Chapter 2: Regconizing Oportunities and Generating Ideas Flashcards
CH02 What is the difference between a business opportunity and a idea?
A BUSINESS OPPORTUNITY is a favorable set of circumstances that creates a NEED for a new product, service, or business.
AN IDEA is a thought, impression, or notion.
An idea may or may not meet the criteria of an opportunity. This is a critical point because many businesses fail not because the entrepreneurs that started them didn’t work hard, but because there was NO REAL opportunity to begin with.
CH02 What are four essential qualities of an business opportunity?
- ATTRACTIVE
- DURABLE
- TIMELY
- Anchored in a product, service, or business that CREATES VALUE for its buyer or end user
CH02 What is two types of entrenepreurial process?
- EXTERNAL STIMULATED Opportunity Recognition:
DECISION to start -> Opoprtunity recognized -> Opportunity chosen -> Opportunity refinement -> Business concept identified -> Commitment to physical creation - INTERNAL STIMULATED Opportunity Recognition:
NEED recognized -> Need fulfilled ->Business opportunity recognized -> Opportunity refinement -> Business concept identified -> Commitment to physical creation
CH02 For an entrepreneur to capitalize on an opportunity, its window of opportunity must be open. What does the term “window of opportunity” mean?
A metaphor describing the time period in which a firm can REALISTICALLY enter a new market.
Market for new product established -> window opens
Market grow -> firms enter, establish profitable position
Market matures -> window closes
CH02 What is a product opportunity gap?
The gap between what is CURRENTLY on the market and the possibility for a NEW or SIGNIFICANT IMPROVED product/service that results from emerging trends.
CH02 What are three general approaches entrepreneurs use to identify opportunities?
- Observing trends (economic forces, social forces, technological advances, political and regulatory changes)
- Solving a problem
- Finding gaps in the marketplace
CH02 What is meant by the term OPPORTUNITY REGCOGNITION?
the process of perceiving the POSSIBILITY of a profitable new business or a new product or service
CH02 What are the personal characteristics of entrepreneurs that contribute to their ability to recognize business opportunities?
- Prior Experience
- Cognitive Factors (sixth sense/ENTREPRENEURIAL ALERTNESS)
- Social Networks
- Creativity
CH02 In what way does prior industry experience provide an entrepreneur an advantage in recognizing business opportunities?
- SPOT A MARKET NICHE that is underserved
2. Builds a NETWORK of social contacts in that industry that may provide insights that lead to opportunities.
#CH02 What is "entrepreneurial alertness"? Why is it important to entrepreneurs?
- = SIXTH SENSE: the ability to notice things without engaging deliberate search.
- Because individuals with higher level of entrepreneurial alertness will presumely identify more business opportunites.
Alertness is a learned skill, and people who have more knowledge of an area tend to be more alert to opportunities.
CH02 What are “solo entrepreneurs”, “network entrepreneurs”, “weak-tie relationships”, and “strong-tie relationships”?
- SOLO Entrepreneurs: those who identified their business ideas ON THEIR OWN
- NETWORK Entrepreneurs: those who identified their business ideas through SOCIAL CONTACTS
- Weak-tie relationships: infrequent interaction, ties between CASUAL ACQUAINTANCES
- Strong-tie relationships: frequent interaction, ties between coworkers, friends, and spouse.
CP02 Which type of tie is most likely to help an entrepreneur find an idea? Why?
- Ideas are most likely to get from WEAK-TIE relationships.
- Because, strong-tie relationships, which typically form between LIKE-MINDED individuals, tend to reinforce insights and ideas the individuals already have, while weak-tie relationships are not between like-minded people, so one person may say s.th to another that sparks a completely new idea.
CH02 What is creativity? How does creativity contribute to opportunity recognition process?
- Creativity is the process of GENERATING a novel or useful idea.
- Opportunity recognition maybe, at least in part, a creativity process. On a anecdotal basis, it is easy to see the creativity involved in forming many products, services, and businesses.
CH02 What are the five stages of the creative process for an individual?
- PREPARATION: the background, experience, and knowledge that an entrepreneur brings to the opportunity recognition process.
- INCUBATION: the stage during which a person considers an idea or thinks about a problem; it is the “mulling things over” (to think CAREFULLY about s.th for a LONG TIME) phase. It’s either CONSIOUS or UNCONSIOUS.
- INSIGHT: the flash of recognition when the solution to a problem is seen or an idea is born. (EUREKA experience). It sometimes can PUSH the process forward or RETURN to the preparation stage (because the flashed idea/solution isn’t in his/her prior experience)
- EVALUATION: the stage during which an idea is subjected scrutiny or analysed for its viability = EVALUATE THE FEASIBILITY.
- ELABORATION: the stage during which the creative idea is put into a final form. This is the point at which a BUSINESS PLAN IS WRITTEN.
CH02 Describe the process of opportunity recognition
ENVIRONMENTAL TRENDS (economic factors, social factors, technological advances, political and regulation changes) + PERSONAL CHARACTERISTICS of an Entrepreneur (Prior experience, Cognitive factors, Social networks, creativity) –> BUSINESS/PRODUCT/SERVICE OPPORTUNITY GAP (Difference between what’s available and what’s possible) –> NEW BUSINESS/PRODUCT/SERVICE IDEAS
