RECOGNIZING,

ASSESSING AND
EXPLOITING
OPPORTUNITIES
Chapter 3
In this chapter we will discuss the various stages
in recognizing and assessing opportunities and
how these opportunities are translated into
entrepreneurial ventures.

For these opportunities to be realized as business

ventures, the individuals needs to commit
resources and should have to capacity to absorb
the uncertainties of any business undertaking.
 OPPORTUNITY RECOGNITION
PROCESS
The concept of opportunity.
According to Cambridge Dictionary, an
opportunity is “a situation or occasion
that makes it possible to do something
that you want to do.”
There are three elements in this simple definition.

1st, you want to do something. You want to establish

your own business enterprise.
2nd, there are conditions for the realization of the
objective.
3rd, you must make decisions or take action on these
conditions to realize your objective.
An opportunity can only considered as a
possibility of realizing your objective since there
are elements of uncertainties in its realization.
Thus, the entrepreneur must take action to
achieve his objectives. This decision will
require resources including time from the
individual and his acceptance of risks because
of uncertainties.
Opportunity recognition often entails
phases that potential entrepreneurs
take before introducing a product or
service to the market.
The five stages of opportunity
recognition, according to Hills,
Shrader, & Lumpkin are summarized
as follows:
Precondition: The preparatory stage, during
which the individual assesses his knowledge of
the market.
Conception: The gestation phase, during which
entrepreneurial intentions and ideas are
generated, using logic, creative thinking, or both.
Visioning: Provides the individual a hunch that
can serve as an opportunity for business.
Assessment: Involves the evaluation on whether
the idea can be realized or not. The paramount
question to the individual is whether the idea
can be realized or not.
Realization: Suggests the production of a
prototype. This is the stage when the mental
construct or idea is now felt in its tangible or
physical form.
 FACTORS IN
OPPORTUNITY
RECOGNITION
A. Market Awareness (prior
knowledge of the market)
- refers to personal exposure to market
and its components including customers
and suppliers. Information on the
market, in turn, can be acquired from
formal training.
B. Entrepreurial Readiness
(entrepreneurial alertness), on the other
hand, refers to a variety of features of an
individual to start a business venture. It
covers all types of resources that the
individual possesses including financial,
physical and human resources.
C. Connections (networks). Business
opportunity recognition is heightened
when the individual has a diversity of
networks. Families and friends as well
as business associates can bring about
opportunities that we can pursue.
OPPORTUNITY ASSESSMENT

- refers to the process of evaluating

the likelihood that the opportunity
can be realized.
 Product or Service – A business opportunity is
primarily the potential of introducing a new product
or service to the market. This new product or service
can be a result of various creative ways of
differentiating an existing product or service.
 Market opportunity – this element in the
assessment process refers to the appraisal of the
characteristics of the market. Included in the
assessment process is the competitive environment in
the market.
 Costing and Pricing – a product which may be
considered valuable by consumers may not be
affordable. Thus, the cost of production as well as the
unit price of the commodity is very important in the
assessment phase.
 Profitability – part of the assessment process is the
extent of profitability of a product or service. The
primary motivation of venturing into business is to earn
profit. Thus, a nonprofitable business enterprise,
however creative the business idea is, is not worth
pursuing.
 Resource Requirements – in any business venture you
will need inputs in the production process. There are two
types of inputs used in production, intermediate inputs
and factor inputs.
 Intermediate inputs, are also called raw materials that
need further processing. Aside from cost, the concerns
on raw materials are on their availability, accessibility,
and reliability.
 Factor inputs, on the other hand, are called processing
inputs which include labor, capital, and technology.
 Risks – any business enterprise will face risks in the
course of its operations. Risks are uncertain situations
that can increase the probability of loss or failure of a
business venture.
 Entrepreneurial Commitment – the last element in the
process of entrepreneurial assessment relates to the
commitment of the individual to pursue the realization
of its business idea.
 OPPORTUNITY PATHWAYS
Once the opportunity has been identified, the
individual can subject it to an assessment as
described above, proceed with its implementation,
or put the business idea on hold. If the decision is
to proceed, the individual has two options to follow
or pathways in transforming the opportunity into a
business venture. These two opportunity pathways
are called the rational approach and the intuitive
approach.
 Rational Approach – is also called the traditional
approach. It uses systematic procedures in
proceeding with the implementation of a business
opportunity. (“Ano ang pwede?” “Ano ang
pinakamainam?”, “Masubukan nga.”) the
traditional pathway employs a routine in the
entrepreneurial process. It starts with the
generation of entrepreneurial intent, visualization
of an idea, recognition of an opportunity, and
finally seizing the opportunity.
 Intuitive Approach – the alternative pathway, it
starts with the recognition of an opportunity and
proceeds directly to the grabbing of the
opportunity after sensing that it can be done.
Rather than using a systematic process, this
alternative approach relies primarily on the
intuition of the individual, which is informed by
his prior knowledge and previous work and life
experience.
 PRODUCT PLANNING AND
DEVELOPMENT PROCESS

This section summarizes the development process of a

product from its inception, introduction in the market,
and final decline. It takes two main phases, pre-
commercialization phase and the commercialization
phase.
Ideal stage – refers to the formation of business ideas.
Concept stage – refinement of ideas and visualization
of an idea that can serve as business opportunity is
called the concept stage.
Product stage – after visualization of the idea the
business idea is concretized with the production of a
prototype.
Test marketing stage – at this phase the product or
service is introduced in the market after a series of
evaluation and feedback from potential customers.
Once the pre-commercialization phase has ended, the
commercialization phase follows. This phase is also
referred to as the product life cycle.
Any product has life and similar to any living organism
it has its birth and its consequent death. Thus, a product
is introduced in the market as an innovative product and
exits the market with the emergence of other newer
innovative products.
The various stages of the product life cycle are
summarized as follows:

Introduction: At this stage, the entrepreneur has to

devote resources and time for the marketing of the
product.
Growth: This market recognition is translated into
a decision to purchase the product.
Maturity: At this stage the product is widely
accepted with the emergence of brand loyalty and
patronage from its target market.

Decline: The decline becomes real when competitive

products with newer innovations and create
differentiations are introduced and get accepted by
the market
THANK YOU !!!
QUESTION
1. Individuals with high IQs would better
entrepreneurs than those with lower IQs.
Do you agree or disagree with this
statement? Explain your answer.
2. Given that priority knowledge is an
important factor in opportunity recognition
does this mean that younger people are less
likely to recognize business opportunities
compared to older people?