chapter 2 Flashcards
opportunity
a favourable set of circumstances that creates a need for a new product, service, or business.
externally stimulated
when an entrepreneur decides to launch a firm, searches for and recognises an opportunity, and then starts a business.
internally stimulated
when an entrepreneur recognises a problem or an opportunity gap and creates a business to address the problem or fill the identified gap. the key to opportunity recognition is to identify a product or service that people are willing to buy, not one that an entrepreneur wants to make and sell.
window of opportunity
a metaphor describing the time period in which a firm can realistically enter a new market. when the market matures, the window of opportunity closes. the window of opportunity must be open for an entrepreneur to capitalise on an opportunity.
idea
a thought, an impression, or a notion. an idea may or may not meet the criteria of an opportunity.
observe trends approach
observe trends and study how they create opportunities for entrepreneurs to pursue. the most important trends to follow are economic trends, social trends, technological advances, and political action and regulatory changes. it is important to remain aware of changes in these areas. when looking at environmental trends, there are two caveats to keep in mind; (1) distinguish between trends and fads, and (2) trends are interconnected and should be considered simultaneously when brainstorming new business ideas.
economic forces
several economic forces help determine areas that are ripe for new business ideas, as well as areas to avoid. these forces include topics such as the rise/fall of consumer spending and strong/weak international rates. if personal income is rising, consumers have more money to spend and are more willing to buy discretionary product and services that enhance their lives. another force is who has money to spend and what they spend it on.
social trends
the reason that a product or service exists often has more to do with satisfying a social need than the more transparent need the product fills. changes in social trends alter how people and businesses behave and how they set their priorities. e.g. proliferation of fast good is because people are busy rather than people’s love of fast food. other examples are; aging population, increasing diversity, millenials entering workforce, growth in use of mobile devices, increasing focus on health and wellness, emphasis on clean forms of energy, continual migration from small towns to cities, and desire for personalisation.
technological advances
provide opportunities to help people perform everyday tasks in better or more convenient ways. also, once a technology is created, products often emerge to advance it. eg. iphone, ipad, etc.
political and regulatory changes
on some occasions, entire industries hinge on whether certain government regulations evolve in a manner that is favourable to the industry. political change also endangers new business and product opportunities, and engenders new business and product opportunities. eg. global political instability and the threat of terrorism have resulted in many firms becoming more security conscious.
business, product, or service opportunity gap
difference between what is available and what is possible.
solving a problem approach
recognise problems and find ways to solve them. they can be recognised by obersving the challenges that people encounter in their daily lives and through more simple means, eg. intuition, serendipity, or chance. for example, problems people experience themselves, or problems that are obvious but have not been addressed.
social ventures
a new type of entrepreneurial venture, launched for the purpose of solving a range of problems including poverty, hunger, and a lack of access to services such as water and electricity.
gaps in the marketplace approach
often products consumers need or want are not available in a particular location or are not available at all. part of the problem is created by large retailers which compete primarily on price and offer the most popular items targeted toward mainstream oncumsers. this allows them to achieve economies of scale, but leaves gaps. thus, boutiques, specialty shops, and e-commerce websites exist. gaps are often recognised when people become frustrated they cannot find a product or service and recognise that others feel the same way.
opportunity recognition
the process of perceiving the possibility of a profitable new business or a new product or service. that is, an opportunity cannot be pursued until it is recognised.
prior industry experience
studies show that prior experience in an industry helps entrrepreneurs recognise business opportunities. by working in an industry, an individual may spot a market niche that is underserved or builds a new network of social contacts that may provide insights that lead to opportunities. there is also anecdotal evidence that suggests that people outside an industry can sometimes enter it with a new set of eyes.
cognitive factors
opportunity recognition may be an innate skill or cognitive process. this is related to entrepreneurial alertness.
entrepreneurial alertness
the ability to notice things without engaging in deliberate search. alertness is largely a learned skill, and people who have more knowledge of an area tend to be more alert to opportunities in that area than others. some think entrepreneurs have a “sixth sense” that allows them to see opportunities that others miss.
social networks
the extent and depth of one’s social network affects opportunity recognition. people with substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks.
solo entrepreneurs
those who identified their business ideas on their own.
network entrepreneurs
those who identified their ideas through social contacts. they identify significantly more opportunities than solo entrepreneurs, but are less likely to describe themselves as being particularly alert or creative.
“ties”
relationships with other people.
strong-tie relationships
characterised by frequent interaction, such as ties between co-workers, friends, and spouses.
weak-tie relationships
characterised by infrequent interaction, such as ties between casual acquaintances. entrepreneurs are more likely to get a new business idea through weak-tie relationships, since they are not as apt to be between like-minded individuals as in strong-tie relationships. thus, someone may say something to another that sparks a completely new idea.
