BUSINESS OPPORTUNITY

IDENTIFICATION
TOPICS TO BE COVERED TODAY

▪ Business Opportunity
▪ Opportunity Recognition process and
approaches
▪ Strategic Management Process
▪ SWOT analysis
BUSINESS OPPORTUNITY
OPPORTUNITY DEFINED

▪ An opportunity is a favorable set of conditions

that creates a need for a new product, service
or business.

▪ Entrepreneurs are opportunity-driven

▪ Opportunity comes from changes in the

environment, and one central characteristic
of entrepreneurs is that they excel at seeing
patterns of change
ESSENTIAL CHARACTERISTICS OF AN
OPPORTUNITY
Opportunity Recognition

Observing Trends

Solving a Problem

Finding gap in the marketplace

Approach 1- Observing Trends

▪ Trends create opportunities for entrepreneurs

to pursue.
▪ Trends include:
• Economic forces • Social forces
•Technological advances • Political and
regulatory changes
▪ As a business, it’s important to be aware of
changes in these areas.
Approach 2 – Solving a
Problem
▪ Sometimes identifying opportunities simply
involves noticing a problem and finding a way
to solve it.

▪ These problems can be pinpointed through

observing trends and through intuition or
research.
Approach 3 – Finding gaps in
the Market

▪ A third approach to identifying opportunities

is to find a gap in the marketplace

▪ A gap in the marketplace is often created

when a product or service is needed by a
specific group of people but doesn’t represent
a large enough market to be of interest to
normal retailers or manufacturers.
Factors That Facilitate Opportunity
Recognition: Prior Industry Experience

▪ Several studies have shown that prior

experience in an industry helps an
entrepreneur recognize business
opportunities
▪ By working in an industry, an individual may
spot a market niche that is underserved.
▪ It is also possible that by working in an
industry, an individual builds a network of
social contacts who provide insights that lead
to recognizing new opportunities
Cognitive Factors

▪ Studies have shown that opportunity

recognition may be an innate skill or
cognitive process.
▪ Some people believe that entrepreneurs have
a “sixth sense” that allows them to see
opportunities that others miss.
▪ This “sixth sense” is called entrepreneurial
alertness, which is formally defined as the
ability to notice things without engaging in
deliberate search
Social Networks

▪ The extent and depth of an individual’s social

network affects opportunity recognition.
▪ People who build a substantial network of
social and professional contacts will be
exposed to more opportunities and ideas
than people with sparse networks.
▪ In one survey of 65 start-ups, half the
founders reported that they got their
business idea through social contacts.
Creativity

▪ Creativity is the process of generating a novel

or useful idea.
▪ Opportunity recognition may be, at least in
part, a creative process.
Business Opportunity
Recognition Process
What is Strategy?

▪ A strategy is a road map of the actions an

entrepreneur/ business draws up to fulfill the
mission, goals, and objectives of the
business.

▪ The mission, goals, objectives spell out the

ends and strategy defines the means for
reaching them.
▪ “Executives, consultants and B-school
professors all agree that strategic planning is
the single most important management issue
and will remain so in future.”

▪ “ Without a strategy an organization is like a

ship without a rudder, going around in circles.
Organization Strategies

▪ BARNES & NOBLE

▪ Barnes & Noble, a large bookseller hesitated
with an online strategy, while upstart
Amazon.com captured huge market share in
online bookselling.
▪ Despite huge capital expenditures and massive
advertising, Barnes & Noble remained barely
more than 1/10th Amazon’s size online.
▪ The lesson for other businesses may be that the
Internet does not tolerate caution and
hesitation.
Organization Strategies

▪ STARBUCKS
Headquartered in Seattle, Starbucks, the
gourmet coffee company, diversified into non
coffee areas such as ice cream, candy, tea,
specialty food, and even kitchen and home
products.
COMPETITIVE ADVANTAGE

▪ Strategically, the key to business success is to

develop a unique competitive advantage, one
that creates values for customers and is
difficult for competitors to duplicate.
Competitive Advantage

▪ CA can be achieved on the basis of any one or

more of the following:
 Market Share
 Product Quality
 Pricing
 Way it is offered
 Services provided
 Location
 Customer Loyalty
 Technological know-how
 Control over suppliers and distributors etc.
Competitive Advantage of
Apple Inc.
▪ Apple’s Unique Differentiation
▪ For Apple, there exists a strong unique differentiation. The
technology industry is full of undifferentiated products. For
example, iOS developed by Apple is a different and unique
operating system.

▪ Apple’s Image of Innovation

▪ Also, Apple has gained a positive image of innovation.
Apple consecutively introduced different types of tech
products including Apple I, Apple II, iMac, iPod, iPhone,
iTunes, and iPad. Also, it has been able to take the first
mover’s advantage in the tech industry.
▪ Premium Pricing Strategy of Apple Inc
Premium pricing is one of the superiority of
Apple. But with that, Apple was able to build
a brand image of exclusivity.
▪ People’s Trust on Apple
Strategic Management

▪ It can be defined as the art and science of

formulating, implementing, and evaluating
cross-functional decisions that enable an
organization to achieve its objectives.
▪ Strategy formulation includes developing a
 vision and mission,
 identifying an organization’s external opportunities
and threats,
 determining internal strengths and weaknesses,
 establishing long-term objectives,
 generating alternative strategies and choosing
particular strategies to pursue.
Strategic Management Process
Vision & Mission Statement

▪ VISION STATEMENT answers the question,

 What do we want to become?

▪ MISSION STATEMENT answers the

question,
 What is our business?
What is SWOT analysis?

▪ SWOT(Strengths, Weaknesses,
Opportunities & Threat)
▪ It is a strategic planning method
used to evaluate the Strengths,
Weaknesses, Opportunities, and
Threats involved in a project or
in a business venture.
▪ It involves specifying the
objective of the business venture
or project and identifying the
internal and external factors that
are favorable and unfavorable to
achieve that objective.
SWOT (contd.)

▪ Strengths: characteristics of the business, or

project team that give it an advantage over
others.
▪ Weaknesses: (or Limitations): are
characteristics that place the team at a
disadvantage relative to others.
▪ Opportunities: external chances to improve
performance (e.g. make greater profits) in the
environment.
▪ Threats: external elements in the environment
that could cause trouble for the business or
project .
INTERNAL FACTORS OF SWOT

▪ P – PEOPLE
▪ R – RESOURCES
▪ I – INNOVATION
▪ M – MARKETING
▪ O – OPERATIONS
▪ F - FINANCE
EXTERNAL FACTOR OF SWOT

▪ P – POLITICAL
▪ E – ECONOMIC
▪ S – SOCIAL
▪ T – TECHNOLOGICAL
▪ L – LEGAL
▪ E - ENVIRONMENTAL
SWOT Analysis Strategies
▪ Leverage (S + O). Leverage effects arise when internal and
external opportunities are consistent and adaptive to one
another
 In this situation, companies can use their internal strengths to pick up
external opportunities and fully integrate opportunities and strengths.
However, opportunities are often fleeting, so companies must sharply
capture opportunities and seize the opportunity to seek greater development.

▪ Inhibitory (W + O). Inhibiting means impeding, preventing,

influencing and controlling
 When the opportunities provided by the environment are not suited to the
internal resource advantages of the company, or cannot be overlapped with
each other, the strengths of the enterprise will no longer be realized. In this
situation, companies need to provide and add certain resources to promote
the transformation of internal resources and weaknesses into strengths to
cater to or adapt to external opportunities.
SWOT Analysis Strategies

▪ Vulnerability (S + T). Vulnerability means the decrease or

decrease in the degree or intensity of strengths

 When environmental conditions pose a threat to the company’s strengths,

the strengths cannot be fully exerted and ending up with a fragile situation. In
this situation, companies must overcome the threats to take advantage of
them.

▪ Problematic (W + T). Problematic attributes to a company’s

weak internal state that are supplemented by external threats
 When the company’s internal weaknesses and corporate external threats
meet, companies face severe challenges. If they are not properly handled,
they may directly threaten the survival of the company
SWOT APPLE INC.

STRENGTHS WEAKNESSES
▪ One of the world’s ▪ Limited distribution
strongest brands network for its goods
▪ High profit margins based ▪ High selling prices
on premium pricing ▪ Dependence of sales in
▪ Effective rapid innovation high-end market segments
processes based on long
history of technological
innovation
SWOT APPLE INC.

OPPORTUNITIES THREATS
▪ Expansion of the distribution ▪ Aggressive competition
network for wider consumer involving large
electronics market reach multinationals like
▪ More widespread and Samsung, and Microsoft
aggressive marketing for ▪ Imitation involving firms
higher sales volumes based that compete based on low
on rising demand prices
▪ Development of new product ▪ Rising labor costs in
lines in consumer electronics various countries where
and online services the company maintains
production facilities
AIM OF SWOT ANALYSIS

▪ Explore your competitive advantage

▪ Analyze your viewpoint for sales, profitability
and product development.
▪ Prepare your company for problems. Allow for
the development of contingency plans.
▪ The analysis can be performed on a product, on a
service, on a company or even on an individual.
▪ Done properly, SWOT will give you BIG picture
on MOST IMPORTANT FACTORS that influence
SURVIVAL and PROSPERITY
SWOT - TESLA
Strategy formulation

▪ Strategy formulation issues include deciding

 what new businesses to enter,
 what businesses to abandon,
 how to allocate resources,
 whether to expand operations or diversify,
 whether to enter international markets,
 whether to merge or form a joint venture, and
how to avoid a hostile takeover.
Strategy Formulation

▪ An entrepreneur must build a sound strategy based

on the preceding steps that uses the company’s core
competencies and strengths as the springboard to
success.
▪ Entrepreneurs should have a clear picture of what
their businesses do best and what their competitive
advantages are.
▪ They should also understand their firms’ weaknesses
and limitations as well as those of its competitors.
▪ The next step is to evaluate strategic options and
then prepare a game plan designed to achieve the
stated mission, goals, and objectives.
STRATEGY IMPLEMENTATION

▪ To make their strategic plans workable,

entrepreneurs should divide them into
projects, carefully defining each one by the
following:
 Purpose
 Scope
 Contribution
 Resource requirement
 Timing
STRATEGY CONTROL/ EVALUATION

▪ A strategy is usually implemented over a

significant period of time during which two
major questions are answered:
▪ a. Is strategy implementation taking place as
planned?
▪ b. Taking the observed results into
consideration, does the strategy require
changes or adjustments?
STRATEGY CONTROL/ EVALUATION

▪ 1.REVIEWING ▪ 2. MEASURING
EXTERNAL AND PERFORMANCE
INTERNAL FACTORS
Since these are Measuring, addressing
constantly changing and reviewing
and form the bases for performance on a
current strategies monthly or quarterly
basis can help determine
a strategy’s progress and
ensure that standards
are being met.
STRATEGY CONTROL/ EVALUATION

▪ 3. ANALYZING ▪ 4. CORRECTIVE
DEVIATIONS ACTION

If there are deviations, If a deviation is due to

managers have to internal factors such as
analyze performance resource shortage, then
standards and determine managers can act to sort
why performance was them out. But if it’s
below par. caused by external
factors that are beyond
one’s control, then
incorrect actions can
worsen the outcome.
“ It is human nature to make decisions based on
emotion, rather than fact. But nothing could be
more illogical.” – Toshiba Corporation

Q & A

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