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Modified from: Barringer

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Title: Slide 1 Author: bbarringer Last modified by: SBA Created Date: 11/30/2004 5:28:57 PM Document presentation format: On-screen Show Company: UCF - College of ... – PowerPoint PPT presentation

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Title: Modified from: Barringer


1
Recognizing Opportunities and Generating
Ideas Part I
Chapter 2
Modified from Barringer Ireland (2006)
2
What is an Entrepreneurial Opportunity?
  • A favorable set of circumstances that creates the
    need for a new product, service or business
  • An opportunity has five essential qualities
  • Attractive
  • What makes this venture good for an ENT to start?
    What value does the ENT/investor extract from
    the opportunity?
  • Durable
  • How is the opportunity competitively sustainable
    (e.g., not easily imitated, unique in some why
    that allows for a competitive advantage)?
  • Timely (window of opportunity is open)
  • What environmental, market, or industry trends
    suggest now is the time for the opportunity?
  • Anchored in a product, service, or business that
    adds value to buyer/end user
  • What value do customers extract from this
    business? Does it solve a problem or fulfill a
    need? Does it save them time/money?
  • Adds value to necessary network partners (e.g.,
    those providing resources necessary for venture
    success)
  • How does the opportunity add value to others that
    you need to help make you firm workyour resource
    providers?

3
Three ways to Identify an Opportunity
  • 1. Observing Trends in External Environment
  • Economic
  • Social
  • Technological
  • Political/Legal
  • 2. Solving a Problem
  • 3. Finding Gaps in the Marketplace

4
Trend 1 Economic Forces
  • State of the economy
  • Consumers level of disposable income
  • Spending patterns (e.g., who has money to spend
    and whos cutting costs)
  • 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
  • Entrepreneurs have taken advantage of this trend
    by starting firms that help other firms control
    costs
  • Increasing gas prices

5
Economic Trend Teen Affluence
  • In 2002, teenage shoppers spent over 170 billion
    double the amount just 10 years earlier
  • 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).

6
Economic Trend Fuel Prices
  • Higher Gas Prices The Next Motorcycle Sales
    Boom Is In Sight
  • its evident well see motorcycle sales
    continue to increase in the coming months.
  • Source Mehren, 2004
  • Electric Bikes Provide Greener Commute
  • The surging cost of gasoline and a desire for a
    greener commute are turning more people to
    electric bikes as an unconventional form of
    transportation. theyre flying off the
    shevles
  • Source cnn.com, 2008

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

8
Trend 2 Social ForcesExamples
  • 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

9
Social Trend Health Conscious Consumers
  • Inside Story 10 Candy Trends
  • Fueled by popularity of the Atkins diet and a
    health-conscious 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

10
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

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

12
Technological Trend Computers
USB drives go beyond storage ... a new company
called U3 said it would promote the next
generation in flash drive technology.
Keychain drives are going beyond storage
They're going to run applications like
PowerPoint , and ScanDisk. A few
companies have already endorsed the idea McAfee
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 Press.

13
Technological Trend Email
14
Trend 4 Political Action and Regulatory Changes
  • Political action and regulatory changes provide
    the basis for new business opportunities
  • 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

15
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
16
Legal/Political TrendFCC Indecency Regulations
Breached
17
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 People have less time for lawn
    maintenance
  • Solution Robomow, automatic lawn mower, by
    Friendly Robotics
  • 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

18
How Are Opportunities Identified?3 Finding Gaps
in the Marketplace
  • Look for a need that customers have that is not
    being satisfied
  • Are there customer segments that are not being
    served?
  • Neglected Need Specialized, unique, apparel
  • Solution Small clothing boutiques
  • Neglected Segment Overweight 30 women
  • Solution Curves International, affordable
    fitness club for women
  • Neglected Segment/Need Non-tech savvy (usually
    older) customers that need cell phones
  • Solution Jitterbug
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