OPPORTUNITY IDENTIFICATION AND SELECTION

Learning Objectives:
1. Identify the difference sources of business ideas
2. Identify business opportunities
3. Select the best business idea

What is Opportunity?
It is a favorable position or a chance for advancement. In business, an
opportunity places you in a favorable position to start and prosper in your chosen
venture.

Steps in arriving at Business Opportunity:

1. Idea generation
2. Selection and screening
3. Formulating the concept of the business by doing the following analyses:
a. Resource analysis
b. Environmental analysis
c. Personal value analysis

Sources of Idea Generation:

1. Identify the needs (food, clothing, shelter, safety, socialization,

recognition for self-esteem, and self-fulfillment) and wants of the people
and draw ideas of a product that can satisfy their needs.

People do not buy a product by itself, but for the expected satisfaction the
product can bring to them.

What is a need or a want?

A need is generic while a want is specific. Example: everyone needs food,
but a person may want a “pork adobo” for lunch while another may want
“bulalo”.

People have different needs and wants, and a business response by

satisfying them.

2. Focus on the specific sector or type of client. In marketing, it is called

market segmentation. Example: classify people by age, income, etc.

Problems bring potential business opportunities.

3. Take the macro perspective or view the larger environment where the
business will be situated, like looking at the social, technological,
economic, environmental, and political aspects of the business
environment.

Socio-cultural research studies point out that lifestyles of the population

change over time, especially those living in urban areas. Example: busy
lifestyle may explain the popularity of instant noodles.

New technologies have also ushered in new business technologies.

Example: internet cafes which were never heard of in the 1980s.

Nature is also a rich source of business ideas. Example: coconut husk.

Political environment affects the business. Example: materials and shirts

during political campaign.
 4. Look closely at the market by analyzing the demand and supply gap,
import-export movement, possible substitutes to existing products,
industry linkages.

One should examine the existing demand for a product and assess if existing
local suppliers or importers adequately satisfy the market. Example: if a
community has a number of schools and universities, but there is only one
internet shop servicing the needs of the student population, one can safely
conclude that there is room for another internet café in the community.

There may also a number of products that are being supplies by producers or
suppliers outside your locality, or even imported from other countries.

Product substitutes may give the same satisfaction or function at a lower cost
and at an affordable price to the customer. Just be careful that one does not
infringe the copyright of others.

A number of industries in the community can participate through linkages.

One can supply that need or vice-versa.

5. Look at people’s skills.

The skills of the people in your group or community can be used or tapped in
organizing a business.

6. Look at available business assistance programs.

By vising the office of the DTI, one can be able to get a list of priority
businesses for development in the locality. From the list, one or two may
match the skills and resources one needs for the business. If the business is
included in the list of priorities, one can take advantage of incentives and
benefits available to priority enterprises. Even if the project is not in the
priority list, one may still pursue it so long as one has the skills and resources
to get the enterprise going.

Many government and private institutions and non-government organizations

provide technical, marketing, and financial assistance to entrepreneurs.

Methods of collecting information from the business environment:

1. Ad hoc shor – is a short-term, infrequent and usually initiated by a a crisis.

2. Regular scanning – involves studies done on a more or less regular basis, say,
once a year.
3. Continuous scanning – entails regular collection and processing of data on a
wide range of factors from the business environment. It is the best method which
allows one to take the current data available and take advantage of opportunities
before competitors do.

Means to collect information from business environment:

1. Accessing networks from agencies, organizations, or personal contacts

2. Public meetings, trade fairs, and fora
3. Focused-group discussions
4. Key people survey in a particular industry
 5. Publications such as trade journals or publications on trends, opportunities and
related topics or issues
6. In-depth interviews from potential customers of your proposed business

7. Usage and awareness studies by sending out questionnaires

Types of screening:

1. Personal-level screening –
a. Based on your personal preference
b. Based on your educational and training background
c. Based on your work experience
d. Based on networks and contacts
e. Based on family support

Sample criteria:
Food business Toy making Handicraft
Criteria Weights (%) (processed meat) (plastic toys) (bag making)
Personal reference 30 25 25 20
Education, training 15 10 10 10
Work experience 15 10 15 5
Business contacts 20 10 15 10
Family support 20 20 15 15 _
Total 100 75 80 60 _

The business with the highest rating suggests that you prioritize the business.
The weights are arbitrary.

2. Firm-level screening –
a. Demand of the product in the market
b. The technical viability (which includes availability of technology, raw materials,
and labor)
c. The capital or financial requirement
d. Financial profitability
e. Government support

Sample criteria:
Toy making Handicraft
Criteria Weights (%) (plastic toys) (bag making)
Market demand 30 25 30
Technology 10 10 10

Availability of skills 10 5 8
Availability of raw materials 10 8 10
Financial or capital requirements 20 15 17
Profitability 10 15 10
Government support 10 7 10 _
Total 100 85 95 _

When it comes to firm-level screening, you should have done some prior
research on your product or business and the selection criteria. Firm-level
screening should be taken only as an initial analysis of the proposed business
and should not be regarded as a final indicator of its viability.

Three types of analyses:

1. Resource analysis – this is to evaluate (by identifying the strengths and

weaknesses) if one has enough money, materials, machines, methods,
manpower, management and moment (time). The resource analysis indicates
what the firm is capable of doing at the start of the business.
 2. Environmental analysis – this is to evaluate (by identifying the opportunities
and threats) the factors of environment such as socio-cultural, technology and
technical, economic, natural, political, peace and order, population trends,
government program, and global environment. The environmental analysis can
give you an idea if the business can survive or not.

3. Personal values analysis – this is related to one’s philosophy, guiding

principles, outlook, and aspirations for the business. These are non-monetary
and reflective of one’s personal attitudes towards the business.

You may ask yourself of the following questions:

a. What are my guiding principles in business?
b. How do I expect to satisfy my customers? (example: high quality, low price;
low qualify, high price)

Summary:

This chapter focused on ways and means of identifying business opportunities.

Opportunities to start a business can come from many sources. One can get
ideas by scanning or looking closely at the environment, solving problems,
understanding the needs and wants of different categories of people,
3.