CHAPTER 4

BUSINESS OPPORTUNITIES:
IDENTIFICATION, EVALUATION, AND
SELECTION
 LESSON OBJECTIVES
At the end of the lesson, students should
be able to understand:

Definition of business opportunity and two

situations in which business opportunity
can exist in the market

 The approach to opportunity identification

WHAT IS OPPORTUNITY

Opportunity is defined as a situation

that enables an entrepreneur to offer
marketable products or services to
interested buyers or end users
 2 TYPES OF SITUATIONAL FACTORS
There are two situations in which
business opportunity can exist in the
market;

 Product or service is already in the market but

failed to satisfy the customers – so need to be
improved.

 Product or service is still not in existence – to

help solve customer’s problems.
EMERGENCE OF OPPORTUNITY
• When people decide they have certain needs and want to
be satisfied, or when people discovered a problem of some
kind that can be helped by a product or service.

• The presence of unfulfilled needs and want and/or

problems alerts the entrepreneur to the potential
opportunity.

• The entrepreneur later creates a business that is able to

fulfill the needs or want and/or solve the problem.
BUSINESS OPPORTUNITY:
IDENTIFICATION
 OPPORTUNITY
IDENTIFICATION
Opportunity identification is a
process that involved the search for
and discovery of business
opportunities.
APPROACH TO OPPORTUNITY
IDENTIFICATION

1. Observe changes in the environment.

2. Recognize a need that customers

have that is not being satisfied.

3. Recognize problems and find ways to

solve it.
1. OBSERVING CHANGES IN
THE ENVIRONMENT

Changes in the environment give rise

to needs and wants and/or problems,
and an opportunity emerges.
 CONT..
Important environment forces to
observe include:

Economic forces
Social forces
Technological advances
Political and regulatory statues
 Examples of How Changes in the Environment Provides Openings for
New Product and Service Opportunities

CHANGES IN ENVIRONMENT PROVIDE OPPORTUNITIES FOR:

Structure of Population and Income

• Number of teenagers higher than number Cyber cafes, cineplexes, recording studios
of elderly and children
• People have higher purchasing power Passenger cars, household furniture, DVD

Social
• Increase incident of housebreaking
• Increase interest in fitness
• Increase mobility of population
• Increasing predominance of dual-
income families leaves less time to
cook at home
Grills, alarm, sensor, security systems
Fitness center, dancing class, in-house exercise
equipment, health food store
Handphone, laptop computers
Restaurants, food delivery services

Technological Advances
• Advances in biotechnology Biotech-related pharmaceutical products, food
products, veterinary products
• Development of the internet E-commerce, improved communication
• Increase pressure to improve economic Online marketing, cost control services
performance

Government Policies and Regulations

Increased driving standards Smoke emission control, helmet, seatbelt
 2. RECOGNIZE NEEDS
AND WANTS
Opportunity occurs whenever there is a need
and want to fulfill. The term “needs” refer to
basic needs that the consumer must have in
order to live while the term “wants” refers to a
personal desire for something that is more than
a basic need.
3. RECOGNIZE PROBLEM
AND FIND SOLUTION
Problems can be recognized by
observing the challenges that people
encounter in their daily lives.
Solution to the problem represented a
business opportunity.
 OPPORTUNITY IDENTIFICATION
PROCESS

Search for Recognize

Discovery
Changes in needs and
of
the wants, and
Opportunity
environment solutions
ABILITY TO SEARCH AND
DISCOVER BUSINESS
OPPORTUNITIES
 Experience and exposure
 Knowledge and skills
 “Special alertness”
 Social network
 Creativity

 Vigilant (alert)
MECHANISM TO IDENTIFY
OPPORTUNITIES
Customers

Retailers and distributors

Business associates
Bankers

Consultants

Employees

Others
 BUSINESS OPPORTUNITY:
EVALUATION & SELECTION
 EVALUATION AND
SELECTION PROCESS

The evaluation and selection

process involves judging the
viability of the opportunity and
assessing its potential.
CRITERIA FOR EVALUATION AND
SELECTION
• Can make money and has potential for growth
• Less competition
• Good fit between entrepreneur and opportunity
• Has competitive advantage
• Workable and efficient
• Not against the norms and values of the
community
• Conform with laws and regulations
THE END!