Opportunity Recognition & Analysis

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Opportunity Recognition& AnalysisPresented by: Julie MessingKent State Universityjmessing@kent.edu

Entrepreneurship Definedby Carsud & BrannbacknnThe process by which individuals – either ontheir own or inside organizations, pursueopportunities without regard to theresources they currently controlE-ship is an attitude towards life as much asit is about starting and running a firm.

Being EntrepreneurialAny intelligent person with an achievementand goal orientation is capable of beingentrepreneurial.nIt does not require the actual creation of afirm; rather entrepreneurial can mean“getting things done” – intrapreneurshipn

Entrepreneurship as aProcessnnnnnnIdea Generation and EvaluationOpportunity RecognitionPlanningLaunchGrowthHarvest

The EntrepreneurialPersonalityIt all starts with passionn Strong motivation for personalachievementn Capable of recognizing anopportunity: see things others do not orevents that impact opportunityrecognitionn

Idea GenerationOne way is to consider what motivatespeople as a source of opportunities:* Needs – you are addressing* Wants – you are fulfilling* Fears – you are relievingn

Sources of New Venture IdeasnnnnnnnnnFamily & FriendsPrior ExperienceReading and following current events, trends, etc.Observations – local and travelBeing an astute customerThings that bug youThings that interest youEvaluate existing mousetraps and build a better oneSerendipity Idea Generation Video

The Opportunity Recognition sectionthat follows is from:Entrepreneurship, SuccessfullyLaunching New VenturesBarringer & IrelandPrentice Hall2008

What is An Opportunity?(1 of 2)nOpportunity Defined– An opportunity is a favorable set of circumstancesthat creates the need for a new product, service, orbusiness idea.– Most entrepreneurial firms are started in one of twoways:nnSome firms are internally stimulated. An entrepreneurdecides to start a firm, searches for and recognizes anopportunity, then starts a business.Other firms are externally stimulated. An entrepreneurrecognizes a problem or an opportunity gap and creates abusiness to fill it.

What is an Opportunity?(2 of 2)An opportunity has four essential qualities

Window of OpportunitynWindow of Opportunity– The term “window of opportunity” is a metaphordescribing the time period in which a firm canrealistically enter a new market.nnOnce the market for a new product is established, its windowof opportunity opens, and new entrants flow in.At some point, the market matures, and the window ofopportunity (for new entrants) closes.

Three Ways to Identify An Opportunity

First Approach: Observing Trends(1 of 2)nObserving Trends– The first approach to identifying opportunities is toobserve trends and study how they createopportunities for entrepreneurs to pursue.– There are two ways that entrepreneurs can get ahandle on changing environmental trends:nnThey can carefully study and observe them.They can purchase customized forecasts and market analysesfrom independent research firms.

First Approach: Observing Trends(2 of 2)Environmental Trends Suggesting Business orProduct Opportunity Gaps

Trend 1: Economic ForcesnEconomic Forces– Economic forces affect consumers’ level ofdisposable income.– When studying how economic forces affectopportunities, it is important to evaluate who hasmoney to spend and who is trying to cut costs.nnAn increase in the number of women in the workforce andtheir related increase in disposable income is largelyresponsible for the number of boutique clothing storestargeting professional women that have opened in the pastseveral years.Many large firms are trying to cut costs. Entrepreneurs havetaken advantage of this trend by starting firms that help otherfirms control costs.

Trend 2: Social Forces(1 of 2)nSocial Forces– Changes in social trends provide openings for newbusinesses on an ongoing basis.– The continual proliferation of fast-food restaurants,for example, isn’t happening because people love fastfood. It is happening because people are busy, andhave disposable income.– Similarly, the Sony Walkman was developed notbecause consumers wanted smaller radios but becausepeople wanted to listen to music while on the go.

Trend 2: Social Forces(2 of 2)Examples of Social Forces That Allow For NewBusiness Opportunities Family and work patterns. The aging of the population. The increasing diversity in the workplace. The globalization of industry. The increasing focus on health care and fitness. The proliferation of computers and the Internet. The increase in the number of cell phone users. New forms of entertainment.

Trend 3: Technological AdvancesnTechnological Advances– Given the rapid pace of technological change, it isvital that entrepreneurs keep on top of how newtechnologies affect current and future businessopportunities.– Entire industries have emerged as the result oftechnological advances.nExamples include the computer industry, the Internet,biotechnology, and digital photography.– Once a new technology is created, new businessesform to take the technology to a higher level.nFor example, RealNetworks was started to add audiocapability to the Internet.

Trend 4: Political andRegulatory ChangesnPolitical and Regulatory Changes– Political and regulatory changes provide the basis fornew business opportunities.nnFor example, laws that protect the environment have createdopportunities for entrepreneurs to start firms that help otherfirms comply with environmental laws and regulations.Similarly, many entrepreneurial firms have been started tohelp companies comply with the Sarbanes-Oxley Act of2002. The act requires certain companies to keep all theirrecords, including e-mail messages and electronicdocuments, for at least five years.

Second Approach: Solving a ProblemSometimes identifyingopportunities simplyinvolves noticing a problemand finding a way tosolve it.These problems can bepinpointed through observingtrends and through more simplemeans, such as intuition,serendipity, or chance.Some business ideas are clearlyinitiated to solve a problem.For example, Symantec Corp.created Norton antivirussoftware to guard computersagainst viruses.

Third Approach: Finding Gaps in theMarketplacenGaps in the Marketplace– A third approach to identifying opportunities is tofind a gap in the marketplace.– A gap in the marketplace is often created when aproduct or service is needed by a specific group ofpeople but doesn’t represent a large enough market tobe of interest to mainstream retailers ormanufacturers.nnThis is the reason that small clothing boutiques and specialtyshops exist.The small boutiques, which often sell designer clothes orclothing for hard-to-fit people, are willing to carrymerchandise that doesn’t sell in large enough quantities forWal-Mart, GAP, or JC Penney to carry.

Personal Characteristics of theEntrepreneurCharacteristics that tend to make some people better atrecognizing opportunities than othersPrior ExperienceSocial NetworksCognitive FactorsCreativity

Full View of the OpportunityRecognition ProcessDepicts the connection between an awareness of emerging trends andthe personal characteristics of the entrepreneur

Idea Generation ToolsnnnPre-Idea Tree (LaunchNET KSU)Your Idea Napkin (The Innographer)Sketch Pad (The Innographer)

nIdea Generation - OpportunityRecognition Exercise

Developing a BusinessConceptnA business concept is a concisedescription of an opportunity thatcontains four essential elements:1. The customer definition2. The value proposition and compellingstory3. The product/service4. The distribution channel

Preparing the FeasibilityAnalysis / Quick TestnnnIs there a customer and a market ofsufficient size to make the conceptviable?Do the capital requirements to start,based on estimates of sales andexpenses, make sense?Can an appropriate start-up orfounding team be assembled toeffectively execute the concept?

Business ConceptGuidelinesnnWhat is your product or service beingoffered? Be specific, give a detaileddescription. Give your product or business aname.What are the features and benefits ofthe product or service? What value arethe customers receiving from your productor service?

Business ConceptGuidelinesnnHow is the product or servicedifferentiated from others on themarket? Why is it different and whatmakes it special?What is the value proposition?What problem or need does yourproduct/service fulfill?

Business ConceptGuidelinesnWho is the customer? Who is yourperfect customer? Will you be selling toan intermediary or to the end user? How willyou find them? What is the demand foryour product or service? Are there enoughof them to support your sales projections?

Business ConceptGuidelinesnHow will you get your product orservice to your customer? Describe theproduct or service value chain (distributionsystem). What marketing tactics will youuse? What are you going to charge for it?How much will it cost to produce yourproduct or service? Do you know what thecompetition charges? How will the entry ofyour product into the market effect theprice?

Business Model CanvasnnnVisual tool/template for developing newbusiness models.It allows you to describe, design, challenge,invent, and pivot your business model.Nine key areas to describe, validate andpivot

How Do The Pieces All FitTogether?nnIdea Generation - nowCover key elements of the Business ModelCanvas throughout the week–––––nCustomer ID and MarketingNetworking and Entrepreneurial ResourcesLeadership/Building Your TeamFunding Your BusinessMoreCompetition on Friday morning (well thoughtout and presented business concept)

Competition on August 5,2016nElements of the Industry and Market/CustomerFounding TeamFinancial Needs AssessmentSecondary areas of consideration:– Conveyed knowledge of the process– Projection for success– Quality of presentation (accuracy, clarity, organized,cohesive)– Q&A (relevant responses, preparedness, knowledge)

Questions?Opportunity Recognition& AnalysisPresented by: Julie MessingKent State Universityjmessing@kent.edu

Business Model Canvas n Visual tool/template for developing new business models. n It allows you to describe, design, challenge, invent, and pivot your business

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