2. Opportunity Identification Flashcards
a) What is meant by opportunity recognition?
(2009)
(4 marks)
a) Opportunity Recognition
- Is seeing a problem/need/percieved need as an opportunity to create a solution
- Opportunities need to be assessed to determine if they are viable business ventures
‘Good opportunities are usually disguised so not many people recognise them’
Dorf and Byers
a) How important do you think demographic changes are in helping
to identify a new business opportunity?
Please give examples. [6 Marks]
2010
Demographic changes can help enormously to identify a new business opportunity
- Demographic trends are powerful because they often influence cultural and other social trends.
- Demographics are measurable aspects of the population. An example of a demographic change is the ageing population.
- As this trend develops, new opportunities open up.
- For example, the market for care homes is booming.
- Another example of how the changing demographic changes peoples attitudes/ culture is that as people live to an older age, there is a percieved ‘need’ to stay looking young.
- Hence forth, the market for anti-ageing cream is very strong at this time
Another example of a changing demographic leading to opportunities is the increase in the middle classes.
- For example, premium goods such as the market for coffee on the go, wine, gifts and food products are growing
Give two examples of opportunity assessment models
DIFA
Demand, innovation, feasibility, attractiveness
SWOT
Strengths, weaknesses, opportunities, threats
What is meant by opportunity and how does it relate to entrepreneurship?
Opportunity = a timely and favourable juncture of circumstances providing a good chance of a successful venture
Entrepreneurship = the identification and exploitation of previously unexploited opportunities”
Entrepreneurship links the opportunity to the idea to the reality
Give four categories of opportunity and an example of each
New applications of existing means of technology
- e.g. credit card strips used for keys in hotel rooms
- microchip used for credit cards
Creating mass markets
- e.g. disposable camera
Customization for individuals
- e.g. dell - built to order laptops and pcs
- e.g. starbucks and coffee
Process Innovation
- e.g. moveing assembly line - HF
Increasing reach
- e.g. Wal-mart opening up chains in the UK under the name Asda
Give an example of how converging technologies have lead to opportunities
Hand-held computers and phones -> iPhone, Blackberry
Computers, scanning, tills -> self service tills in supermarkets
What does DIFA stand for and how might it be used?
Demand - market, customers and competitors
Innovation - concept
Feasability - finance, risks
Attractiveness - overall attractiveness + success** **
Opportunity Assessment model may be used to assess the viability of an opportunity
For an opportunity to be viable, it must have demand, be innovative, be feasible and attractive to investors/customers
Give three approaches that can be taken to identify an opportunity
Observing Trends
- STEP
- e.g. ageing population, healthy eating
Solving a problem
- e.g. Peter Norton Computing later to be Norton anti-virus
Finding a gap in the market
- Previously unexploited niche
b) Name Peter Drucker’s 7 sources of innovation and give an example
[7 Marks]
Unexpected event
e.g. post-it notes - low-tac glue developed
Incongruity
gap between what is and what should be
e.g. environmenally friendly solutions - car clubs
Process needs
A problem with a process that already exists, ‘the missing link’
e.g. Rightmove.com - new way to buy/sell houses
Market changes
Changes in demand, e.g. due to new technologies
Convergence - pc+ phone = iPhone
Demographic changes
Shifts that open up huge opportunites to expolit, predictable
e.g. ageing population
Changes in perception
e. g. culture of obsession with appearance
- > cosmetics, clothes, mags
New knowledge
e.g. biotechnology, GM foods
(first 4 are internal to industry)
What is the difference between an opportunity and an idea?
- An opportunity is attractive (to customers, investors
- An opportunity is timely ( has a place in the market at that time
- An opportunity is durable (will last)
- An opportunity is anchored in a product/service that creates or adds value for its end user
b) Explain how finding a gap in the marketplace can
create a business opportunity.
(4 marks)
- Finding a gap in the marketplace is an approcah that some entrepreneurs take to create a business opportunity
- Gaps in the market occur when there segment of the population that are not catered for in the mainstream market
- This segment is extremely lucrative because it doesn’t represent a large enough section of the market to be of interest to large scale retailers
- One example would be bespoke furniture retailers, most people can’t afford it but some can.
- Another example - shoes for plus size feet
Give three approaches of identifying an opportunity
- Observing trends
* STEP - Solving a problem
- Finding a gap in the market
* A segment that is not of interest to mainstream producers
Peter Drucker’s 7 sources of innovation
Process needs
Market changes
Incongruity
Unexpected event
Changing demographics
Changes in perception
New knowledge
Richard Branson Quote
“Business opportunities are like buses, there’s always another one coming.”
- Richard Branson, founder of Virgin Enterprises
