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Untitled Prezi

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Saleha Yousuf

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Agenda
Key words
Successful entrepreneurs
Idea or opportunity?
Opportunity recognition and evaluation
Levels of Opportunity Recognition and Opportunity Recognition process
Important factors in Opportunity Recognition
Sources and factors that create opportunities in the external world and the human thought.
Comparing opportunities in large and small businesses.
Examples
Life cycle of opportunities
The Creation Perspective
Radical Innovation
Theoretical Perspectives: Evaluation opportunities
Important considerations when starting a new business
Is your idea attractive enough?
What is a good opportunity to start a new business?
Start-up typologies
Summary

Idea or Opportunity?
Criteria to evaluate whether an idea is an opportunity:

Anchored
: Creating value
Attractive
: Willingness to pay
Appropriate
: With regard to time and space
Achievable
: Can it be done?

From Opportunity Recognition to Opportunity Evaluation
Levels of Opportunity Recognition
Key words
Idea Generation
: The production of ideas for something new; similar in meaning to creativity.
Opportunity Recognition/Creation
: the process through which individuals conclude that they have identified the potential to create something new that has the capacity to generate economic value (i.e. potential future profits)
Entrepreneurial Alertness
: A theory suggesting that entrepreneurs, and especially successful ones, possess a schema (mental framework) that assist them in being alert to and therefore able to recognize opportunities..
Opportunity Evaluation
: Matching of a market opportunity to a firm's policies, resources, and strategies.
Entrepreneurial Opportunity
:

Is a situation in which a person exploit (develop) a new business idea that has the potential to generate a profit. (Baron and Shane, 2008: 39).
Opportunity Development
: Process which involves proactive efforts that give rise to an entire business.
What makes an individual a successful entrepreneur?
Successful Intelligence
- A basic requirement for entrepreneurs

Robert Sternberg
, suggested that in order to succeed, entrepreneurs need a high level of successful intelligence- a good blend of practical, analytical, creative intelligence.

Relationship between Creativity, Invention, Opportunity and Entrepreneurship
Important factors in Opportunity Recognition
Opportunity Recognition: The central role of Information
Sources of Opportunities/PEST
Changes in the ‘external world/human thought’ that generate opportunities (Baron and Shane, 2008):

Knowledge base
, i.e. consultancy companies
Technology
, i.e. Internet (Amazon)
Political and regulatory policies
, i.e. EU’s ‘open sky’ legislation (low budget airlines) Government policy: e.g. low tax rate and low trade barriers.
Social and demographic trends
, i.e. Ageing, Lifestyle changes.
Business facilities
: complete licensing policy and law can motive people start their own business
Experience
: prior experience (managerial experience) can drive them to set up their own business.
Educational level
: high educational level can encourage people start up their business.
Marriage and children
: provide better living for their family and children can inherit the business
Recognition
: great achievements in their field may encourage them to set up a business (Bill Gates and Steve Jobs)
Ethnicity
: some ethnic groups can get more welfare from Government (greater resources and more subsidy)

The source of opportunity is EXTERNAL
The perception of opportunity is INTERNAL
Opportunities in Small and Large firms
Examples of different forms of entrepreneurial opportunity
Life-cycle of Opportunities
Beginning
: New external changes might occur that close up existing opportunities and open up new ones.

Entrepreneurship
: Entrepreneurs will make opportunities to to be realistic and profitable.

Improvement
: Training, patents and co-operation.

Closure
: sold on for monetary gain; insolvency; technical closure.

The Creation Perspective
Main Ideas:


Human action is pivotal

Basing on existing information on markets, prices, consumer preferences

Innovative thinking to creative activity

Created through the entrepreneurs’ interactions with others, their contexts and themselves.

Opportunities are dynamic

Radical Innovation
New technologies
New inventions
New business models (Eg. Apple)
New markets
Sea changes in market sentiment or behaviour (e.g. CSR)
Changes in laws or regulations (e.g. H&S)
Unthinkable events

THEORETICAL PERSPECTIVES:Evaluating Opportunities
1.
Aim
: to determine whether the idea has market potential

2. Evaluation is
forward-looking, visualizing the future

3. It is both a
cognitive /intellectual
and
emotional process
Essentially subjective judgement
Seeking other people’s perspectives & advice
Varying degrees of analysis

4.
Context
: Uncertainty, complexity & risk

5. Evaluation methods often
situational
(type of product or industry)
Important considerations before starting a new business
Feasibility Analysis /Studies
Is the idea viable?
Is the idea profitable?

Market Information
What your customers want?
What is the competition?
How fierce is rivalry?
Is the market growing?

Government Polices and Regulations
How they affect new ventures?

Interpreting Information
What is the final decision? Yes /No?
Is your idea attractive enough?
Identified market need/gap
Identified customers and marketing strategies
No or few existing competitors
Not easily copied
Growing market
High margins
Low fixed costs
Low funding requirements
Financeable
Identifiable risks that can be monitored and mitigated
Management skills that can be leveraged
Scalability
What is a good opportunity to start a new business?
New companies are better at exploiting competence-destroying change

They are also better when they develop products and services that are discrete, e.g. new drugs

Also when their ideas are embedded in human capital rather than physical capital
START-UP TYPOLOGIES
Summary
An opportunity is an idea that has the qualities of being attractive, anchored, appropriate and achievable. Not all ideas are opportunities

Observing trends, solving a problem and finding gaps in the market place are the three general approaches entrepreneurs use to identify an opportunity.

Entrepreneurs can use a wide range of tools to evaluate their business ideas. Note the situational aspects that might lead to the use of analytic versus legitimate evaluation.

Sometimes market gap or opportunity even after being identified is not put into action due to financial constraints, intense competition, legal barriers to entry and lack of recognition.
References
Bannatyne, D. (2008) Wake up and change your life, London: Orion Publishing Group.

Barringer, B.R. and Ireland, R.D. (2012)’Entrepreneurship: Successfully Launching New Ventures’. Fourth Edition, Pearson Education

Baron and Shane (2008) Entrepreneurship-A process perspective, Mason: South-Western Cengage Learning. Chapter 2, 3 and 4.
Blundel, R. and Lockett, N. (2011) Exploring entrepreneurship – Practices and perspectives, Oxford: Oxford University Press, Chapter 6.

Burns, P. (2014) New Venture Creation: A Framework for Entrepreneurial Ventures, Basingstoke: Palgrave Macmillan, Chapter 3 and 4.
Eckhardt J. and Shane S. (2003) Opportunities and entrepreneurship, Journal of Management, 29 (3), 333-349.

Nielsen, S. L., Klyver, K., Rostgaard, E. and Bager, T. (2012) Entrepreneurship in theory and practice: Paradoxes in play’, Cheltenham: Edward Elgar, Chapter 4 and 5.
Baron, R. and Shane, S. (2005). Entrepreneurship. Mason, Ohio: Thomson/South-Western.
Opportunity Recognition Process
(Baron and Shane, 2005)
(Nielsen et al., 2012:14)
Thank you for listening! Any Q/A?
(Baron and Shane, 2005)

Do opportunities exist ‘out there’ in the external world or are they purely a construction of human thought?

Ryan, Saleha, Sabrina, Vanessa
Group 6
Full transcript