WEEK 2

BUSINESS OPPORTUNITY SCREENING

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INTRODUCTION

Business an opportunity recognition is considered the first critical step in starting a new business. Kirzner, (1979)

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Business opportunity should comprises of three important characteristics; potential economic value (generate profit); newness (product did not exist previously) and desirability (moral and legal acceptance of the new product) (Baron, 2006) .

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Screening Environment
OPPORTUNITIES THREATS

Business trend

Government Policy

ENTREPRENEUR Strength
Global Economic

Weakness

Private Sectors

Other Issues ( Education, Health, Social, Political, Culture)

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Steps to select new ventures

Step 4 Select one which is suitable to the
entrepreneur and develop business concept.

Step 3 Analyze specific opportunities which are feasible to venture. Step 2 Screening environment, evaluating self,
community & society, value and culture of the potential target group.

Step1

Identify Customers needs and wants

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Step 1 : Identifying customer needs & wants

Needs & Wants

Products
Something physical which can satisfied customer needs and wants.

Needs : something basic which people must have. Example: clothing, house, food, health, basic education, protection etcs.
Wants: desire to have more than basic needs. Wants will be fulfill after the basic needs were being fulfilled. Examples: cars, bigger house, traveling, golf club, latest fashions, jewelry etcs.

Services
Non-physical but able to fulfill customer needs and wants

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Step 2 : Screening environment, evaluating self, community & society, value and culture of the potential target group.

Analyze Environment
Population structure, Income, taste, preferences Country export & imports Local resources and new technology Industry linkages Government and Private development projects Global and Regional development Currents issues, social, rules & regulations.
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Self
Experience Knowledge & skills Financial standing Interest Networking

Community
Norm

Step 3: Analyzing the feasibility of Opportunities

Legal perspective

Market Competition level

Funding

Analyze

Technology availability Raw material supply

Feasibility

Expertise & manpower Logistic Sustainability

Risks Level
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Step 4: Select New Ventures

Market Competition level / Marketing Plan Operational Plan ( Technology, Supply Chain)

Analyze

Organizational & Admin. Plan ( Expertise & manpower )

Viability

Funding ( working capital, fixed assets) Profitability ( ROI, ROE, Pay back, Cash Flow, Risks Level

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Step 4 ( cont: )
New venture selected. Prepare Details Business Plan. Execute Plan

Monitor and Improvement.

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Example business opportunities

AGRICULTURE

Forestry

Fishery

Plantation

Poultry

Veneer Plywood Logging Furniture Sawn timber

Fishing Equipment Deep-sea fishing Fish Processing Wholesales/ distributions

Clearing plantation Planting Processing Wholesale/ distribution Nursery

Poultry farming Processing Wholesales/ Supplies

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Business Opportunities
High Risks

Business Risk
Risk could be transfer insurance (fire, loss etc)
Controlled risk but not 100% - market forecast quality products,

Financial Risk
Liquidity level
Loan Credit Currency exchange

Uncontrolled risk : economy recession, currency value, disaster

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SWOT ANALYSIS OF BUSINESS ENVIRONMENT

Strength (inside) Competent staffs Strong financial Weaknesses (inside) Lack of resources

Opportunity (outside) Strategic location Government support High demand

Threat (outside) High competitors Economic problems

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PEST MODEL - AS BUSINESS OPPORTUNITY SCREENING AND EVALUATION

Factors Political How? government policy and political factor can have significant influence on businesses as well as affect consumer confident and business spending. Existing of legal or business procedures of the country such as Companies Act (1965), Business Registration Act (1954), and various act.. there are a number of economic indicators can be used to analysis the economics of a country such as Gross Domestic Product (GDP), unemployment rate, and so on. For instance, with the GDP at 5% to 6% in year 2010, Malaysian economic development is among the highest in Asia (Economic Planning Unit, 2011)

Economic and environment

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PEST MODEL - AS BUSINESS OPPORTUNITY SCREENING AND EVALUATION

Factors Social How? Socio and culture influence on business vary from country to country. For instance, changes in social trends, values, lifestyles, demographics etc may impact on the entrepreneurship development is the making, modification, usage, and knowledge of tools, machines, techniques, crafts, systems, methods of organization, in order to solve a problem, improve a pre-existing solution to a problem, achieve a goal or perform a specific function.

Technology

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Quiz (In Group)

20/9/2012

Select one potential business and analyze the business opportunity based on SWOT and PEST Model

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