Lesson 3

• Opportunity: (According to the Cambridge Dictionary)

  A situation or occasion that makes it possible to do something that you want to do
• Five Stages of Opportunity Recognition: by Hills, Sharder and Lumpkin (1999)

  1. Precondition
  2. Conception
  3. Visioning
  4. Assessment
  5. Realization
• Precondition 


  Precondition

  also known as the preparatory stage

  • A pre-test to assess the skills of the entrepreneur
• Conception


  also known as the gestation stage the stage where an idea is generated; driven by personal intentions and creativity.
• Visioning: The stage when visions on what you want to do start to form.
• Assessment: Evaluation stage - To see whether the idea is rational; - Evaluation of resources and skills
• Realization also known as the testing stage - The creation of a prototype
• Factors in Opportunity RecognitionBy Hisrich, Peters, Shepherd (2010)Creativity and Business Idea

  1. Market awareness
  2. Entrepreneurial readiness
  3. Connections
• Market awarenes: Knowledge of the market
• Entrepreneurial Readiness: Entrepreneurial Readiness also known as entrepreneurial awareness; Features an entrepreneur can offer.
• Connections: also known as networks The relationship between diversity of networks and business opportunity recognition High diversity = high opportunity
• Elements in Opportunity Assessment

  By Kunene (2008) and Hisrich (n.d)

  A critical analysis of entrepreneurial and business skills in SMEs in the textile and clothing industry in

  Johaness burg, South Africa; & Opportunity Assessment and the Entrepreneurial Process. 1. product or service 2. Market opportunity 3. Costing and pricing. 4. Profitability 5. Resource requirements 6. Risk 7. Entrepreneurial commitment
• Product or Service: A business opportunity is primarily the potential of

  introducing a new product or service to the market.
• Market Opportunity: Characteristics of the market;

  • Assessment of how competitive is the environment
• Costing and Pricing

  • A product which may be considered valuable by

  consumers may not be affordable.

  Quantity vs Quality Basic factors to consider on pricing:

  
  

  Cost of Raw Materials

  Means of Production
• Profitability

  • an important motivation for business
• Resource Requirements

  • input and production;

  Two Types of Inputs

  -Intermediate Inputs

  -Factor Inputs
• Risks

  • this element can increase the profitability of loss or failure

  in a business venture;
• Entrepreneurial Commitment

  • the commitment of an entrepreneur to pursue the

  realization of its business idea

  Level of seriousness can define commitment
• Entrepreneurial Commitment

  Determinants of an Entrepreneur’s Commitment

  • Motivations of the individual Skills Experience Resources. Amount of time he/she can devote
• Opportunity Pathways

  Two Approaches of Opportunity Assessment :

  1. Rational Approach

  2. Intuitive Approach
• Rational Approach

  also known as the traditional approach

  • uses systematic procedures in proceeding with the

  implementation of a business opportunity
• Rational Approach

  The traditionalist approach follows the following:

  Generation of entrepreneurial intent

  Visualization of an idea

  Recognition of an opportunity

  Assessment of opportunity

  • Seizing the opportunity
• Rational Approach Recommendations:

  -Big enterprises

  -Big Investments (Schumpeterian enterprise)

  -The traditional approach presents a sense of security.
• Intuitive Approach

  starts with the recognition of an opportunity and proceeds

  to grabbing it after sensing it can be done.

  relies on intuition, determined by prior knowledge,

  previous work, and life experiences.
• Intuitive Approach Recommendations:

  -No big investments

  -For micro-entrepreneurs

  -An entrepreneur can be flexible in redirecting the business if

  needed.
• Product Planning and Development Process

  By Hisrich, Peters, and Sheperd (2010) Creativity and Business Idea:

  1. Precommercialization phase

  2. Commercialization phase.
• Precommercialization Phase

  • Idea Stage
  • Concept Stage
  • Product Development Stage
  • Test Marketing Stage
• Commercialization Phase

  Product Life Cycle Hypothesis

  “any product has life, and similar to any living organism, it has

  its birth and consequent death.”
• Commercialization Phase:

  -Introduction

  -Growth

  -Maturity

  -Decline
• Risk: This element can increase the profitability of loss or failure in a business venture.
• Entrepreneurial commitment: The commitment of an entrepreneur to pursue the realization of its business idea. Levels of seriousness can be define commitment.
• Entrepreneurial commitment: -Determinants of an entrepreneur's commitment:

  • Motivations of individuals
  • Skills
  • Experience
  • Resources
  • Amount of time he/she can devote