Recognizing Opportunities and Generating Ideas Part I Chapter

  • Slides: 17
Download presentation
Recognizing Opportunities and Generating Ideas Part I Chapter 2 Modified from: Barringer & Ireland

Recognizing Opportunities and Generating Ideas Part I Chapter 2 Modified from: Barringer & Ireland (2006) 1

What is an Entrepreneurial Opportunity? l l A favorable set of circumstances that creates

What is an Entrepreneurial Opportunity? l l A favorable set of circumstances that creates the need for a new product, service or business idea An opportunity has five essential qualities: 1. Attractive i. Serves a need, solves a problem, is in response to a external force/trend and therefore creates value for the entrepreneur or investor 2. Durable (is sustainable over time and relative to competition) 3. Timely (window of opportunity is open) 4. Anchored in a product, service, or business that adds value to buyer/end user 5. Adds value to necessary network partners (e. g. , those providing resources necessary for venture success) 2

Two ways to Identify an Opportunity 1. Observing Trends in External Environment l Economic

Two ways to Identify an Opportunity 1. Observing Trends in External Environment l Economic l Social l Technological l Political/Legal 2. Solving a Problem 3

Trend 1: Economic Forces l l Affect consumers’ level of disposable income Evaluate who

Trend 1: Economic Forces l l Affect consumers’ level of disposable income Evaluate who has money to spend and who’s cutting costs l l An increase in the number of women in the workforce and their related increase in disposable income Many large firms are trying to cut costs l Entrepreneurs have taken advantage of this trend by starting firms that help other firms control costs 4

Economic Trend: Teen Affluence • Last year teenage shoppers spent over $170 billion —

Economic Trend: Teen Affluence • Last year teenage shoppers spent over $170 billion — double the amount just 10 years earlier (ABC news, 2003). • Over the past five years, teen purchases … have grown [more] than the teen population, rising from $122 billion annually in 1997 to $170 billion last year (The Sun Herald, 2003). 5

Economic Trend: Fuel Prices Higher Gas Prices: The Next Motorcycle Sales Boom Is In

Economic Trend: Fuel Prices Higher Gas Prices: The Next Motorcycle Sales Boom Is In Sight “…it’s evident we’ll see motorcycle sales continue to increase in the coming months. ” Source: Mehren, 2004 6

Trend 2: Social Forces l Changes in social trends continually provide openings for new

Trend 2: Social Forces l Changes in social trends continually provide openings for new businesses l The proliferation of fast-food isn’t because people love fast food l It’s because people are busy, and have disposable income l The Sony Walkman was not developed because consumers wanted smaller radios but because people wanted to listen to music while on the go 7

Trend 2: Social Forces—Examples • Family/work patterns • Childcare • Scheduling • Aging of

Trend 2: Social Forces—Examples • Family/work patterns • Childcare • Scheduling • Aging of the population • Healthcare • Financial management • Increasing diversity in the workplace • Training • Globalization of industry • Transportation • Taxation • Regulatory compliance • Online shopping • Focus on health care and fitness • Weight management • Trainers • Computers and the Internet • Hardware/software/training • Shopping alternatives • Number of cell phone users • New technology/complimentary products • New forms of entertainment • Video games • DVR • Laser tag • Fantasy sports teams • Online entertainment 8

Social Trend: Health Conscious Consumers Inside Story: 10 Candy Trends “Fueled by popularity of

Social Trend: Health Conscious Consumers Inside Story: 10 Candy Trends “Fueled by popularity of the Atkins diet and a healthconscious uprising in America, products that are low in fat, carbs, sugar and calories are hitting retail shelves at lightening speed. ” “ACNielsen reports that in 2002, diet candies grew the fastest, claiming 23 percent of the $24 billion candy market. ” Source: Carneal (2004), American Wholesale Marketers Association 9

Social Trend: `Tween Market Kiddie calls are on the horizon for the growing 'tween

Social Trend: `Tween Market Kiddie calls are on the horizon for the growing 'tween market “’Tweens [ages 8 -12] constitute a lucrative retail market … 23 million members … Retail studies say this demographic is on the leading edge of the most-consumer-oriented generation in history. They increasingly have disposable income, and their voice now factors heavily into family purchases. ” “ … when they shop for themselves, ‘tweens ignore toys … preferring clothes, video games and electronics. ” “ The world's No. 2 toymaker [Hasbro, Inc. ] is going after the … 'tween market with a walkie-talkie-like device that resembles a mobile phone. ” Source: St. Louis Tribune, February 12, 2005 10

Trend 3: Technological Advances l Entrepreneurs must keep on top of how new technologies

Trend 3: Technological Advances l Entrepreneurs must keep on top of how new technologies affect current and future business opportunities l Industries have emerged due to technological advances l l Computer industry, Internet, biotechnology, digital photography Once developed, new firms form to take technology to higher level l Real. Networks was started to add video capability to the Internet l Massively Multiplayer Online Role Playing Games (MMORPG) l l l Ever. Quest World of Warcraft Second Life 11

Technological Trend: Computers USB drives go beyond storage “. . . a new company

Technological Trend: Computers USB drives go beyond storage “. . . a new company called U 3 … said it would promote the next generation in flash drive technology. ” “Keychain drives are going beyond … storage … They're going to … [run] applications … [like] Power. Point [, ] … and Scan. Disk. ” “A few companies have already endorsed the idea: Mc. Afee … antivirus software vendor [and]. . . Zone Labs … the firewall maker …” Source: Hesseldahl (2005), Forbes Economics of MMORPGs “…supply-and-demand market exists for virtual items … that it crosses over with the real world. [This includes: ] … • The purchase of in-game items for real-world currency • Exchanges of real-world currencies for virtual currencies Source: Castronova, E. Synthetic Worlds: The Business and Culture of Online Games. University Of Chicago 12 Press.

Technological Trend: Email Text message essay baffles British teacher Monday, March 3, 2003 Posted:

Technological Trend: Email Text message essay baffles British teacher Monday, March 3, 2003 Posted: 10: 17 AM EST (1517 GMT) The girl's essay began: "My smmr hols wr CWOT. B 4, we used 2 go 2 NY 2 C my bro, his GF & thr 3 : - kids FTF. ILNY, it's a gr 8 plc. " Source: CNN. com 13

Trend 4: Political Action and Regulatory Changes l Political action and regulatory changes provide

Trend 4: Political Action and Regulatory Changes l Political action and regulatory changes provide the basis for new business opportunities l l EPA laws create opportunities to start firms that help other firms comply with environmental laws and regulations Non-smoking legislation in Ohio and other states Legalization of gambling in some states Periods of war/conflict 14

Legal/Political Trend: Legal Unrest Source: CBSnews. com High Condition (Orange). A High Condition is

Legal/Political Trend: Legal Unrest Source: CBSnews. com High Condition (Orange). A High Condition is declared when there is a high risk of terrorist attacks. Visitors wait in line to be fingerprinted and photographed at the U. S. Customs check point at San Francisco International Airport in San Francisco. Source: US Department of Homeland Security 15

Legal/Political Trend: FCC Indecency Regulations Breached Legal Trend FCC to investigate incident at end

Legal/Political Trend: FCC Indecency Regulations Breached Legal Trend FCC to investigate incident at end of halftime show Social Trend Howard Stern Show Taken Off Clear Channel Stations Whoops! Source: CNN. com Tuesday, February 3, 2004 Posted: 7: 58 AM Source: Clear Channel Communications, Inc. Press Release Wednesday February 25, 2004 16

How Are Opportunities Identified? #2 Solving a Problem • Sometimes involves noticing a problem

How Are Opportunities Identified? #2 Solving a Problem • Sometimes involves noticing a problem and finding a solution • Problems identified via observing trends and intuition, serendipity, or chance • Problem: Airport security weak • Solution: Finger print identification; more advanced customs software • Problem: Computers are susceptible to viruses • Solution: Symantec Corp. created Norton antivirus software to guard computers against viruses • Problem: People have less leisure time for watching TV on a schedule • Solution: Tivo, DVR 17