Identifying Entrepreneurial Opportunities

This assignment focuses on the new and innovative business idea of smart home automation in the UK. It discusses different sources of entrepreneurial ideas and innovation, the rationale and market gap for smart home automation, and gap analysis in the evolution of smart home automation. It also explores the SWOT framework and evaluation of the competitive market environment.

IDENTIFYING
ENTREPRENEURIAL
OPPORTUNITIES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P 1 Different sources of entrepreneurial ideas and innovation....................................................1
LO 2.................................................................................................................................................3
P 2 Rationale and market gap for a smart home automation.......................................................3
LO 3.................................................................................................................................................4
P 3 Gap analysis in evolution of smart home automation...........................................................4
P 4 Evidence for market evidence...............................................................................................7
LO 3.................................................................................................................................................8
P 5 SWOT Framework to collate evidence to support an objective assessment for smart home
automation....................................................................................................................................8
P 6 Evaluation of competitive market environment..................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Entrepreneurship can be defined as a process in which launching, designing and running
of a new business is involved and the business person who create this new business are called as
entrepreneurs. Entrepreneurial opportunities can be defined as a situation in which any service or
product can be sold t a much higher prices as compared to their production cost. It is a situation
where entrepreneurs can take advantage of a particular situation in order to succeed in the market
in order to make profit (Ramdani, Azis and Kaltum, 2016). These entrepreneurial situations are
extremely important for an entrepreneurs so that they can extend their business in order to make
profit. This assignment will lay emphasis on a new and innovative business idea of Smart home
automation in UK. This smart home automation will be controlled with a central mobile
application and will be able to control all the household appliances, AC, ventilation, lightening,
heating etc. For this different sources of entrepreneurial ideas and innovation, rationale and
market gap for a smart home automation, gap analysis in evolution of smart home automation,
evidence for market evidence, SWOT Framework to collate evidence to support an objective
assessment for smart home automation, evaluation of competitive market environment will
discussed in details in this assignment.
LO 1
P 1 Different sources of entrepreneurial ideas and innovation
If an entrepreneur wants their business to become successful then it is quite important for
them to come up with a new, innovative and feasible business idea. A good business idea will
help in starting and gradually develop their start up business (Molasy, and et.al., 2019). There
various kinds of sources though which an entrepreneur can get a new, feasible as well as
innovative business idea. There are various kinds of external sources can create opportunities for
entrepreneurs to start their own business. These opportunities and sources can be explained
through Perter Drucker's Seven sources of innovations.
 The Unexpected: One of the biggest source of innovation is an unexpected success or
failures that occurs within an organization can be a great source that can inspire an
entrepreneur for a new and innovative idea. An entrepreneur should always notice
unexpected failure or success as it can become one of the great source of opportunity
which can help them to start their own business. They should see those failures and
success as an advantage to start their own business.
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Advantages: one of the major advantage of unexpected innovation is that if it this type is that it
can come any time in the organisation which can lead to the success of the organisation.
Disadvantages: The only disadvantage of this innovation is that lack of analysis of the
innovation may result in huge loss for the company.
 Incongruities: Many people fall for developing an new service or product without doing
any kind of proper research about the market segment, customer needs etc. Company
should keep a connection between what the product or service is and what their target
customers want (Cavaco and Machado, 2018). If the organization fails to keep that
connection then it can lead to downfall of the company, but this downfall is a great
source of inspiration and opportunity which can lead to an innovative idea.
Advantages: This innovation sources can save time for the company when there is a need of
innovation in the company in a short period of time.
Disadvantages: One of the major disadvantage of this sources is lack of market research can
result in innovation failure.
 Process need: According to Peter Drucker Companies should not focus on situation in
fact they should be more task focused. This focus on process and tasks can provide a
great source of opportunity for the companies it will help them to identify their
weaknesses and way they can improve those weaknesses. Such weak links of the
organization can lead to increase companies capabilities which will help them to create
new and innovative ideas for their business which will behave more like a threat than
opportunity.
Advantages: As this sources of innovation is task based it can provide a huge opportunity for the
company to develop an innovative product or service in an organisation.
Disadvantages: There may exist a lack of employee capabilities in task or lack of interest may
result in failure of innovative idea.
 Industry and market structure change: Innovation in changing technology also brings
changes within the industry and market needs. Organizations need to understand those
changes and implement those changes within their company (Dubey and et.al., 2015). It
is one of a good source which will increase their success opportunities and decrease their
failure chances.
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Advantages: one of the major advantages of this source is that change in market structure can
develop a innovative idea which can prove success for business.
Disadvantages: Any change in industry or market can result result in change in organisational
structure of the company which can result in lack of innovation in the company.
 Demographics: Change in demographics can lead an organization towards their downfall
as these demographic changes not only affect the market in which they operate but it will
also affect the demand for their services and products within their customers. So
companies should focus on these changes as they can become another source of bringing
innovation within their organization which can increase their opportunities and can lead
the company towards success.
Advantages: Based on the demography of an area can give a company various opportunities for
developing a new idea.
Disadvantages: In order to develop a new, a company need to make a in-depth market research
which can prove time consuming for the company.
 Change in perception: Continuous significant changes within the market leads to change
in perception of their target customers. These changes can affect technologies used by the
company, their involvement in social networking sites etc. This change in perception can
also become one of the great source of innovation or business idea to develop a new
product or service.
Advantages: One of the major advantage of this sources is that with the change in perception of
customers company can come with the idea which can meet the perception of customers.
Disadvantages: The only disadvantage is that perception of the customer keeps on changing on
continuous basis so it can make innovation obsolete.
 New Knowledge: New knowledge has always seen as a good source of inspiration for
new and innovative ideas which cannot be overlooked by the organizations. Companies
that focus on bringing new and innovative knowledge idea and implement it within the
organization can help their business to grow and achieve success.
Advantages: One of the major advantage of this sources is that new experience or knowledge
can result in unique ideas.
Disadvantages: The only disadvantage is that there is lack experience and lack of market
experience which can result in inadequate innovative business idea.
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LO 2
P 2 Rationale and market gap for a smart home automation
GAP analysis can help the company to identify the difference in performance between
the business's information systems in order to determine whether the business requirements are
met or not. It also helps identification if various steps that should be taken in order to improve
the performance or business performance are met successfully.
GAP Analysis:
Current state: A company wants start a business of home automation by offering a products and
services such as AC, ventilation, lightening, heating etc.
Future state: A copany wants to enter in the home automation business and establish strong
business and want to increase market share by 30 percent.
GAP description: As it is just annew business idea so, there certainly is a gap between current
and future state.
Bridging the GAP: In order to over come the GAP, company should make a proper market
analysis in order to opportunities in the market and develop strategies accordingly.
Industry life cycle:
New and innovative business idea helps an organization to grow and expand their
organizations in such a way such that they can achieve success, increase their profit, revenue etc.
In order to implement a successful business idea within the organization it is important for the
organizations to understand their target audience, understand their industry life cycle and do a
market gap analysis of their business idea. Smart home automation is nowadays continuously the
way people control their home appliances (Mineraud and et.al., 2016). Soon people will be able
to control their home appliances, AC, ventilation, lightening, security systems etc. though a
central mobile application. People will be able to switch on and off their appliances etc. This
automation for smart home has increased an opportunities for organizations to focus on
providing automation to their target customers. Due to this IT and various other industries are
moving in growth stage of industry life cycle as this requirement of this automation is increasing
continuously within the people.
Industry life cycle has five stages which are: First is the start up stage where customers
demand is quite low due to unfamiliarity of the product or service. Second stage is the growth
stage where the product slowly get peoples attention due to which its popularity increases. Today
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people are getting aware of this smart home automation slowly so demand for this smart home
automation technology is increasing which has brought this industry within this growth stage
where product demand, profit and revenue of the companies is increasing. Then third stage is the
shakeout stage where the growth within the industry stops and cask flow starts to downfall.
Fourth stage is the maturity stage where industries reaches a saturation i.e. There is no scope of
growth and they need to think of an idea for the growth of their business (Yassein, Mardini and
Khalil, 2016). Last stage is the declining stage where the demand for the service and product
starts to decline.
Identification of customer types through STP:
Smart home automation firm's target customers can be explained though STP. STP in
marketing stands for segmentation, targeting and positioning. It helps the organizations to
identify their target audience.
Segmentation: It helps in identifying potential customers or target audience for the new product
or service. If segmentation of smart home is done then the organization will focus on few types
of customer segments such as: life style segment where non working customers are focused on
who have a hobby or liking for the product. For example people who love automation and would
like to control their home though a central mobile application (Abhishek and et.al., 2017). Then
in geographic segment all the customers of developed countries will be focused who can afford
complete automation. Within those people, customers who have much more disposable income
so that they can spend on their home will be focused.
Targeting: There are following segments based on which customers are targeted such as: Size-
potential market size for this automation within developed counties is quite high. Difference-
with the help of google analytics measurable difference between all the segments will be
focused. Money- with with more disposable income i.e. people who are economically stable will
be focused.
Positioning: it helps in identifying competitive advantage based on the segmentation and targets.
It can be measured as: Functional positioning: In this company need to focus on user experience
and features of smart home automation. Symbolic positioning- in this organization need to build
their brand value which will attract their customers. This will help the company to focus on their
target customers in a better manner for the success of their smart home automation idea.
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LO 3
P 3 Gap analysis in evolution of smart home automation
This smart home automation idea is based upon automating all the appliances, electricity
for the houses which can e controlled with the help of central mobile application. If the growth
rate and increment in smart home use is seen that it is continuously increasing since 2016 (70
percent)and according to a forecasting it will continue to grow to at least 156 percent. It has
become one of the main way through which IT companies can increase their profit margin.
Another reason due to which demand for smart home automation is increasing is the increasing
electricity cost which makes the household people concern and make them more focused towards
saving energy.
So, From the above graph it is clear that demand for smart homes is increasing and will
continue to increase. So entrepreneurs within UK who are working on this innovative idea as
their business strategy can focus on this and try to enhance their market segment in order to
achieve success. This gap analysis will help the companies to focus on this innovative idea and
grow their business by identifying the need of innovation and innovative idea within this
industry. It will also help the companies to strengthen their market presence and gain competitive
advantage in order to increase their market share, profit and overall revenue. From the above
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Illustration 1: Smart Home Market by region
(Source: Smart home Market. 2019)

graph it has also been observed that demand for these smart houses is growing continuously
especially in UK and North America. People are showing interest in smart home automation are
interested using this technology for various purposes such as security, saving electricity,
increasing control overall the appliances.
Gap analysis can also be done with primary research where 5 people will be asked to fill a
questionnaire of 2 questions:
Questionnaire:
 Would you like to automate and control you home appliances through a single central
system?
◦ Yes
◦ No
 Would you like to spend your disposable income on this smart home automation?
◦ Yes
◦ No
Theme 1: Automate and control you home appliances through a single central system
Options Respondents
Yes 4
No 1
Interpretation: From the above graph it has been analysed that 5 out of 4 respondents will like to
automate and control their home appliances through a single central system whereas one will not.
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4
1
Yes
No

Theme 2: Spend your disposable income on this smart home automation
Options Respondents
Yes 3
No 1
Interpretation: From the above graph it has been analysed that 5 out of 2 respondents will like to
spend your disposable income on this smart home automation whereas two will not.
P 4 Evidence for market evidence
Automation market is one of the fastest growing market whose demand is growing
continuously as nowadays consumers are becoming aware about the increasing number of
technology that can be used or applied to automate their homes or other appliances. Today
people are becoming more and more busy within their daily routine lives, jobs, extra curricular
activities etc. Due to this busy schedule of people need of automation is increasing continuously.
As per a research it has been found that market share of Smart homes is increasing year by year
by approximately 15 percent to 20 percent. Not only this many consumers today are spending on
their smart phones due to this increasing number of automation. Due to this scope for smart
home automation is also increasing. It can be a great business idea as today most of the people
today are becoming aware of these automations and like to control new technology directly
through a central system. According to a statistical graphical representation it has been observed
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3
1
Yes
No

that today Cost of household with smart system and annual consumers spendings is almost equal
and not only this it is increasing continuously.
From the above graph it is clear that number of household with smart systems is
increasing continuously year by year and with it consumer spendings is also increasing every
year. From this it can be said that this smart home automation business idea will be a great
success as people like to spend on smart household system and its demand is also increasing
constantly. According to the above graph a prediction has been made that till 2023 number of
houses with smart systems will increase along with the consumer's spendings.
LO 3
P 5 SWOT Framework to collate evidence to support an objective assessment for smart home
automation
As from the above discussion it is clear that smart home automation can help the
organization to expand their business as well as increase their profit and revenue (Jose and
Malekian, 2017). SWOT analysis of Smart home automation business idea will help in
understanding the strengths, weaknesses, opportunities and threats for the organization who are
thinking of implementing this business idea of automated smart homes:
Strengths:
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Illustration 2: Consumer spending and household with smart systems
(Source: Smart Home Strategic Analysis. 2019)

 One of the biggest strength of smart home automation is that all the home appliances,
electricity etc. can be controlled through a single central mobile applications. It does not
matter whether the customers are at home or somewhere outside they can directly control
their each and every home appliances and electricity with a single touch. It will
consumers work to manage their electricity consumption ,increase home security etc.
much more easier as they can continuously monitor their home though a single
application. This will also help them to focus on their other works and reduce some of
their stress about security of their houses and water and electricity uses (Assael, Le and
Chang, 2017).
 Another strength of Smart home automation is that their customer base is huge who are
ready to pay additional amount fort this automation because of all the services that is
being provided to them through a single application.
 It is one of the biggest opportunity for organizations to focus on this business idea and
increase their overall revenue and profit.
Weaknesses:
 One of the main weakness of this smart home automation is that it is not much innovative
and competition within this much more as compared to other sectors.
 Another weakness is that this technology requires huge amount of investment. Other than
this huge investment organizations need to continuously update themselves with the new
advance technology if they want to survive the competition in this automation sector.
 Company need to have highly skilled employees who can install this completely
automated smart home within their customers home and within their mobiles and if any
problem occurs they they should have appropriate knowledge and required skills so that
they can easily resolve that problem for their customers.
Opportunities:
There are various opportunities for the organizations if they want to succeed in this
automation sector using this business idea:
 Organizations can partnership with professional installers and IT professionals so that
complete installation of this smart home automation becomes much more easier for the
companies. Partnership with IT professionals will help the organization to provide proper
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maintenance and system up-gradation which will help them to provide excellent service
to their customers.
 Companies should try to build their system with energy network optimization so that
energy consumption of the system as well as of all the home appliances connected to the
system can be reduced. This will help the organization to attract more customers.
Threats:
 One of the main threat for smart home automation is the increasing number of
competition in the automation market. Organization need to keep them updated with the
recent technology so that the current competition does not become a threat for them
P 6 Evaluation of competitive market environment
Competitive market environment can be evaluated with the help of porters five force
analysis:
Bargaining power of buyers: Bargaining power of buyer is high for smart home automation as
they are the ones who will be using the automated system (Huang and Lin, 2017). As it is a new
technology so power of buyers will be high because if they will not accept this system then it
will become difficult for the organization to survive in this market.
Rivalry among competitors: Rivalry among competitors will be moderate as today only smart
home appliances are present in the market but fully automated smart homers is a new innovative
idea so the power of competitors will be quite low.
Threat of new entrant: Threat to new entrant is quite high as if this innovative business idea
gets successful then many new commerce will try and establish themselves in this sector. So the
organization need to continuously update themselves with updated technology so that threat to
new entrant can be reduced.
Suppliers bargaining power: Bargaining power of suppliers is quite low for this smart home
automation as there are extremely low number of suppliers required for this new technology
system.
Threat of substitute: Threat of substitute at present is low as it is new technological system and
there are quite low number of substitutes available in the market. However if this innovative idea
succeeds then this threat of substitute will increase as more number of competitors will try to
enter into this market.
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CONCLUSION
From the above assignment it has been summarized that there are various sources of
entrepreneurial ideas and innovation which can help an entrepreneur to start a new business.
With the help of STP it has been concluded that the identified customer segment for this smart
home automation will be all the persons who have a keen interest in new technology, has much
more disposable income and will be from developed countries. From the porters five force model
it has been analysed the threat to substitution and suppliers is extremely low for this business
idea however others are much higher.
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REFERENCES
Books and Journals
Abhishek, R., and et.al., 2017, June. SeSAMe: Software defined smart home alert management
system for smart communities. In 2017 IEEE International Symposium on Local and
Metropolitan Area Networks (LANMAN) (pp. 1-6). IEEE.
Assael, M.C., Le, N.G. and Chang, W.I., 2017. The Business Solution for Smart Home Building
Technology.
Cavaco, N.M. and Machado, V.C., 2018. Evaluation of sustainable competitiveness through
innovation. International Journal of Systematic Innovation. 5(2).
Dubey, R., and et.al., 2015. Antecedents of innovation and contextual relationship. International
Journal of Business Innovation and Research. 9(1). pp.1-14.
Huang, K.C. and Lin, Y.C., 2017. The Battlefield of IoT: Competitive and Cooperative
Relationship Among Smart Home Vendors.
Jose, A.C. and Malekian, R., 2017. Improving smart home security: Integrating logical sensing
into smart home. IEEE Sensors Journal. 17(13). pp.4269-4286.
Mineraud, J., and et.al., 2016. A gap analysis of Internet-of-Things platforms. Computer
Communications. 89. pp.5-16.
Molasy, M., and et.al., 2019, May. Total Innovation Management–Application in Large and
Medium-Sized Manufacturing Enterprises in China. In International Scientific-
Technical Conference MANUFACTURING (pp. 101-113). Springer, Cham.
Ramdani, D., Azis, Y. and Kaltum, U., 2016. Innovation as a Driver for Enhancing Transient
Competitive Advantage in Volatile Environment–a Literature Review. Academy of
Strategic Management Journal. 15. pp.24-34.
Yassein, M.B., Mardini, W. and Khalil, A., 2016, September. Smart homes automation using Z-
wave protocol. In 2016 International Conference on Engineering & MIS (ICEMIS) (pp.
1-6). IEEE.
Online
Smart home Market. 2019. [Online]. Available through :
<https://www.marketsandmarkets.com/Market-Reports/smart-homes-and-assisted-
living-advanced-technologie-and-global-market-121.html>.
Smart Home Strategic Analysis. 2019. [Online]. Available through :
<https://news.strategyanalytics.com/press-release/devices/strategy-analytics-global-
smart-home-market-hit-155-billion-2023>.
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