UNIT 3 INNOVATION AND ENTREPRENEURSHIP

BUSINESS OPPPORTUNITY IDENTIFICATION AND SELECTION

BUSINESS OPPORTUNITY

MEANING
Business opportunity refers to the occasion or opportunity to start a business idea,
enter a new job sector or launch a new product on the market. A good example of a
business opportunity is when a need is identified in an unsatisfied market, also having
the financial and technological capacity.

The concept of business opportunity is always present in the business market. It is

about taking advantage of a consumer need, satisfying a demand or presenting a new
service or item on the market that stands out for its innovative potential.

SOURCES TO GENERATE POTENTIAL IDEAS

1. HOBBY:
An activity you do when you’re not working.
Do you know that you can make money from whatever it is you like or enjoy doing?
All you have to do is to identify the things you do most often especially when you’re
free, evaluate them and act. (Just have a quiet time and reflect on how to make
money from what you enjoy doing).

2. COMPLAINTS:

Expressing unhappiness.
Critically evaluate the following statements…
 “I wish there was…”
 “If only there were a product that could…”
 “If only there were services that could…”

Most of these come up maybe when a customer is not satisfied with a product/service
that he or she has tried. Your role here is to put those complaints into consideration
then generate ideas to solve such problems because from what you heard above, there
is a problem that needs a solution.
3. EXHIBITION:

A demonstration of a particular skill or craft.

Attending exhibition and trade fairs regularly will help you discover new products or
services and give you an opportunity to meet with manufacturers, sales
representatives, wholesalers, distributors, etc… They can help you with information
on getting started or might need your services.
4. EXPERIENCE:

Knowledge or skill gained through been involved in or exposed to something over a

period of time.
Don’t look down on any skill or training you learned or passed through because over
half of the ideas of successful businesses come from the experience in the work. The
background of a potential entrepreneur plays a crucial role in the decision to go into
the business as well as the type of venture to be created. Your skills and experience
are your most important resources, therefore, be productive and capitalize on them.

5. BRAINSTORMING:

This is a way of making a group of people all think about something at the same
time.
Often, in order to solve a problem or to create good ideas. It usually starts with a
question or problem statement and each idea leads to one or more additional ideas,
resulting in a good number.
 Ensure you don’t criticize or judge the ideas of others.
 Consider all ideas even those that seem to be wild or crazy.
 The greater the number of ideas, the better.
 Combine and improve upon the idea of others.

6. SURVEY:

To look at or consider something in a general or very broadway.

This has to do with an investigation on the opinions, behavior, etc… of a particular
group of people which is usually done by asking them questions. Such a survey can be
or might be conducted formally or informally by talking to people, usually using a
questionnaire or through interviews and, or through observation.

7. MASS MEDIA:

This is a great source of information and news such as newspapers, magazines,

radio, the internet and television.
They reach and influence a large number of people from the advertisements and offers
and even information you derive from the mass media, you can come up with ideas to
work on.

IDEA GENERATION
Idea generation is described as the process of creating, developing and communicating
abstract, concrete or visual ideas.

METHODS OF IDEA GENERATION

1. Reverse brainstorming

While the process of brainstorming is the generation of ideas to identify problem-

solving methods, reverse brainstorming starts with thinking about the causes of that
problem. Focusing on the causes of the problem may sometimes be more efficient
than focusing on the solution. By finding potential causes, you can work proactively
to resolve or prevent the cause of the problem. Often, teams use reverse brainstorming
to improve products and services.

2. Brainwriting

A brainwriting activity is typically most effective in a group setting. Start by writing a

topic on a piece of paper. Then, pass the paper around the group so that everyone has
a turn to write on it and contribute their ideas to the central topic or question. The
ideas of one group member can inspire the ideas of another, or someone may choose
to improve upon an existing one.

3. Brain netting

Brain netting involves the use of cloud-based documents or programs for groups to
share and collaborate. This form of brainstorming can be quite interactive with the
addition of links, videos and images to provide visual representations and context.
Using an online program also works when working with a team either live or
remotely, which could be beneficial for those collaborating within different time
zones.

4. Forced relationships

The forced relationships method introduces two random and seemingly unrelated
items and forces you to create a connection between them. This technique encourages
innovative thinking in order to build those relationships and possibly develop a new
product. You can conduct forced relationship activities in group settings or
individually.

5. Role-storming

Role-storming is brainstorming with the added element of role-playing. To bring out

new perspectives and different ideas, participants could imagine that they're in a
different role in relation to the brainstorming goal. They could pretend they're a client
or manager assessing the same goal and ask themselves what improvements to
implement.

6. Storyboarding

Develop a storyboard by finding pictures, quotes and other visual information

associated with the focus of your brainstorming. Then, you could arrange these items
to create a narrative and add notes to help explain the progression of the ideas.
Storyboarding can be a more interactive method when searching for physical items to
add to the board. The physical aspect of seeking and building can allow your brain to
process the visual information in front of you at a faster rate.

7. Five whys

This method often begins with a real or hypothetical problem that you could address
with your team. You would ask them why a problem happens or is happening. After
the initial round of responses and forming an answer, a facilitator asks again and again
until the fifth time. The reason for asking the same question five times is to find
deeper answers, as the first response is typically more shallow.

8. Six thinking hats

You can use this technique with groups of at least six people. Each participant
represents a "thinking hat," or different thought focuses, such as benefits, emotions,
facts, ideas, judgment and planning. With these mindsets, each person addresses the
topic or problem from that standpoint.

9. S.C.A.M.P.E.R.

S.C.A.M.P.E.R. stands for substitute, combine, adapt, modify, put to another use,
eliminate and reverse. This acronym is essentially a question checklist to prompt your
ideas. It asks you to consider factors like substituting a variable for another,
combining one with another or adapting a variable to a different context. This method
helps you think critically and consider creative approaches from several angles.

10. S.W.O.T. analysis

S.W.O.T. is an acronym for strengths, weaknesses, opportunities and threats. You can
usually use this method individually or with a team to assess the worth of proposed
projects. You could ask what the strengths, weaknesses, opportunities and threats are
for a particular project to help decide if you should proceed with it.

11. Group sketching

In this method, each group member passes around a piece of paper to sketch
something related to a central concept or related to another sketch on the paper. Once
the entire group has completed sketching, discuss the images and form connections
between them. Visually thinking and creating can give a form to the group's ideas in a
way that they can then interpret a plan or design.

12. Word banking

Word banking is similar to other word association activities but conducted on a larger
scale with the volume of words and phrases involved. While word association is
relating one word to another, you can form bigger word sets with word banking. You
can associate more than one word with another and group those words to identify
patterns and connections. This method can help solidify abstract ideas by finding a
common objective or purpose that can initiate the beginning of a project.

13. Wishing

This method asks for participants to wish for solutions to a given problem. These
solutions can be impractical or unattainable, but your team can still discuss potential
ways to make them happen. You could develop the ultimate solution to the problem
by analyzing what aspects of each wish they can use or integrate into the actual
solution.

14. Gap filling

Gap filling begins with a statement of your starting point with a project or problem.
Then, you'd state your final goal and begin thinking of what you can do to fill the gap
between the start and endpoints. Initial responses are often more general, but through
multiple processes of filling gaps, you can identify specific resolutions.

15. Rapid ideation

With this technique, ask your group to write ideas individually within a time
constraint. They would all write as many ideas as possible on their own pieces of
paper. Once the time is over, they can share their ideas aloud or the group leader can
collect them. When reviewing the responses, there may be some common ideas
between the group that can provide insight into ideas that they can develop further.

16. Trigger storming

Trigger storming provides more specific prompts or "triggers" for a group to discuss.
These prompts can be open-ended sentences for the group to finish or evocative or
abstract statements that can inspire or provoke new thoughts. You can do this method
aloud or on paper.

17. "What if"

The "what if" method introduces scenarios to encourage creative thinking. When
facing a problem, you could reframe it using "what if" questions to analyze the
problem from a different perspective. Some examples of these questions could be:
  "What if we gave this problem to an artist rather than an engineer to
solve?"
 "What if this problem happened at the end of the fiscal year?"

18. Zero draft

Writers often use zero drafting as a variation of freewriting. Starting with a topic,
you'd write everything you know about it, what you want or need to know and why
the topic is important. You could then add other ideas that come to mind while
writing. This method can also be beneficial for those with writer's block in order to
develop thoughts freely, but with a few prompts to guide them.

OPPORTUNITY EVALUATION:

An entrepreneur would like to evaluate the opportunities for his products, both goods
and services, in the market. He needs to take into account various factors based on
which he evaluates opportunities and how such factors are likely to influence those
evaluations. He should critically asses his business ideas for their effectiveness.
According to experts, opportunity evaluation is meant to assess future opportunities
and identify wealth creating resources that can be controlled and utilized by the
entrepreneur.

PORTERS FIVE FORCES MODEL

What Are Porter's Five Forces?

Porter's Five Forces is a model that identifies and analyzes five competitive forces
that shape every industry and helps determine an industry's weaknesses and strengths.
Five Forces analysis is frequently used to identify an industry's structure to determine
corporate strategy. Porter's model can be applied to any segment of the economy to
understand the level of competition within the industry and enhance a company's
long-term profitability. The Five Forces model is named after Harvard Business
School professor, Michael E. Porter.

1. Competition in the industry

2. Potential of new entrants into the industry

3. Power of suppliers

4. Power of customers

5. Threat of substitute products

Competition in the Industry
The first of the five forces refers to the number of competitors and their ability to
undercut a company. The larger the number of competitors, along with the number of
equivalent products and services they offer, the lesser the power of a company.
Suppliers and buyers seek out a company's competition if they are able to offer a
better deal or lower prices. Conversely, when competitive rivalry is low, a company
has greater power to charge higher prices and set the terms of deals to achieve higher
sales and profits.

Potential of New Entrants Into an Industry

A company's power is also affected by the force of new entrants into its market. The
less time and money it costs for a competitor to enter a company's market and be an
effective competitor, the more an established company's position could be
significantly weakened. An industry with strong barriers to entry is ideal for existing
companies within that industry since the company would be able to charge higher
prices and negotiate better terms.

Power of Suppliers
The next factor in the five forces model addresses how easily suppliers can drive up
the cost of inputs. It is affected by the number of suppliers of key inputs of a good or
service, how unique these inputs are, and how much it would cost a company to
switch to another supplier. The fewer suppliers to an industry, the more a company
would depend on a supplier. As a result, the supplier has more power and can drive
up input costs and push for other advantages in trade. On the other hand, when there
are many suppliers or low switching costs between rival suppliers, a company can
keep its input costs lower and enhance its profits.

Power of Customers
The ability that customers have to drive prices lower or their level of power is one of
the five forces. It is affected by how many buyers or customers a company has, how
significant each customer is, and how much it would cost a company to find new
customers or markets for its output. A smaller and more powerful client base means
that each customer has more power to negotiate for lower prices and better deals. A
company that has many, smaller, independent customers will have an easier time
charging higher prices to increase profitability.

 
The Five Forces model can help businesses boost profits, but they must continuously
monitor any changes in the five forces and adjust their business strategy.

Threat of Substitutes
The last of the five forces focuses on substitutes. Substitute goods or services that can
be used in place of a company's products or services pose a threat. Companies that
produce goods or services for which there are no close substitutes will have more
power to increase prices and lock in favorable terms. When close substitutes are
available, customers will have the option to forgo buying a company's product, and a
company's power can be weakened.

Understanding Porter's Five Forces and how they apply to an industry, can enable a
company to adjust its business strategy to better use its resources to generate higher
earnings for its investors.

JOHN MULLIN’S DOMAIN FRAMEWORK

Mullin’s Seven Domains Model divides the proposed new product or venture into
seven “domains”, four that look at the small (micro) and large (macro) aspects of the
market and industry, as well as three that focus on internal issues within a company.
As one begins to analyze each of the domains and ask key questions, a clearer picture
will emerge as to the viability of the business or product being considered. During this
process, potential challenges will be uncovered which can be addressed while writing
the business plan. The seven domains are described in detail below:

1. Market Domain/Macro Level: Market Attractiveness: This first domain

analyzes the market attractiveness from a macro level. It looks at the size in
terms of the number of customers, the sales value and the quantity of units
sold. It also looks at recent growth and whether previous growth is likely to
continue. Basically, this analysis looks at whether the market is healthy
enough to welcome new products or if it is declining in growth.

2. Market Domain/Micro Level: Sector Market Benefits and

Attractiveness: This domain looks at the market segment on a micro level
and asks questions such as which segment is most likely to benefit from the
new product, how is the product being considered different and better than
the ones currently being offered, and is this segment currently growing? It is
important to get different types of data when answering these questions,
such as specific sales data and prospective customer insights.

3. Industry Domain/Macro Level: Industry Attractiveness: This domain

looks at the attractiveness of entering the industry on a macro level.
Questions to ask revolve around how difficult is it to enter the industry and
how inundated it is with competition. Also, look at how fierce the
competition is currently and whether there is theft of ideas and strategies
among the participants. Lastly, investigate the power of buyers and suppliers
within the industry and their ability to set their own terms, and how this
might affect the new product or service being considered.

4. Industry Domain/Micro Level: Sustainable Advantage: The last industry

domain to consider on a micro level regards Sustainable Advantage. Asking
 how easily the competition will be able to duplicate the product or service
you are considering and how you can minimize this possibility are important
questions. Look at possible advantages on either side, such as patents,
technological processes, and financial backing.

5. Team Domain: Mission, Aspirations, Propensity for Risk: At this point

in the process the analysis turns inward, toward the team in place to start the
venture. It is important to look at the level of commitment that both
leadership and individuals have to the idea being considered. Whether the
team is willing to work hard in order to see the idea succeed and is willing to
live with the level of risk involved are also factors that need to be
considered.

6. Team Domain: Ability to Execute on Critical Success Factors: This

domain considers the Critical Success Factors for the new product or
service, and whether the internal team in place is able to deliver on them.
The questions to ask about the internal team at this point center around
which decisions can be made that have the potential to significantly harm or
help the business succeed, and who is responsible for making these
decisions. If there are gaps in talent or decision-making ability, think about
what positions can be filled to minimize those gaps.

7. Team Domain: Connectedness Up, Down, Across Value Chain: This last

domain looks at relationships up and down the Value Chain, including
suppliers, investors, customers, distributors, and the competition. Analyzing
these connections and how they can potentially help or hurt the business
being considered will help to head-off or prepare for potential conflicts in
the future.

As the Seven Domains Model is conducted for a potential business opportunity, a

theory will emerge on whether the it is a good idea or not to pursue it. It may be that
there are factors that seem like large obstacles but can be managed in advance because
they have been detected. If the consensus is that the new product or venture is a good
idea, the next step will be to develop a comprehensive business plan for leadership
and potential investors to analyze.

ALEXANDER OSTERWALDERS BUSINESS DEVELOPMENT MODEL

The business model canvas is a great tool to help you understand a business
model in a straightforward, structured way. Using this canvas will lead to
insights about the customers you serve, what value propositions are offered
through what channels, and how your company makes money. You can also use
the business model canvas to understand your own business model or that of a
competitor! The Business Model Canvas was created by Alexander Osterwalder,
of Strategyzer.

How to use the canvas?

The business model canvas is a shared language for describing, visualizing, assessing
and changing business models. It describes the rationale of how an organization
creates, delivers and captures value.

1. Customer segments
List the top three segments. Look for the segments that provide the most
revenue.
2. Value proposition
what are your products and services? What is the job you get done for your
customer?
3. Revenue streams
List your top three revenue streams. If you do things for free, add them here too.
4. Channels
How do you communicate with your customer? How do you deliver the value
proposition?
5. Customer relationships
How does this show up and how do you maintain the relationship?
6. Key activities
What do you do every day to run your business model?
7. Key resources
The people, knowledge, means, and money you need to run your business.
8. Key partners
List the partners that you can’t do business without (not suppliers).
9. Cost structure
List your top costs by looking at activities and resources.
 This Photo by Unknown Author is licensed under CC BY-SA

nature and importance of business opportunity read by yourself.

Sanjana patel. R