UNIT–1: ENTREPRENEURIAL OPPORTUNITY

Unit 1: Entrepreneurial Opportunity

Competencies: Scanning the environment; Analytical and logical thinking; Innovation and creativity;
Decision making; self-confidence
Contents Learning Outcomes
• Sensing Entrepreneurial Opportunities After going through this unit, the student/ learner
• Environment Scanning would be able to:
• Problem Identification • Comprehend the concept and elements of
• Idea fields business opportunity
• Spotting Trends • Discuss the process of sensing opportunities
• Creativity and Innovation • Understand the need to scan the environment
• Selecting the Right Opportunity • Enlist the various forces affecting business
environment
• Identify the different idea field
• Understand the concept of opportunity and
market assessment
• Appreciate the ways in which trends can be
spotted
• Understand the process of creativity and
innovation
• Transform ideas into business opportunities

1 How does Peter F. Drucker define an entrepreneur?

Ans • Peter F. Drucker defined entrepreneur as one who always searches for an opportunity.
• The basic test of a successful entrepreneur is the identification of business opportunity in the
environment and initiating steps to produce and sell goods and services to make the best use
of that opportunity.

2 Explain the concept of entrepreneurship with the help of a diagram.

Ans

3 What is a business opportunity?

Ans Business opportunity can be described as an economic idea which can be implemented to create a
business enterprise and earn profits.

4 Before selecting an opportunity which two things and entrepreneur has to ensure?
Ans Before selecting an opportunity, the entrepreneur has to ensure two things-
• There is a good market for the product he is going to produce
• The rate of return on the investment is attractive to be accepted by him
PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 1
5 Can all ideas be converted into opportunities?
Ans No, all ideas may not be converted, into opportunities because if an entrepreneur conceive an idea
and start its business without even analysing the market and as per the needs and problems of the
people and only try to satisfy his own ego, then the result/outcome of launching a business and a
product will end with only few customers.

6 List the five elements of a business opportunity.

Ans A business opportunity may be described as an attractive economic idea which could be
implemented to create a business, earn profits and ensure further growth. A business opportunity
has five elements which are as follows:
1) Assured market scope
2) An attractive and acceptable rate of return on investment
3) Practicability of the idea
4) Competence of the entrepreneur to encash it
5) Potential of future growth

7 How are opportunities derived from the society?

Ans An opportunity may be derived from the needs and problems of the society.

8 Draw and explain the Enterprise Process Diagram.

OR
With the help of a diagram explain how opportunities are derived from the society?
Ans

This diagram shows the following stages:

i) Opportunity spotting by analysing the needs and problems that exist in the environment
ii) Evaluating the ideas received from different sources to find a creative solution
iii) Identifying a product or service through innovation
iv) Setting up a project and nurturing it to success

9 Identify the missing element in the figure given below.

Ans

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 2

10 List the factors involved in sensing opportunities.
Ans To sense an entrepreneurial opportunity, an entrepreneur employs his/her sharpened skills of
observation, analysis and synthesis to identify an opening. The most important factors involved in
the process are:
1. Ability to perceive and preserve basic ideas which could be used commercially
2. Ability to harness different sources of information
3. Vision and creativity

11 List the various sources which lead to the emergence of basic ideas.
Ans Spotting an idea often triggers the process of sensing an opportunity. The following are the
various sources which lead to the emergence of basic ideas.
a) Problems: When a problem exists, an idea leads to a solution to resolve that problem, it
emerges as a business opportunity.
b) Change: A change in social, legal, technological aspects etc. leads to new opportunities to start
a business.
c) Inventions: New products or services leads to new business opportunities.
d) Competition: Competition often results in emergence of new and better ideas that result in
new business opportunities.
e) Innovation: Creating new things of value as well as new and creative processes that add value
to the existing products or services. For example, computers to tablets.

12 Name the different sources of information that an entrepreneur can use to gather data.
Ans • Various sources like magazines, journals, books, seminars, trade shows, family members,
customers, friends etc. help in getting information that results in evolution of basic ideas.
• Bring together various sources of information and knowledge, and analyze it to the best
possible extent.
• The analysis helps in the identification of the right opportunity to start a new business.

13 Explain how Vision and creativity play an important role in an entrepreneur’s life.
Ans Creativity in innovating a solution and vision. The entrepreneur should be able to creatively
identify an idea to generate a valuable solution to a problem. Once the solution is identified their
vision to convert the solution into business opportunity helps them to move forward, overcoming
all the obstacles. They constantly
a) overcome adversity
b) exercise control over the business
c) make a significant difference.

14 Define Business environment.

Ans • Business environment may be defined as all those conditions and forces external to a business
unit under which it operates.
• Entrepreneurship does not emerge and grow spontaneously.
• Rather, it is dependent upon several economic, social, political, legal and other factors.

15 What is environment scanning?

Ans Careful monitoring of an organization's internal and external environment for detecting early
signs of opportunities and threats that may influence its current and future plans.

16 Why do we need to scan our environment?

Ans • In a rapidly changing environment, one rule of thumb applies: If you don't adapt, you don't
endure.
• This is the core idea behind environmental scanning.
PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 3
 • Environmental scanning refers to the means by which organizations gather information on
changing conditions and incorporate those observations into a process where necessary
changes are made.
• The right information, combined with the right adaptations, can determine an organization's
future viability.
• If an entrepreneur is not aware of the environment surrounding his/her business, he/she is
sure to fail.

17 “If you don’t adapt, you don’t endure”. Evaluate the validity of the statement.
Ans • Yes, it is correct.
• The business environment is increasingly becoming uncertain and complex due to political
realignments, economic crises, terrorism threats, technological innovations and natural
disasters. In rapidly changing environments, one rule of thumb applies: If you don’t adapt,
you don’t endure.
• It is the core idea behind environmental scanning, which refers to the means by which
organizations gather information on changing conditions and incorporate those observations
into a process where necessary changes are made.
• The right information, combined with the right adaptations, can determine an organization’s
future viability.
• Environmental scanning can help you identify the trends that are most likely to directly affect
the organisation and product.
• Then an entrepreneur can craft a strategy that will help him take advantage of various
changes occurring and get through the success and at the same time if he is not aware of what
the environment surrounding his business, he is sure to fail.
(i)E.g., HMT watches lost its market to Titan;
(ii)Sony failing to understand the changing trends in mobile phones and therefore losing it’s
market share.
Value Points:
(i)Spirit of Enquiry
(ii)Services to others
(iii)Initiative
(iv)Self-existent
(v)Awareness of responsibility of citizenship
(vi)Social service
(vii)Endurance
(viii) Tolerance
(ix)To protect national property.

18 What is the importance of environment to an entrepreneur?

OR
“Sensitivity to environmental factors is essential for an entrepreneur.” In light of above
statement explain the importance of environment scanning.
Ans Importance of Environment: Sensitivity to environmental factors is crucial for an entrepreneur. If
a company is able to adapt to its environment, it would succeed in the long run. For example,
Sony is failing to understand the changing trends in mobile phones and therefore losing its
market share. The benefits of understanding the relevant environment of business are:
(i)Identification of opportunities to get first mover advantage: An entrepreneur must be keen
and alert and must be aware of all the changes in the external environment, so that he can identify
opportunities and find strategies to capitalise on the opportunities at the earliest. For example,
Volvo, the Swedish brand, has 74% share in the luxury bus segment as it had entered India
earlier.

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 4

 (ii)Formulation of strategies and policies: An entrepreneur must be capable of formulation of
strategies and policies which is really going to help in identifying threats and opportunities in the
market.
(iii)Tapping useful resources: If an entrepreneur has complete and a thorough knowledge of the
external environment, then easily he can tap raw materials, technology and even financial
resources from the market at economical prices, at the right time.
(iv)Better performance: Proper understanding of the various elements of the external
environment is necessary to take timely action to deal with threats and avail opportunities for the
purpose of improvement in the performance of the firm.
(v)Sensitisation of entrepreneurs to cope up with rapid changes: A keen watch on the trends in
the environment would help sensitise the entrepreneur to changing technology, competition,
government policies and changing needs and taste of the customers. For example, trends in
clothing, outdoor celebration of family events. Showing more interest in fast food, changing
fitness trend.
(vi)Image building: If a company is sensitive to the external environment, it will come out with
new products and services to meet the requirements of the customers. This would build the image
or reputation of the firm in the eyes of the general public. For example, call-radio taxis with
additional features like GPS systems, online booking, etc.

19 Why did Sony is failing to understand the changing trends in mobile phones and therefore
losing its market share.
Ans • It did not scan the environment
• Did not adapt the changes in the market

20 Draw a flow chart explain the SWOT analysis framework.

Ans

21 From where can you collect information to scan the environment?

Ans Information for environmental scanning can be collected from several sources. These include
a) verbal information from customers, wholesalers, retailers, distributors, consultants, etc.
b) records of companies
c) government publications
d) publications by various financial institutions
e) formal studies conducted by strategic planners

The data, so obtained, is processed and analysed with the help of quantitative and qualitative
techniques.

22 Draw a flow chart explain the interface on an opportunity.

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 5

Ans

• The flow chart shows that an opportunity received by the entrepreneur should be tested
against important environmental parameters to arrive at a sound business choice.
• This interface is an evaluative process leading to a judgement.
• Is it a viable idea?
• Does it make sound business sense?
• If yes, the entrepreneur can proceed to the next stage of product or service identification.

23 How many levels does Business environment consists?

Ans Business environment consists of two levels, i.e., micro environment and macro environment.

24 Entrepreneurship does not emerge and grow spontaneously. Rather it is dependent upon
several various environmental factors. Explain them.
OR
Explain the factors in the macro environment.
OR
Explain the PESTEL model.
Ans Yes, it is correctly said that “Entrepreneurship does not emerge and grow spontaneously.” It is
dependent upon several factors, like economic, social, political, legal and other factors.
The basic PESTEL analysis includes four factors:
Political factors are basically to what degree the government intervenes in the economy. Various
political factors include areas are:
(i)Taxation Policy, Trade Regulations, Tariffs policy, Policy regarding export and import.
(ii) Government Affairs: Government in power, attitude of government towards different groups
of the societies, Government Stability, Policy changes implemented by changed government,
Labour laws, Unemployment policy.
(iii)Goods and services which the government wants to produce and how much quantity to be
produced.
(iv)It also influences the health, education, and infrastructure of a nation.
Economic factors:
(i)Gross domestic product, Income level at national level and per capita income, economic
growth.
(ii)Profit earning rate, interest rate, exchange rate, inflation rate, fiscal and monetary policy of the
government. For example, interest rates will affect the cost of debt and, potentially, the cost of
equity, e.g. when interest rates increase the cost of debt increases, which increases the firms cost of
capital to what extent a business grows and expands.
(iii)Exchange rates affect the costs of exporting goods and the supply and price of imported goods
in an economy.
(iv)It includes the close study of important variables like supply and demand. Details of consumer
trends, economic preference, costing, discounting, etc. are all economic decisions.
(v)Economic details will also help the entrepreneur in determining the size of the project and the
reasons of finance and have major impacts on how businesses operate and make decisions.
Social factors:
PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 6
 i. Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety.
ii. Trends in social factors affect the demand for a company’s products and how that
company operates.
iii. For example, an aging population may imply a smaller and less-willing workforce (thus
increasing the cost of labour).
iv. Furthermore, companies may change various management strategies to adapt to these
social trends (such as recruiting older workers).
Technological factors:
(i)An entrepreneur must be aware of importance of technological development for the firm and
how it is to be resolved.
(ii)He should show complete knowledge of technology required to produce the product?
(iii)Availability of training at a local area or can outsource it.
(iv)What would be the position of supply of plant and machinery for such a technology?
(v)It also includes technological aspects such as resources and development activity, automation,
technology incentives and the rate of technological change.
(vi)Influence various decision for better and latest technology, costs, quality, and lead to
innovation.
Environmental factors:
(i)It includes ecological and environmental aspects such as weather, climate, and climate change,
which may especially affect industries such as tourism, farming, and insurance.
(ii)Growing awareness of the potential impacts of climate change is affecting how companies
operate and the products they offer, both creating new markets and diminishing or destroying
existing ones.
Legal factors:
(i)It includes discrimination law, consumer law, antitrust law, employment law, and health and
safety law.
(ii)These factors can affect how a company operates, its costs, and the demand for its products.

25 Explain the micro factors in business environment.

Ans a. Suppliers b. Customers c. Intermediaries d. Competitors e. General public

26 When does an entrepreneur identify the problem?

Ans • A problem is a roadblock in a situation, something that sets up a conflict and forces you to
find a solution.
• When an entrepreneur identifies such a road block, he/she is said to have identified the
problem.

27 What are the objectives of problem identification?

Ans Objectives of problem identification:
PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 7
 • It should clearly state the problem
• Identify target group facing the problem
• Find the market acceptability of the solution to the problem

28 What are the uses of problem Identification to an entrepreneur?

Ans It helps the entrepreneur to:
1. Bring out new products in the market
2. Understand the problems and needs of the market
3. Be creative
4. Increase employment generation
5. Increase national income (of the country)

29 Define Idea generation.

Ans • The process of creating, developing, and communicating ideas which are abstract, concrete, or
visual.
• It includes the process of constructing through the idea, innovating the concept, developing
the process, and bringing the concept to reality.

30 Define Idea Fields.

Ans Idea Fields can be described as: 'Convenient frames of reference for streamlining the process of
generation of ideas.'

31 Draw a flow chart explain the various sources of idea fields.

Ans

a) Idea fields are well defined frames of reference that guide the generation of ideas.
Various idea fields are examined below:
(i) Natural resources: The idea for a product or service can be derived from the available natural
resources like
(a)Agricultural
(b)Breeding and Caring of animals (animal husbandry)
(c)Cultivation or Horticulture
(d)Human
(e)Mineral or Soil
(f) Solar
(g)Tidal
(h)Wind
Entirely new products or service related ideas can be generated from these resources or ideas to
supplement these natural resources can be derived.

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 8

 (ii)Current products or services: It requires careful analysis of the existing products or services
and put the expertise and imagination to improve the current products or services. The demand
for a product or service or the need to tackle the competition will also help in origination of a new
idea. As the value addition to the existing product or service is as good as inventing a new
product, the existing products or services also act as a good source of new ideas.
(iii)Demand or Market: Conducting research in the market to procure the information relation to
the gap between demand and supply, changing consumer preferences, trends, technology helps in
the generation of new ideas for products or services. The data gathered is analyzed using business
intelligence and helps as a good sources of new ideas.
In addition to this, the demand prevailing in the market will also help in generation of new ideas.
The analysis of the products and services offered by the competitors will also act as a valuable
source for generating a new idea.
(iv)Trade: As the globalization has expanded the scope of business to the entire world, a careful
analysis of the prevailing trades and methods will act as a good source of idea generation. Earlier
the trading was limited to local distribution network or grocery stores. However, the trade has
expanded from the local market to import and export of goods. The most recent revolution in the
trade is e-commerce and has broadened the scope of trading globally and is not time bound. Thus,
it became a valuable, most effective, less risk prone area for originating new ideas.
(v)Service sector: As the society is becoming more educated and as there is tremendous growth in
information and technology, it opened up new challenges and opportunities and became a great
source for generation of new ideas in various entrepreneurial sectors. Few of the sources are in the
(a)Service of home appliances
(b)Automobile servicing
(c)Fast food
(d)Cool drink outlets
(e)Ice cream outlets
(f) Tourism
(g)Personal grooming
(h)Career counselling
(i) Emigration services
(vi)Creativity: Creativity being one of the most important competencies of an entrepreneur plays
a vital role in getting an idea for a new product or service or improving an existing product or
service. Most often it is noticed that the need to solve a problem triggers creativity to come up
with new ideas. It helps in
(a)Adding additional value to an existing product or service
(b)Innovate a new product or service
(c)Innovate a new methodology or material to produce a product
(d)Expand the demand and market for the current product or service
(e)Expand the usability of an existing product or service

32 Explain how the process of a basic idea becoming an opportunity?

Ans The given diagram shows how the process of a basic idea becoming an opportunity:

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 9

 • The above given diagram explains that it is just a process of conversion of basic idea into
opportunity.
• Business idea arises from an opportunity in the market.
• It originates from any need or wants of any product or services that an entrepreneur can
identify. In this process all basic ideas have to undergo a vigorous process of close
examination, evaluation, analysis and synthesis to become viable opportunities.
• This diagram explains an entrepreneur utilize the skills, knowledge, creative thinking and
competency needed to develop an idea which is backed up by various political economical,
social, technological, ecological and legal factors in the existing competitive market.
• By this process an entrepreneur convert ideas into viable business opportunities.

33 Explain the steps involved in Idea and opportunity assessment.

Ans (i) Product Identification:
(a)To select a product or services which is in demand and an entrepreneur can sell easily.
(b)To check with the product whether it is available in the market or not.
(c)If it is, then he should identify the reason for introducing the same product or service in the
market.
(d) Take further step to further improvisation of the product. For example, entrepreneur selected
pen drive but it is already available in the market but he improvised V the same by innovating a
new pen drive especially for teachers which will have a built-in anti-virus and which can be worn
like a watch so it minimises the problem of losing the pen drive.
(ii)Application and Use:
(a)Ideas should be examined for their real-life use and application.
(b)If it already exists in the market then finding out its present use, improvisation of the product,
modifying it for better use.
(c)For example, the new pen drive especially for teachers which will have a built in antivirus and
which can be worn like a watch. This example of pen drive and watch is an already existing
product produced by many companies but according to new trend an entrepreneur has innovated
a new type of pen drive especially for teachers which will have a inbuilt antivirus which shows
improvisation and modifying a product for a better use.
(iii) Level of Operation:
(a)This is a crucial test for product/ service identification.
(b)Depending on the nature of the enterprise, the production is undertaken, the enterprise can be
cottage industry, small scale, medium scale or large scale industry.
(c)Quantity of production is considered.
(d)Requirement of labour, technical experts, skilled labour, etc. all are to be considered.
(iv) Cost:
(а)An entrepreneur first finds out the cost price of the product and then ultimately decides the
sale price.

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 10

 (b)Every entrepreneur must answer the following questions before deciding the selling price of
the product: •What is the per unit cost of the product at particular level of operation? •Whether
this cost is comparable with that of other competitive products? For example, a large
manufacturing unit would be expected to have a lower cost per unit of output than a smaller unit,
all other factors being equal, while a company with many facilities should have a cost advantage
over a competitor with fewer.
(v) Competition:
(а)The extent, intensity and trends in competition are to be analysed. This has direct impact
on production capacity and supply.
(b)Any product or service will face market competition at some stage.
(c) An entrepreneur should be assessed through a study of the trends in demand and supply.
(vi) Technical Complexity:
What type of technology is required to produce the product? Whether training and application of
such technology will be locally available or will it have to be supported from other places? What
would be the position of supply of plant and machinery for such a technology? These are
important issues that have to be resolved.
(vii) Annual turnover and profit margin:
(a)An entrepreneur has to examine the basis of expected annual turnover. It refers the total sales
of the year.
(b)This will also indicate the market share or profit margin of the product or service.
(c)Once the entrepreneur has assessed the opportunities on these bases he should go ahead and
assess the market also.

34 While assessing the market, an entrepreneur has to prepare details on four factors, one of them
being ‘project innovation and change’. Explain briefly the other three.
Ans Selection of a product or service will depend upon many factors. While assessing the market, an
entrepreneur has to prepare details on the following lines:
(i) Demand: The demand assessment will be based on the size of market being targeted, i.e., local
markets, market at state level or national/international market. It will also involve a study of the
target groups of consumers, their preferences, tastes and other rela ted variables.
(ii) Supply and nature of competition: While assessing market, supply position is also studied by
entrepreneurs. By supply position what is meant is the complete picture of quantities of the
product made available in the market by all the existing players. It should take into account future
supplies from possible entrants in the field.
(iii) Cost and price of product: It is important to determine the cost of the product and its
comparison with available products in the market. Cost variable of competitors in terms of
transportation delays, wastage, storage etc., have to be studied to spot cost advantage. This will
influence the delivery mechanism of the identified product or service.
(iv)Project innovation and change: Market assessment will require a study of prevailing
innovations and changes being carried out by existing entrepreneurs. Technological
advancements in the field have to be analysed because they may change the quality and influence
the cost and price ultimately.

35 What do you mean by trend spotting?

Ans • Trend spotting is the process of identifying emerging trends in the marketplace and using
them to inform strategic decision-making.
• Businesses have been using trend spotting to stay ahead of their competition and capitalize on
emerging markets for decades.

36 List and explain the different ways in which an entrepreneur spots trend.
OR
What are the various ways in which an entrepreneur spot trends?

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 11

 Ans (i)Read trends: (a)Entrepreneurs regularly read the leading publications and websites affecting
their business. (b)Publications include industry publications, trade association sites, major
newspapers, key business magazines, thought leaders and influential bloggers. (c)They scan
information from a wide variety of sources – from international news on down to niche bloggers
focused on specific aspects of their industry. Obviously, there is a sunami of information
available. They use tech-tools like RSS feeds, e-mail newsletters or websites and forums to keep on
top out of all and get the information they want. They understand quickly which sources are
valuable and which should be avoided.
(ii)Talk trends: (a)Talking to people is an equally important trend-spotting tactic. They get
involved in specific industry’s trade association and attending events both online and offline.
(b)From social networking tools like social network websites and forums. (c) They even start or
join groups on the networks and see what people are buzzing about the latest trends to customers
regarding what customers thinking, buying, doing, etc. what customers are saying about the
business, but what they’re saying about the competitor’s business.
(iii)Watch trends: (a)Watching and observing the customers in the market place. (b)If the
customers are teenagers, in the local mall. (c)If they are business class people, it might be
restaurant or office park restaurant center. (d)The entrepreneur spends some time simply
watching and observing, what people are eating, doing, wearing, using.
(iv)Think trends: (a)As an entrepreneur begins gathering all these information regularly, they
will start to develop a “trend-spotter mind.” (b)They collect from what they read, heard and
observed, and they start to making connections and observations that will lead to business-
boosting insights.

37 Define creativity.
Ans Creativity, the ability to make or otherwise bring into existence something new, whether a new
solution to a problem, a new method or device, or a new artistic object or form.

38 Explain the five steps in creative process.

OR
Why is creativity important and explain the creative process?
Ans The process of creativity involves five steps: 1. Idea germination, 2. Preparation, 3. Incubation, 4.
Illumination and 5. Verification.

1) Idea germination: This is the seeding stage of a new idea. It is the stage where the
entrepreneur recognises that an opportunity exists. The idea germination takes place
according to interest, curiosity of the entrepreneur according to which opportunity is explored
and exploited to its best potential. Creative ideas germinate besides the interest, the need of a
specific problem or area of study.

2) Preparation: On the basis of the idea, interest and curiosity the need is judged by the
entrepreneur and he starts looking for the answer to implement the idea. If the idea is to
launch a new product or service then market research is conducted. That happens because the
seed of curiosity has taken the form of an idea, the entrepreneurs foresee the future of the
product.

3) Incubation: This is the subconscious assimilation of information. This is the transition period.
The entrepreneur starts thinking about the idea and implementation in his sub-conscious
mind.

4) Illumination: In this period of illumination, the idea re-surfaces in a realistic way and
entrepreneur comes out with a viable plan to give practical shape by collecting raw -material,
arranging funds, policy making for implementation of idea.
PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 12
 5) Verification: Also called the validation or testing stage. This is where the idea is verified to
prove that it has value. This is the most difficult phase of creativity as obstacles begin to
appear. This is the developing stage in which knowledge is developed into application.

39 Identify the missing element in the creative process.

Ans

40 Explain the elements in the innovation process.

Ans • Analytical planning: Carefully identifying the product or service features, design as well as
the resources that will be needed.
• Resource organization: Obtaining the required resources, materials, technology, human or
capital resources.
• Implementation: Applying the resources in order to accomplish the plans and delivering
results.
• Commercial application: The provision of value to customers, reward employees, and satisfy
the stake holders.

41 Identify the missing element in the innovation process.

Ans

CHAPTER SUMMARY

Business Opportunity

Business opportunity can be described as an economic idea which can be implemented to create a business
enterprise and earn profits.

Elements of business opportunity

• Assured market scope

• An attractive and acceptable rate of return on investment

• Practicability of the entrepreneur to encash it

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 13
• Competence of the entrepreneur to encash it

• Potential of future growth

Exploring opportunities in the environment

• Opportunity spotting by analyzing the needs and problems that exist in the environment

• Evaluating the ideas received from different sources to find a creative solution

• Identifying a product or service through innovation

Factors involved in securing opportunities

• Ability to perceive and preserve basic ideas which could be used commercially

• Ability to harness different sources of information

• Vision and creativity

Various sources which lead to the basic ideas

• Problem

• Change

• Inventions

• Competition

• Innovation

Importance of environment

• Identification of opportunities to get first mover advantage

• Formulation of strategies and policies

• Tapping useful resources

• Better performance

• Sensitization of entrepreneurs to cope up with rapid changes

• Image building

Analysis of environment

• Verbal information from customers, wholesalers, retailers distribution, consultants, etc.

• Record of companies

• Government publications
PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 14
• Publications by various financial institutions

• Formal studies conducted by strategic planners

Environmental factors

• Internal factors (Micro environment)

• External Factors (Macro environment)

Pestel Model

• Political

• Economic

• Social

• Technological

• Ecological

• Legal

Idea Generation

The process of creating, developing and communicating ideas which are abstract, concrete or visual

Sources of business ideas

• Examine your own skill set for business ideas

• Keep up with current events and be ready to take advantage of business opportunities

• Invent a new product or service

• Add value to an existing product

• Investigate others markets

• Improve an existing product or service

• Get on the band wagon

Ideas fields

• Natural resources

• Existing products

• Market driven ideas

• Funds related ideas

• Service sector ideas

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 15
• Creative effort of the entrepreneur

Steps involved in idea and opportunity assessment

• Product identification

• Application and use

• Level of operation

• Cost

• Competition

• Technical complexity

• Annual turnover and profit margin

Factors to be kept in mind while assessing the market

• Demand

• Supply and nature of competition

• Cost and price of product

• Project innovation and change

Ways to spot trends

• Read trends

• Talk trends

• Watch trends

• Think trends

Creative process

• Idea germination

• Preparation

• Incubation

• Illumination

• Verification

Innovation process

• Analytical planning
PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 16
• Organising resources

• Implementation

• Commercial application

**************************************************************************

PREPARED BY Ms. DILRAJ KAUR-PGT COMMERCE 17