LECTURES 3 AND 4:

THE ENTREPRENEURIAL PROCESS AND

OPPORTUNITY EVALUATION

I. Entrepreneurial Process Flow

II. Strategic Management Approach
III. Creating and Evaluating Opportunities
IV. Sources of Ideas
V. Methods of Generating Ideas
 ENTREPRENEURIAL PROCESS FLOW

◦ Pre-startup: Identify and evaluate the opportunity, develop

a business plan.

◦ Startup: Fulfill all requirements, launch venture.

◦ Growth: Motivate employees, maximise

potential, overcome crisis.

◦ Exit: Terminate the business, or

reduce involvement .
 EP: STRATEGIC MANAGEMENT APPROACH

Organisation
Goals
•Vision Environmental
•Mission
Analysis
•PESTD Formulate
•SWOT strategies
•Porter’s 5 competitive
forces

Implement
strategies

Evaluate
performance
Environmental Analysis

 Besides PESTD (macro) and SWOT (micro), Porter’s (1980) framework can be
used specifically for industry level analysis.

 In an industry analysis, 5 competitive forces are considered:

Threat of new entrants
Threat of substitutes
Bargaining power of buyers
Bargaining power of suppliers
Existing rivalry and competition

 According to Porter, companies can choose any of three strategies:

Cost leadership, Differentiation and Focus.
CREATING AND EVALUATING OPPORTUNITIES

 “Opportunity” may be defined broadly as “room for improvement” -

> aided by innovation.

 Opportunities exist in the 6 following dimensions:

 Product-based, e.g. offer a new product within the same market.
 Service-based, e.g. enhance speed of delivery.
 Process-based, e.g. reduce wastage.
 Market-based, e.g. enter a new market segment.
 Supply-based, e.g. use cheaper raw materials.
 Administration-based, e.g. improve employee selection methods.
 When presented with an opportunity, the primary
question is:
“Should I take it?”

 The answer depends on the results of a feasibility

study which involves evaluation of general factors
such as:
 Population demographics.
 Personal interest, skill, experience.
 Availability of resources.
 Level of competition.
 Specific terms and conditions.
 InIn feasibility

 feasibility studies,
studies, one
one common
common approach
approach isis toto
predict
predict33possible
possiblescenarios:
scenarios:
 worst-case, normal case and best-case
 worst-case, normal case and best-case

The

The objective
objective isis toto assess
assess whether
whether appropriate
appropriate
contingency
contingencyplans
planscan
canbebeimplemented
implementedininthe
theworst-
worst-
case
casescenario.
scenario.

 Alternatively,
 Alternatively,ininthe
thebest
bestcase
casescenario,
scenario,the
themain
mainissue
issue
isishow
howtotoreinvest
reinvestprofit.
profit.
 SOURCES OF IDEAS
The importance of networking is evident.

Government Employees

Trade
Media Entrepreneur associations

Consumers Competitors
Suppliers/
Distributors
 Employees: Internal contests, QCC
 Government: Annual budgets, tender notices
 Media: Advertisements, feature stories
 Trade associations: Exhibitions, trade visits
 Competitors: First-mover weaknesses
 Suppliers/distributors: Feedback
 Consumers: Customer surveys, complaint desk
 METHODS OF GENERATING IDEAS

 Focus groups
 Moderator focuses discussion of the group in a
directive or nondirective manner.
 An excellent method for initially screening ideas and
concepts.

 Brainstorming
 Allows people to be stimulated to greater creativity.
 Though most ideas generated have no basis for
further development, sometimes a good idea
emerges.
CLASS ACTIVITY
 Based on the general terms
and conditions of one
selected franchise, decide
whether or not being a
franchisee is an opportunity
which you will pursue.