Revision Notes- Entrepreneurial Opportunities | Entrepreneurship Class 12 - Commerce PDF Download

Sensing Entrepreneurial Opportunities

• Entrepreneurs perceive opportunities quickly, synthesize the available information and analyse emerging patterns that escape the attention of other people.
• Entrepreneurs are themselves responsible for the success and failure of the enterprise.
• Peter F. Drucker defined entrepreneur as one who always searches for an opportunity. The basic test of a successful entrepreneur is the identification of business opportunity in the environment and initiating steps to produce and sell goods and services to make the best use of that opportunity.
• Entrepreneur has two basic roles:
  1. Sensing Opportunity;
  2. Spotter and Project Champion.
• Entrepreneurship is the function which involves grabbing of an opportunity, organizing the resources and undertaking the production and other activities.
• A business opportunity is an attractive economic idea which could be implemented to create a business, earn profits and ensure further growth.
• Sensing Entrepreneurial Opportunities is a process of perceiving the needs and problems of people and society and arriving at creative solutions, initially converting these solutions into opportunity and then into an enterprise.
• Sensing Opportunities Factors:
  1. Ability to perceive and preserve basic ideas; 
  2. Ability to harness different sources of information;
  3. Vision and Creativity.
• There are five sources to obtain ideas:
  1. Problems
  2. Change
  3. Inventions 
  4. Competition
  5. Innovation
• Elements of business opportunity:
  1. Assured market scope;
  2. An attractive and acceptable rate of return on investment;
  3. Practicability of the idea;
  4. Competence of the entrepreneur;
  5. Potential of future growth.
• Various stages in the Enterprise Process Diagram:
  1. Spotting an opportunity by analyzing the needs and problems that exist in the environment.
  2. Evaluating the ideas received from different sources to find a creative solution.
  3. Identifying a product or service through innovation.
  4. Setting up a project and nurturing it to success.

Scanning Environment

• Environment scanning is careful monitoring of an organization’s internal and external environment for detecting early signs of opportunities and threats that may influence its current and future plAns.
• The environmental factors affecting the macro external environment are as follows:
  1. Socio Cultural Factor: A detailed analysis of socio-cultural factors will involve a close study of the life styles, beliefs, customs, conventions, practices, etc.
  2. Political Factor: For entrepreneurship to thrive, a conducive political climate is necessary. The rules and regulations and the laws that monitor and regulate the market forces are framed and promulgated by the government.
  3. Economic Factor: Closely linked to the political factor is the consideration of economic policies and the general health of the economy.
  4. Economic Factor: Closely linked to the political factor is the consideration of economic policies and the general health of the economy.
  5. Legal and Financial Factors: Legal scanning of the environment demands analyzing the legal requirements in the establishment of the project, management of the project and also in getting assistance from different sources.
  6. Developmental and Institutional Support Factors: There are many governmental and non-governmental agencies that extend support, guidance and expertise to entrepreneurs.
• Environmental factors affecting the micro internal environment are:
  1. Suppliers
  2. Customers
  3. Intermediaries
  4. Competitors
  5. General Public
• The benefits of understanding the relevant environment of business are:
  1. Identification of opportunities to get first mover advantage
  2. Formulation of strategies and policies
  3. Tapping useful resources
  4. Better performance
  5. Sensitisation of entrepreneurs to cope up with rapid changes
  6. Image building
• PESTEL Model
  1. Political: The political environment includes taxation policy, government stability and foreign trade regulations.
  2. Economic: The economic environment includes interest rates, inflation, business cycles, unemployment, disposable income, energy, availability and cost.
  3. Social: The social/cultural environment includes population demographics, social mobility, income distribution, lifestyle changes, attitudes to work and leisure, levels of education and consumerism.
  4. Technological: It is influenced by government spending on research, new discoveries and development, government and industry focus of technological effort, speed of technological transfer and rates of obsolescence.
  5. Ecological: It considers the ways in which the organisation can produce its goods or services with minimum environmental damage.
  6. Legal: It covers areas such as taxation, employment, law, monopoly, legislation and environmental protection laws.

Product Identification and Selecting Right Opportunity

• A problem is a roadblock in a situation, something that sets up a conflict and forces you to find a solution. When an entrepreneur identifies such a road block, he/she is said to have identified the problem.
• On the basis of scanning of environment one can take up a thorough study of ideas of different types. It will also lead to a variety of situations out of which products or services can be selected. This phase is called Generation of Ideas.
• Generation of ideas refers to a conscious endeavour to collect ideas from different sources for the purpose of finding a creative answer to a need or a problem. Ideas can be generated in the following ways:
  1. Brain storming
  2. Doing market research
  3. Gathering information from publications
  4. Seeking assistance from entrepreneurs
  5. Using hobbies to generate ideas 
  6. Talking and listening to people
  7. Day dreaming and fantasizing
• After generating ideas, all basic ideas have to undergo a vigorous process of close examination, evaluation, analysis and synthesis to become viable opportunities.
• Idea fields can be described as convenient frames of reference for streamlining the process of generation of ideas.
  1. Natural resource
  2. Existing products and services
  3. Market or demand driven ideas
  4. Trading related ideas
  5. Service sector ideas
  6. Creative efforts
  7. Other considerations
• After opportunity spotting and scanning of the environment, an entrepreneurial idea should lead to a definite product.
• Steps involved in identifying feasible opportunities are product identification, application and use, level of operation, costing, competition analysis, determining technical requirements and fixing annual turnover and profit margin.
• Selection of a product or service will depend upon the assessment of market demand-supply position.
• Market assessment involves demand analysis, supply analysis, costing and pricing and determining nature of innovations required.
• Trend spotting means identification of new trends which helps entrepreneur to understand the market and produce goods or provide services in sync with the market trends. Ways in which an entrepreneur spots trends:
  1. Read trends
  2. Talk trends
  3. Watch trends 
  4. Think trends
• The entrepreneur should look into various factors before deciding on the opportunity. Even if the opportunity looks promising, an entrepreneur should look into the environmental factors before choosing the best opportunity.