CHAPTER 4: The window of opportunity

Baphicile Mbata

Part B: The entrepreneurial process

Chapter 4:
The window of
opportunity
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 LEARNING OUTCOMES

• Differentiate between idea and opportunity

• Define and understand the concept window of
opportunity
• Understand the integrated approach to
opportunity evaluation

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 THE OPPORTUNITY

 What is an opportunity?
A gap in the market left by those serving it.

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What is the difference between an idea and an
opportunity?

– An idea does not necessarily automatically translate into

an opportunity.

– An opportunity is an idea that is attractive, durable

and timely and anchored in a product or service
that creates or adds value for the end-user.

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 THE OPPORTUNITY

 Qualities of an opportunity

1. Attractive  Have the power to please the consumer’s

mind and eye, awakening his/her interest, this leading to
an act of purchase.
2. Durable  Have inherent ability to continue in a
particular condition and not wear out soon.
3. Timely  Be presented to the market at the right time,
when the market is ready for it. Not sooner, not later.

Additionally, it much be anchored into a product or a

service.
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 SOURCES AND DRIVERS OF IDEAS
AND OPPORTUNITIES
 Techniques for searching for a business idea
Five broad approaches
1. From skills, expertise and aptitude
2. From common needs
3. From existing problems
4. From everyday problems
5. From other sources

 Other sources:
1. Business publications
2. Investor’s associations
3. Expired patents
4. Advertisements
5. Trade shows
6. Oversea products
7. Blogs etc.
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 SOURCES AND DRIVERS OF IDEAS AND OPPORTUNITIES

Figure 4.1 The generation of ideas (Textbook page 103)

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 Industry
and market
Strategic issues
differentiation Economics

Criteria for
Opportunity
Personal evaluation Harvest
criteria issues

Fatal flaw Management

issues team
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 Industry
and market
issues

– Factors that influence attractiveness of a market

 Market structure
 Market size
 Market capacity
 Market share
 Cost structure

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 Economics

- High and durable gross margins usually have high and durable
profits.
- Abilities to achieve positive cashflows.

- No profits three years post breakeven  No longer attractive.

- Low start-up funds needed makes those ventures attractive and vice
versa.

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- As an exit strategy, attractive ventures in attractive markets
have harvest objective, i.e. sale of business in mind and vice
versa.

- Buyers or investors not interested in purchasing unattractive

firms in unattractive markets.
Harvest
issues

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- Industry and experience of entrepreneur and team = attractive
business.

* Industry and technical experience

* Integrity
* Intellectual honesty
* Commitment to excellence
* Tolerance of ambiguity
* Opportunity obsession
* Creativity and innovativeness
* Internal locus of control
* Determination and perseverance

Management
team
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- Flaws render opportunities unattractive.
Examples of flaws:
* Markets are too small.
* Markets with overwhelming competition
* Markets with high cost of entry
* Markets where entrants are unable to produce a sustainable
competitive advantage.

* Lack of entrepreneurial team

* None-existent industry or technical experience
* Lack of or compromised intellectual honesty and integrity (Owner)

Fatal flaw
issues
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- Good fit between entrepreneur and venture.

- An attractive business is both desirable and good for the entrepreneur

to undertake.

- Have high stress tolerance levels in addition to team qualities.

Personal
criteria

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 Strategic
differentiation

- How well is the venture’s positioning within the market to take

advantage.
- How well is the venture able to differentiate.

- Good differentiation = value addition to customers (on the basis of

unique service offering).

Defeated if the competition can easily copy.

High quality, extraordinary service, innovative designs, technological

capability or unusually positive brand image.
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 Industry
and market
Strategic issues
differentiation Economics

Criteria for
Opportunity
Personal Harvest
evaluation
criteria issues

Fatal flaw Management

issues team
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 THE PURSUIT OF OPPORTUNITIES
Larger organisations succeed in the pursuance of
opportunities due to:
- More experience
- Strong and secure network with suppliers,
customers and intermediaries
- Have lower costs due to their development of
experience curve economies
- Possession of economies of scale

- Organisational inertia  Refusal to adapt in a

responsive manner to market changes.

- Organisational complacence  Resting on

past successes, the “ we have made it”
attitude.

- Bureaucracy  Rigidity and inadequate pace

of movement. The big machine troubles.
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Other opportunity creating characteristics of larger
organisations:
1. Technological inertia
2. Cultural inertia
3. Internal politics
4. Economic inefficiency

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Why large or more established businesses leave gaps
in the market:

1. Failure to see new opportunities

2. Underestimation of new opportunities
3. Technological inertia
4. Cultural inertia
5. Politics and internal fighting
6. Government intervention to support new and (smaller) entrants

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Case study on loaded on E-Learning platform.
The window of opportunity

The time period available for creating new ventures.

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 THE WINDOW OF OPPORTUNITY
Figure 4.2 The window of opportunity (Textbook page 110)

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Stages of the window of opportunity

1. Seeing the window

2. Locating the window
3. Measuring the window
4. Opening the window
5. Closing the window

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 STAGES OF THE WINDOW OF
OPPORTUNITY
Figure 4.3 A holistic view of the window of opportunity
(Textbook page 111)

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BASES FOR COMPETITIVE ADVANTAGES

Figure 4.4 The bases of competitive advantage (Textbook page 113)

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 CONTINUOUS OPPORTUNITY
EVALUATION AND UTILISATION

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 LOOKING BACK

1. What is the window of opportunity? 

2. When pursuing opportunities, what factors make

it easy for smaller entrepreneurs to effectively
take advantage of opportunities overlooked by
larger companies? 

3. For what reasons do larger organisations leave gaps

in the market that smaller firms can effectively take
advantage of? 

4. What is the difference between an idea and

an opportunity? 
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 LOOKING BACK

5. What are the common generators of business

ideas and opportunities in southern Africa? 

6. What criteria are used to screen opportunities? 

7. What actions are required of the entrepreneur when

‘seeing’ the window of opportunity? 

8. What actions are required of the entrepreneur when

‘locating’ the window of opportunity? 

9. What actions are required of the entrepreneur when

‘measuring’ the window of opportunity? 

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 KEY TERMS

 Ambiguity
 Closing the window
 Entrepreneur
 Fatal flaw issues
 Idea
 Idea generation
 Locating the window
 Market
 Market capacity
 Market conditions
 Market share
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 KEY TERMS

 Market size
 Measuring the window
 Opening the window
 Opportunity
 Opportunity evaluation
 Seeing the window
 Stakeholders
 Sustainable competitive advantage
 Uncertainty
 Value addition
 Venture
 Window of opportunity
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 LOOKING BACK - ANSWERS

1. What is the window of opportunity?

– The window of opportunity is the time period available for
creating new ventures.

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2. When pursuing opportunities, what factors make
it easy for smaller entrepreneurs to effectively take
advantage of opportunities overlooked by larger
companies?
– Larger organisations’
• organisational inertia
• organisational complacence
• bureaucracy.

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3. For what reasons do larger organisations leave gaps
in the market that smaller firms can effectively take
advantage of?
– Failure to take advantage of new opportunities
– Underestimation of opportunities
– Technological inertia
– Cultural inertia
– Politics and internal fighting
– Government intervention to support SMMEs

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4. What is the difference between an idea and
an opportunity?
– An idea does not necessarily automatically translate into
an opportunity.
– An opportunity is an idea that is attractive, durable and
timely and anchored in a product or service that
creates
or adds value for the end-user.

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5. What are the common generators of business
ideas
and opportunities in southern Africa?
– Skills, expertise and aptitude
– Common needs
– Existing problems
– Everyday problems
– Other sources

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6. What criteria are used to screen
opportunities?
– Industry and market issues
– Economics
– Harvest issues
– Management team
– Fatal flaw issues
– Personal criteria
– Strategic differentiation

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7. What actions are required of the entrepreneur when
‘seeing’ the window of opportunity?
– Actively searching the market for gaps that have been
left open by competitors
– Identifying ways that customer needs can be
served while providing and making use of a
sustainable
competitive advantage
– Creativity and innovation

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8. What actions are required of the entrepreneur when
‘locating’ the window of opportunity?
– Understanding the location of the window of opportunity
– Positioning the product or service favourably in relation to
competitors’ products and services

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9. What actions are required of the entrepreneur when
‘measuring’ the window of opportunity?
– Ensuring that the opportunity is feasible and viable by
carrying out feasibility and viability studies

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