to it being exploited by another entrepreneur or at that period of time has become out-of-date or obsolete
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Changing Opportunity An Example


Data storage in the computing age is essential to the user. In the early years of desktop computing and data storage, the diskette was the key mode of data storage As time passes, the user looks to more storage capacities in a more stable form and much more compact design. Hence, the introduction of the pen drive or thumb drive fulfills the new needs of the growing user group
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Characteristics of an Attractive Opportunity Timely


a current need, unmet demand or problem (e.g. vaccine for bird flu, drugs to prevent obesity)

Solvable
a problem that can be solved in the near future with accessible resources (e.g. a cure for cancerous diseases, a more efficient public transport to reduce congestion and traffic jams)

Entrepreneurship Dept/FBM (2009)

ENT600/Unit 3 Opportunity Analysis

Characteristics of an Attractive Opportunity


Important
The customer deems their problem or need important to them (e.g. energy-saving air conditioner or petrol saving devices that work)

Profitable
the customer will pay for the solution and allow the enterprise to profit (e.g. security products, multi function printers)

Context
a favorable regulatory and industry situation (e.g. online business transaction , genuine investment schemes that promise high returns)
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Entrepreneurship Dept/FBM (2009)

Opportunity Analysis A Process Approach


Opportunity discovery Evaluate the opportunity

Go Decision Technology-based idea blueprint Exploitation of opportunity

Reject Look elsewhere

Entrepreneurship Dept/FBM (2009)

ENT600/Unit 3 Opportunity Analysis

Opportunity Discovery
Sources of business ideas include:

Patent office
The Intellectual Property Corporation of Malaysia is an agency under the Ministry of Domestic Trade, Cooperative and Consumerism. This agency can be a good source of business ideas that can be retrieved easily from their online patent search and patent gazette hosted on its website

University Research & Development


Provides an endless stream of research findings that can be commercialized. Local universities play an important role in providing knowledge that will help businesses grow into new market segments and develop new products
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Opportunity Discovery
Research Institutes Considered as reliable sources of business ideas on various fields. Examples of research institutes in Malaysia include the Malaysian Agricultural Research & Development Institute (MARDI), Standards and Industrial Research Institute of Malaysia (SIRIM)

Entrepreneurship Dept/FBM ENT600/Unit 3: Opportunity Analysis (2009)

ENT600/Unit 3 Opportunity Analysis

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Opportunity Pull (Market Driven) vs Capability Push (Technology Driven)


Opportunity can either be:

Opportunity pull (market driven)


Occurs when there is a need or problem that requires a solution. An example is the need for a pharmaceutical that can mitigate or cure the effects of AIDS. This type of opportunity can be called opportunity pull, since the size of the opportunity draws opportunity seekers to attempt to exploit it.

Capability push (technology driven)


Occurs from the discovery of a capability or resource that can be applied to a problem or need. An example of this type of opportunity is the discovery of a new technology, such as digital television. This type of opportunity can be called a capability push, since it flows from a capability or resource availability.
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Evaluate the Opportunity


Evaluating opportunities Involves internal and external factors Internal factors relate more to the entrepreneurial individual capabilities and intentions External factors relate to the company and business environment

Entrepreneurship Dept/FBM (2009)

ENT600/Unit 3 Opportunity Analysis

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Evaluate the Opportunity (Internal Factors)


Internal factors that include: Capabilities
the ability or quality (knowledge, experience, and skill) necessary to develop the business venture include financial, physical, and human resources consistent with the magnitude of the business venture
the will, commitment, and passion to pursue the business venture

Resources

Interest

Entrepreneurship Dept/FBM (2009)

ENT600/Unit 3 Opportunity Analysis

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Evaluate the Opportunity (External Factors)


External factors include: Market
involves determining the size of the market and the potential customers

Financial
involves determining the costs to be incurred in developing the business venture

Technical
involves determining the requirements to proceed with the idea that include machineries, raw materials, the processes and infrastructure
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Entrepreneurship Dept/FBM (2009)

Evaluate the opportunity (cont external factors)


Economic forces
Have a direct impact on the level of disposable income and consumer buying patterns. For e.g., when incomes are high, people are more willing to buy products and services that enhance their lives. Similarly, a drop in interest rates typically leads to an increase in new home construction and furniture sales.

Entrepreneurship Dept/FBM (2009)

ENT600/Unit 3 Opportunity Analysis

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Evaluate the opportunity (cont external factors)


Social and cultural trends
an understanding of the impact of social and cultural trends and how they affect new product, service, and business ideas is a fundamental piece of the opportunity recognition puzzle.

For example, the persistent proliferation of fast-food restaurants is not due primarily to peoples love of fast food but rather to the fact that people are busy the increasing predominance of two-income households leaves less time to cook at home. Similarly, the Sony Walkman was developed not because consumers wanted smaller radios, but because people wanted to listen to music while on the move and while exercising.
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Entrepreneurship Dept/FBM (2009)

Evaluate the opportunity


(cont: external factors)

Technological advances

provide opportunities to help people satisfy basic needs and desires in a better or more convenient way.

For e.g. the cell phone provides the mobile population the ability to communicate with its co-workers, customers, friends, and families from anywhere and everywhere. Similarly, people who shave have always wanted to minimize the number of nicks and shaving time and get as close a shave as possible. These and other shaving-related desires will probably never change. What does change is the degree to which new technologies can better satisfy these needs and desires.
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Evaluate the opportunity (cont: external factors )


Political and regulatory changes New regulations create opportunities for entrepreneurs to start firms to help companies comply with these laws. E.g. OSHA standard, has opened up business opportunities for consulting companies to help other companies ensure compliance. Political change also leads to new business and product opportunities. E.g., global political instability and the threat of terrorism have resulted in many firms becoming more security conscious.
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Feasibility Study
The outcome of the evaluation of opportunity is a feasibility study; which is a tool to identify whether the business idea is feasible or not.

Entrepreneurship Dept/FBM (2009)

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Making decision
Once the opportunity is evaluated, a decision has to be made whether to proceed to the preparation of a technology-based idea blueprint or to explore other possibilities by looking elsewhere The entrepreneur must make a difficult decision whether to act or not on a good potential opportunity The factors to be considered in making the decision include whether: - the product will give significant value to the customer - the entrepreneur can attract the necessary financial, physical, and human resources required by the venture opportunity - the expected return of the venture is consistent with the risk of the venture

Entrepreneurship Dept/FBM (2009)

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Technology-based idea blueprint


This document summarizes the entrepreneurs proposal of a business venture

Entrepreneurship Dept/FBM (2009)

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Exploitation of Opportunity Exploitation of opportunity for technologicalbased product can be done through commercialization.

Entrepreneurship Dept/FBM (2009)

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