OPPORTUNITY IDENTIFICATION

SKILLS
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

DEFINITION OF OPPORTUNITY
• A possibility to meet the needs and wants of a
market through combining resources and delivering
superior value (Schumpeter, 1934; Kirzner, 1973).
• A situation in which new goods, services, raw
materials, markets and organizing methods can be
introduced through the formation of new means,
ends or means-ends relationships (Eckhardt &
Shane, 2003).
• An opportunity is a chance to meet a market need by
using a creative combination of resources (Ardichvili
et al., 2003).
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

ENTREPRENEURIAL OPPORTUNITY

“ To have entrepreneurship, you must first

have entrepreneurial opportunities”

(Shane & Venkataraman, 2000)

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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

ENTREPRENEURIAL OPPORTUNITY
• An entrepreneurial opportunity as “a situation
in which a person can create a new means-ends
framework for recombining resources that the
entrepreneur believes will yield a profit”
(Shane, 2003) .
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

THEORY OF ENTREPRENEURIAL
OPPORTUNITY
• Opportunity-Based Theory
• Entrepreneurs excel at seeing and taking advantage
of possibilities created by social, technological and
cultural changes
(Peter Drucker, 1985) .

• For example, where a business that caters to senior

citizens might view a sudden influx of younger
residents to a neighborhood as a potential death
stroke, an entrepreneur might see it as a chance to
open a new club.
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

ROLES OF OPPORTUNITY IN
ENTERPRENEURSHIP

Organizations - To reap
extraordinary profits

Communities/ Society -
Societal Responsibility
and Recognition

Individual/
Entrepreneur- To engage
in work of their choice
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,

• To reap extraordinary profits – the profit earned

RAJA ROSNAH RAJA
DAUD

by an entrepreneur are an important motivation

and indication factor for further increased
performance. Thus these could spur them to
greater achievement and success.
• Societal responsibility and recognition – small
business owner are among the most admired,
respected and trusted individuals of society.
- they will help to contribute employment
and business opportunity in a particular locality
or area.
• To engage in work of entrepreneur choice –
small business owners tend to engage in
business that gives them personal satisfaction.
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

SOURCES OF OPPORTURNITY
• Drucker’s Seven Sources of Innovative Opportunity
• The first four sources lie in the organization and
they are therefore visible primary to the people
involved:-
1. The Unexpected - composed of three types of
unexpected events: unexpected success, unexpected
failure, unexpected outside event.
2. Incongruities - between reality as it actually is and
reality as it is assumed to be
3. Process Need - innovation based on process need
4. Industry and Market Structures - changes in the
industry structure or market structure that catch
everyone unawares
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

SOURCES OF OPPORTURNITY
• The second set of three sources for innovative
opportunities are changes outside the
organization or the industry:-
4. Demographics;
5. Changes in perception, mood and meaning;
6. New knowledge, both scientific and non-
scientific.

(Peter F. Drucker, 1995)

 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

OPPORTUNITY IDENTIFICATION
PROCESS
• The core of the opportunity identification
process is made up of the following stages: being
alert (which has been studied under the concept
of entrepreneurial alertness), search for
information and evaluation, and construction of
the opportunity (Mary George et al., 2016).
• These three main stages are conducted by
entrepreneurs in order to develop/exploit an
opportunity (Oyson & Whittaker, 2015).
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

1. Entrepreneurial alertness
- More sensitive to the needs that a market can offer
(Gaglio & Katz, 2001).
- Individuals sense the needs of the market and
propose new ways to satisfy those needs by creating
value (Mary George et al., 2016)
- In identifying and exploiting an opportunity, an
individual's capabilities, as well as personal
characteristics, such as entrepreneurial alertness,
make the difference between those alert and non-
alert individuals.
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

OPPORTUNITY IDENTIFICATION
PROCESS
2. Search for information
- Once an individual observes and understands the
opportunity and the chance that they possess to
exploit it, they continue with the search of
information.
- This is the search, which allows entrepreneurs to use
all their sources of knowledge.
- Systematic search gives the occasion for individuals
to assess the scope of the opportunity and the
capacity of their proposed venture to fit that
opportunity. (Cuero Acosta, Adu-Gyamfi, Nabi &
Dornberger, 2017)
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

OPPORTUNITY IDENTIFICATION
PROCESS
3. Evaluation of the information
- This is an important part of the opportunity
identification process (Ardichvili et al., 2003).
- This evaluation can be applied in a formal,
systematic, or an informal way.
- It implies how the identified opportunity has been
located into the business concept, how the value
offered through the business model is going to be
assessed by the customer, and how the new product
or the new processes are conceived.
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

OPPORTUNITY IDENTIFICATION
PROCESS
• The evaluation within the stages is important in
order to continue developing the business idea.
• In order to recognize an opportunity and
develop it into a business concept, the evaluation
of the feasibility of that opportunity-focused
business model is required.
• This business model serves as a guide for the
exploitation of entrepreneurial opportunity in
the subsequent phases (Chandra et al., 2015).
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

OPPORTUNITY IDENTIFICATION
PROCESS
4. Construction of the opportunity
- In this stage the entrepreneur first senses the
needs that exist within a market or identifies
resources that have not been used yet (Ardichvili
et al., 2003)
- Secondly, the entrepreneur visualises the fit
among market needs and resources deployed to
satisfy those needs.
- Third, the entrepreneur converts that fit into a
business concept.
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

OPPORTUNITY IDENTIFICATION
PROCESS
5. Exploitation
- This stage consists of various processes which
entrepreneurs can develop to materialise business
ideas including the development of new products,
new processes, the proposal of a new business
model, and the creation of a business organisation
(Short et al., 2010; Vaghely & Julien, 2010).
- This requires proactive, risk-taking, and innovative
entrepreneur's characteristics which entrepreneurs
can exert through their entrepreneurial orientation
(Anderson, Kreiser, Kuratko, Hornsby, & Eshima,
2015).
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

OPPORTUNITY IDENTIFICATION
PROCESS
- The exploitation can be conceptualized at this
stage implies how the entrepreneurs are going to
make the identified opportunity and its
development profitable (Oyson & Whittaker,
2015) and how the business model created to fit
market needs and resources is going to offer a
value for customers.
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

ENTREPRENEUR BEHAVIORS IN
IDENTIFIYING OPPORTUNITY
• Commitment - theory of planned behaviour have pointed
that the entrepreneur's intention which is her degree of
commitment to identify opportunity recognition and
exploitation is important.
• Knowledgeable – entrepreneur must have knowledge to
perceived feasibility and desirability of the opportunity
and relate to decision making under risk and uncertainty
• Experience - cognitive structures, generated from past
experiences, that entrepreneur use to interpret new
information can give opportunity to them
 SYAMSURIANA SIDEK,

• Seeking information – identifying information

MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

to gain explicit and implicit social validation

from family, friends, colleagues and partners to
find opportunity.
• Entrepreneurial munificence (recognise) - the
extent to which the market or industry an
individual is embedded in provides him or her
with opportunities to recognize and resources to
exploit those opportunities.
• Identity salience - an entrepreneur will feel an
identity is situational relevant to the extent he or
she perceives the identity to be appropriate for
the immediate social context when they identify
the opportunity.
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SYAMSURIANA SIDEK,
RAJA ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

NEW VENTURE IDEA VS NEW VENTURE
OPPORTUNITY
NEW VENTURE IDEA
• new product development through
research and development or improving
existing services.
• Innovation can be the central focus of
a business and this can help them to
grow and become a market leader if they
execute their ideas properly.
• Eg : the individual has yet to understand
how value can be created and how the
commercial potential of the initial idea
can be exploited.
• an unmet customer need (e.g., long
battery life in smart phones), a particular
customer segment (e.g., senior citizens), a
resource or capability (e.g., new type of
water absorbing material), or a
combination of these elements.
SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD
NEW VENTURE
OPPORTUNITY
• The entrepreneur is able to
describe the valuable and
contributions of a venture and
create the design of a business
model that can. be sustained by a
competitive advantage.
• venture opportunity emphasizes
that prospective entrepreneurs
will act based on their beliefs of
what can be accomplished in the
future.
• At some point, the individual will
evaluate whether it is worthwhile
to move to exploitation.
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SYAMSURIANA SIDEK,
RAJA ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

TAXONOMY OF OPPORTUNITY
GENERATION PROCESSES

(Alsos & Kaikkonen 2006)

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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

TAXONOMY OF OPPORTUNITY
GENERATION PROCESSES
• Opportunities might be a result of a process of deliberate
search or serendipity and the opportunities may be
objectively discovered or subjectively created.
• The way entrepreneurs have recognized opportunities is
related to their former experiences and their social
networks.
(Alsos & Kaikkonen 2006)
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

TAXONOMY OF OPPORTUNITY
GENERATION PROCESSES
• Opportunity discovery (passive-objective)
➢Takes place when the opportunity objectively exists
➢It can be recognized by the entrepreneur even though
(s)he is not actively searching.
• Opportunity search (active-objective)
➢Supposes for more active search for finding a business
opportunity, considering that the opportunity can be
objectively recognized.
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

TAXONOMY OF OPPORTUNITY
GENERATION PROCESSES
• Opportunity creation (active-subjective)
➢Opportunity generation processes in which the
entrepreneur’s (subjective) abilities, experiences, prior
knowledge and actions make the opportunities to come
into existence.
• Opportunity occurrence (passive-subjective)
➢Not include search activities.
➢It is mostly a result of the entrepreneur’s own special
skills and/or resources. The opportunities occur from the
knowledge about a specific industry, market, customers
or a variation of skills.
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SYAMSURIANA SIDEK,
RAJA ROSNAH RAJA
DAUD, MUNIRAH
MAHSHAR
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

OPPORTUNITY DISCOVERY VS
OPPORTUNITY CREATION
• Opportunity Discovery
• Assumption that opportunities exist as objective phenomena,
waiting to be discovered by unusually alert people who, once they
decide to exploit an opportunity, called as entrepreneurs.
• Entrepreneurs discover and then exploit these opportunities.

• Opportunity Creation
• takes place when the entrepreneur actively searches for a business
opportunity and uses her subjective capacity and resources to create
the opportunity.
• In some cases the opportunity can occur due to entrepreneur’s
special skills and resources, even though (s)he is not actively looking
for (this particular) opportunity, i.e. opportunity occurrence.
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

DON’T WAIT FOR

OPPORTUNITY. CREATE IT!
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

INFLUENTIAL FACTORS IN IDENTIFYING

OPPORTUNITIES
• Prior knowledge - An individual’s lack of
knowledge and skills hinder the process of
recognizing opportunities (Kourilsky and Walstad,
1998)
• Social capital – Social capital provides access to
scarce resources, which, in turn, can help
entrepreneurs exploit opportunities (Fuentes et al.,
2010).
• Cognition/personality traits - Creativity, self-
efficacy, the propensity to assume risks, the need for
achievement, the need for independence, and locus
of control are the traits that can influence in
opportunity recognition (Garg et al., 2011).
 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

INFLUENTIAL FACTORS IN IDENTIFYING

OPPORTUNITIES
• Environmental conditions - Economists agree that
changes in technology, social mores, the political
climate, and demographic conditions create sets of new
information, which help in the processes of opportunity
discovery or creation (Schumpeter 1934; Shane and
Venkataraman 2000).
• Alertness - Alertness is the capacity to possess keen
insights into identifying entrepreneurial opportunities
(Mary George et al., 2016).
• Systematic search - the systematic search (discovering
opportunities by actively searching for them from a
known information domain) helps individuals discover
opportunities (Fiet et al., 2005).
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SYAMSURIANA SIDEK, RAJA

ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

CONCLUSION
• In an age of rapid change, entrepreneurs who can
recognize and leverage new opportunities bring
enormous value to their organizations.
• The opportunities are therefore formed rather than
recognized. The difference between these two
categories lies in the extent of active search.
• When entrepreneurs have the ability to recognize
opportunity, they know how to identify promising
changes unfolding around them, and act to take
advantage of these opportunities.
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SYAMSURIANA SIDEK,
RAJA ROSNAH RAJA DAUD,
MUNIRAH MAHSHAR

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 SYAMSURIANA SIDEK,
MUNIRAH MAHSHAR,
RAJA ROSNAH RAJA
DAUD

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