Chapter 4 - Evaluation of opportunities

Question 1

Describe the word evaluation in terms of an opportunity

Answer 1

the process where the entrepreneur seeks to assess whether the idea represents an opportunity or not

Question 2

Describe the elements of instrumental evaluation

Answer 2

• Emphasises how opportunity evaluation is a means to achieve a particular results or goal
• Different techniques and tools are needed to assess if it is possible to achieve the goal
• The goal is often to create a profitable organisation
• Should resources be invested in a business idea?
• Evaluation based on five areas:
  Product/service: Are people interested in it?
  Market/industry: Is there an opportunity?
  Organisation: How will the entrepreneur organize business to attract customers?
  Financing: What financing resources are needed?
  People: individual or teams

Question 3

Describe the Legitimacy Evaluation

Answer 3

• Emphasises that the creation of legitimacy is essential for the evaluation of options.
• The entrepreneur’s success depends on whether he or she can get others to accept the opportunity as being valuable and attractive
• When a new idea occurs, the legitimacy is usually low because it is unknown
• The challenge is to find market players to support the idea with resources
• The legitimisation process is a social process

Question 4

When is it suitable to use the instrumental VS the legitimate evaluation process? Discuss

Question 5

In which situations shall you adopt the instrumental evaluation?

Question 6

In which situations shall you adopt the legitimating evaluation?