Entrepreneurial Opportunity Recognition

This assignment delves into the concept of entrepreneurial opportunity recognition. It examines various theories, models (including Porter's Five Forces), and research findings that shed light on how individuals identify and evaluate promising business opportunities. The text highlights the importance of market analysis, technological knowledge, and individual competencies in recognizing these opportunities.

Identifying
Entrepreneurial
Opportunity

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different sources of entrepreneurial ideas and innovation....................................................1
TASK 2............................................................................................................................................2
P2 Rational and market gap for a specific entrepreneurial idea..................................................2
TASK 3............................................................................................................................................3
P3 Data needed to support gap analysis in the evaluation of a specific entrepreneurial idea.....3
P4 Interpretation of data..............................................................................................................5
TASK 4............................................................................................................................................9
P5 SWOT framework to collate evidence...................................................................................9
P6 Evaluation of competitive and market environments..........................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
.......................................................................................................................................................15

INTRODUCTION
Entrepreneurial opportunity can be defined as the process of establishing a business
which is based on a new idea. For all the individuals who are willing to be entrepreneur in future,
it is very important to gather appropriate information of essential requirements that may help to
set up a commercial enterprise successfully (Aliaga-Isla and Rialp, 2012). Main aim of this
report is to figure out the sources that are required to launch an effective business idea.
In this project report a new Chinese restaurant “Sweet and Spicy” is going to be
established in London, UK. Low fat food items and beverages are going to be offered by the
organisation. It is a great place for foodies who are fitness freak. Various topics are covered
under this report that are sources for a new and innovative business idea, choice of a specific idea
and primary and secondary data to identify market potentials. An assessment of potential
viability and competitor analysis has also been covered under this assignment.
TASK 1
P1 Different sources of entrepreneurial ideas and innovation
Most of the entrepreneurial idea are based on innovation because these are made
according to recent market trends. Entrepreneurs get business idea from various sources that
motivate and support them through out its implementation. A new business is going to be
established in London, UK. It is a restaurant which is Sweet and Spicy. Target market of the
organisation is fitness freak and diet conscious individuals. Chinese food and beverage items
with less fat and calories are going to be offered by it. The concept of Sweet and Spicy is being
identified with the help of Drucker's 7 Sources of Innovation which is described below:
Drucker's 7 Sources of Innovation: All these sources are introduced by Peter Drucker in
order to inspire individuals so that a new business can be launched successfully. All the 7
sources are described below:
 The unexpected: It is the first source of innovation that described the unexpected nature
of innovation that may result in massive success or failure. As the business idea of Sweet
and Spicy is very interesting then it may help the entrepreneur to achieve all the business
goals. Identification of unexpected situations may guide to find best idea (Alvare, Barney
and Anderson, 2013).
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 Incongruities: According to this source the entrepreneurs need to gather appropriate data
of market so that a new business can be established with such items that customers are
willing to buy. While introducing Sweet and Spicy the owner need to collect proper
information of market so that taste and preferences of customers can be identified.
 Process need: The entrepreneurs needs to be task oriented rather than situation focused
as it can help to identify best business opportunity. According to this source the
entrepreneurs should use such concept for business which has not yet been used by any
other person. Differentiation and uniqueness of Sweet and Spicy restaurant will help to
attract large number of customers.
 Industry and market structure change: Modification in industry and market structure
guides to create innovative idea for a specific product so that it can meet the expectations
of customers. As Sweet and Spicy is based on an innovative business concept and the
idea is formulated according to market changes in order to reach large number of
customers.
 Demographics: Fluctuations in demographics such as population, education and income
level guides individuals to create a business idea according to them. It will help to meet
the goals of the new businesses such as Sweet and Spicy. For the restaurant it is very
important to give preference to these factors while launching business. It helps to
motivate the entrepreneurs to set a business by analysing the demographics that are
required to be focused while establishing a business.
 Changes in perception: Preferences and perception of customers changes with time. It
can motivate Sweet and Spicy to offer them such food and beverage items that they are
willing to have (Audretsch, 2012).
 New knowledge: It is the combination of scientific and non scientific technology. It is
very important for entrepreneurs to have appropriate information of recent trends of
market. It may motivate the individuals who have formed the business idea of Sweet and
Spicy to focus on the preference and current market trends that have taken place in food
and beverage sector.
All the above described sources can motivate individuals to form innovative ideas for
businesses so that future goals can be achieved. These sources may guide and support the owner
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of Sweet and Spicy to offer such food items to the customers that may meet their preferences
(Godley, 2013).
TASK 2
P2 Rational and market gap for a specific entrepreneurial idea
Market gap concerned with business opportunities that can be used implement an
innovative idea in order to expand business by capturing large market area. Sweet and Spicy is
going to use different targeting segments in order to identify best target market. All of them are
described below:
Behavioural segmentation: It is can be defined as the way of distributing whole market
in small homogeneous groups that are based on the buying behaviour of customers. Sweet and
Spicy can segregate the its target customers according to their buying behaviour such as brand
loyalty, frequency etc. It may help to attract large number of customers and retain them by
offering good quality food items.
Demographic segmentation: This is the segments which is divided according to age,
gender, family size, income, education and other factors of customers. Sweet and Spicy can
divide its individuals on the basis of demographies in order to know them more accurately. All
the socio economic characteristics of consumers may help the restaurant to target such
individuals who are going to buy the food items (Grégoire and Shepherd, 2012).
Geographic segmentation: In this type of segment the market is divided on the basis of
geography. It can be segregated in areas, city, country, state and region. Sweet and Spicy is
going to be launched in London, UK and the geographic segment which can be selected by it is
A country which is London.
From all the above above described segmentations the best suited segment for Sweet and
Spicy is demographic in which the targeted customers are the young, foodies and fitness freak
customers. It will help to reach large number of individuals who are willing to have such food
items that are going to be offered by Sweet and Spicy.
As Sweet and Spicy is a new restaurant and the food and beverage sector of UK is broad
hence there are various competitors are available in the market. These are Min Jiang, Kai
Mayfair and rice republic Chinese restaurant. All of them are well established and famous and
for Sweet and Spicy it is very important to be competitive in the market in order to survive in the
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market. In food and beverage sector there is a high possibility of getting failure due to end
number of competitors but the business idea is unique and innovative that may help to get huge
success in the market. There are end number of growth opportunities for the restaurant in the
market along with this organisation also have to face various risks such as higher competitors.
This can be reduced by offering unique food items to the customers.
Gap analysis is the process of assessing the gap between market demand and
organisation's products. As requirements of customers in food and beverage sector are very high
and it is very important for Sweet and Spicy to meet their aspirations so that business can be
executed appropriately. The organisation have planned to offer fast food items and soft drinks
with less fat. Demand of such products is continuously increasing in the market. It has been
estimated that in future Sweet and Spicy can attain higher growth because customers are
becoming fitness freak and health conscious. Main objective behind the business idea is to offer
unique food items so that business can be established successfully. This can be achieved by
meeting requirements of customers.
TASK 3
P3 Data needed to support gap analysis in the evaluation of a specific entrepreneurial idea
Gap analysis can be defined as the tool which is used to analyse the gap between target
and projected results. As Sweet and Spicy is a new restaurant which is going to be established in
London, UK hence, it is very important for it to conduct a gap analysis so that appropriate
strategies can be formulated. For this purpose a research can be conducted in order to gather
information of customer's tastes and preferences. The data can be collected from primary and
secondary methods. Both are as follows:
Primary research: It is conducted by the organisations in order to gather first hand data
so that accurate decisions can be formulated. Primary research can help Sweet and Spicy to
analyse requirements of customers and their concepts about the restaurant. There are various
sources of collecting primary data. These are survey, questionnaire, interview etc. The data
which is gathered from this method is accurate and appropriate. It is very beneficial for the
restaurant because it may help to formulate business strategies in appropriate manner.
Secondary research: It is a method in which previously researched data is used to form
decisions and strategies. There are various modes of collecting data from secondary sources that
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are websites, journals, books, articles etc. It may guide the marketers of an organisation to
appropriately form business decisions so that all the tasks can be accomplished successfully. This
type of research can also be used by the owner of Sweet and Spicy to gather information of
customer's taste, preferences and current market trends (Kohlbacher, Herstatt and Levsen, 2015).
From both the methods primary research is being selected by Sweet and Spicy in which a
questionnaire is formulated to gather market information. The responses are collected from 30
respondents. The questionnaire is as follows:
QUESTIONNAIRE
Name:
Age:
Address:
Q1. Are you aware of Sweet and Spicy Restaurant?
A. Yes
B. No
Q2. Are you a foodie and fitness freak as well?
A. Yes
B. No
Q3. Do you love fast food?
A. Yes
B. No
Q4. Which is your favourite cuisine?
A. Thai
B. Chinese
C. Mexican
D. None of the above
Q5 Are you agree with the concept that Sweet and Spicy can attain competitive advantage in the
market?
A. Agree
B. Disagree
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P4 Interpretation of data
Q1. Are you aware of Sweet and Spicy Restaurant?
A. Yes 20
B. No 10
Mean 15
Mode 0
Median 15
Interpretation: From the above chart it has been analysed that from 30 20 people are
aware of Sweet and Spicy and 10 are not aware of the restaurant. Mean, mode and median are
calculated on the basis of the responses that are 15, 0 and 15 respectively.
Q2. Are you a foodie and fitness freak as well?
A. Yes 23
B. No 7
Mean 15
Mode 2
6
A. Yes B. No
0
5
10
15
20
25
Column B

Median 15
Interpretation: The above chart represents that 23 out of 30 respondents are foodie and
fitness freak and 7 of them marked no in the questionnaire. From their responses mean, mode
and median are calculated that are 15, 2, 15 respectively.
Q3. Do you love fast food?
A. Yes 22
B. No 8
Mean 15
Mode 6
Median 15
7
A. Yes B. No
0
5
10
15
20
25
Column B

Interpretation: From the above chart it has been identified that 22 individuals has
responded positively and 8 has responded negatively on the question of liking fast food. Mean,
mode and median for their responses are 15, 6 and 15.
Q4. Which is your favourite cuisine?
A. Thai 4
B. Chinese 18
C. Mexican 5
D. None of the above 3
Mean 7.5
Mode 1
Median 3.5
8
A. Yes B. No
0
5
10
15
20
25
Series1

From the above chart it has been analysed that 18 out of 30 respondents love Chinese
food, 5 prefer Mexican, 4 like Thai and 3 does not prefer three of them. Mean for the responses
is 7.5, mode for the same is 1 and median for the answers of respondents is 3.5.
Q5 Are you agree with the concept that Sweet and Spicy can attain competitive advantage in the
market?
A. Agree 21
B. Disagree 9
Mean 15
Mode 3
Median 15
9
A. Thai B. Chinese C. Mexican D. None of the above
0
2
4
6
8
10
12
14
16
18
20
Column B

From the above chart it can be analysed that 21 out of 30 respondents are agree with the
concept of that Sweet and Spicy can achieve competitive advantage in future but 9 of them does
not think the same. Mean, mode and median for the result are 15, 3, 15 respectively.
TASK 4
P5 SWOT framework to collate evidence
SWOT analysis: It is a technique which is used by organisation to analyse its strengths,
weaknesses, opportunities and threats. A SWOT analysis of Sweet and Spicy is conducted by the
entrepreneur that may help to formulate new strategies in order to successfully establish the
business (Mitchelmore and Rowley, 2013). The analysis is as follows:
Strengths Weaknesses
 The new business idea is based on
customer's preferences which may
result in increased market share.
 The food items that are going to be
offered by Sweet and Spicy have
unique feature of low fat which will
 There is a lack of trained staff members
that may create issues for the firm in
future.
 As it is new business hence there is a
lack of sufficient finance that may
affect appropriate executing of business
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A. Agree B. Disagree
0
5
10
15
20
25
Column B

attract fitness freak customers. activities.
Opportunities Threats
 Sweet and Spicy is offering low fat
food to the customers which will attract
large number of foodies and fitness
freak customers towards the company.
 As the business idea of the restaurant is
unique that may help to achieve growth
quickly by capturing large market area.
 There is a high competition in food and
beverage market and it may affect
business operations of Sweet and Spicy.
 Customer's preferences and tastes
changes with time and if Sweet and
Spicy is not able to meet their
expectations then it may affect on
overall performance of the company
(Siegel and Renko, 2012).
Sweet and Spicy have various risks such as high competition and the restaurant can
overcome the risk by offering unique food items that may grab attention of customers and meet
their requirements.
P6 Evaluation of competitive and market environments
Competitive market analysis is a process of analysing existing competition that may
affect a new business or a running business. The best technique that can be used by Sweet and
Spicy in order to analyse competitive market is Porter's five force model. This model is
described below:
Porter's five force model: This model was introduced by Michael Porter in year 1979 in
order to facilitate new entrepreneurial ventures to while assessing factors that may affect their
business in future. This model can be used by Sweet and Spicy to identify the competitive forces
that are affecting food and beverage sector (Porter's Five Force Model, 2018). All the five
elements of this model are described below:
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(Source: Porter's Five Force Model, 2018)
 Industry rivalry: For all the new businesses that are going to be launched in the market
it is very important to identify existing competitors in the market who are providing same
products to the customers. For Sweet and Spicy it is essential to gather information of
existing firms which may affect business of the restaurant. Main competitors of the firm
are Min Jiang, Kai Mayfair and rice republic Chinese restaurant. It is very important for
Sweet and Spicy to be competitive in the future which is possible by offering good food
and beverage items to the customers.
 Threat of new entry: In Current era competition in food and beverage sector is
continuously increasing and new restaurants are launching frequently. It is very important
for Sweet and Spicy to keep information of new entries in the same market so that a
unique feature can be added in the food items to get competitive advantage (Smith and
Ibrahim, 2012). In UK there are less rules and regulations on small business like Sweet
and Spicy so the organisation have higher threat of new entry in the same market.
 Threat of substitutes: There are various cuisines that are eaten by customers and for
Sweet and Spicy it is very important to analyse such restaurants which are supplying
substitutes to the customers. These are Mexican, Thai, Continental etc. It will help the
restaurant to retain its customers by offering them such food and beverage items that may
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Illustration 1: Porter's Five Force Model, 2018

fulfil their requirements. In market demand of Chinese and fast food is continuously
increasing which will reduce the threat of substitutes because Sweet and Spicy is going to
offer fast food items with less fat.
 Bargaining power of suppliers: In Food and beverage market of UK there are end
number of suppliers hence it may help Sweet and Spicy to bargain on food materials. It
will help the restaurant to get food material on low prices so that monetary resources can
be saved for future (Suddaby, Bruton and Si, 2015).
 Bargaining power of buyers: In UK demand of fast food items is very high hence there
is less bargaining power of customers. It will be very beneficial for Sweet and Spicy
because there are end number of buyers that will decrease their bargaining power.
For Sweet and Spicy it is essential to conduct a PESTLE analysis in order to analyse
market conditions. All the elements of this model are as follows:
 Political: In UK political parties are supporting new business in order to develop the
economy. They are implementing low tax rates on such business which have higher
potentials to get developed in future. For Sweet and Spicy it is a great opportunity to
establish the business successfully..
 Economic: In UK food and beverage sector is growing massively. This sector is
contributing a higher amount in the national income of the country hence the government
supports the sector. As Sweet and Spicy is also a part of this sector then it will be
beneficial for the restaurant in order to successfully launch a new venture..
 Social: These factors depends upon education level, taste and preferences, paying
capacity of customers etc. Local public of UK like to have different types of cuisines and
Sweet and Spicy is offering Chinese food with less fat hence it is a unique concept that
may help to target large number of customers. It is very important for the firm to set
appropriate prices for food items that may attract the target market (Tang, Kacmar and
Busenitz, 2012).
 Technological: All the elements that are related to latest technology in the market. In UK
People are interested in technology hence it is very important for Sweet and Spicy to use
some technological factors. If the organisation is using any new technique then it will
help to grab attention of customers.
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 Legal: Rules and regulations of legal parties are required to be followed by all the
businesses as it may help to smoothly run the business. If Sweet and Spicy is not able to
implement the rules that are imposed by government then it will affect its launch in the
market.
 Environmental: Environment protection law and regulations are the part of such factors.
Sweet and Spicy needs to make sure that it is not harming society and environment as it
is required to perform all the operational activities (Wilson and Martin, 2015). It will
create different opportunities for the restaurant because the government supports such
business entities which are concerned with social and environment welfare activities.
All the above described factors are required to be analysed while launching a new
business because all of them may help to form appropriate strategies to successfully conduct all
the operations.
CONCLUSION
From the above project report, it has been concluded that entrepreneurs are the
individuals who analyse market opportunities and grab them. It is very important for all the
entrepreneurs to identify the actual needs and wants of customers so that an innovative idea may
be created in order to meet their expectations. If a businessmen is not able to analyse current
trends of market then it is not possible to establish a successful business. PESTLE analysis is a
tool that can be used to assess external environment that may help to form appropriate strategies
to run the business.
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REFERENCES
Books and Journals:
Aliaga-Isla, R. and Rialp, A., 2012. How do information and experience play a role in the
discovery of entrepreneurial opportunities? The case of Latin-American immigrants in
Barcelona. Latin American Business Review. 13(1). pp.59-80.
Alvarez, S. A., Barney, J. B. and Anderson, P., 2013. Forming and exploiting opportunities: The
implications of discovery and creation processes for entrepreneurial and organizational
research. Organization Science. 24(1). pp.301-317.
Audretsch, D., 2012. Entrepreneurship research. Management Decision. 50(5). pp.755-764.
Godley, A. C., 2013. Entrepreneurial opportunities, implicit contracts, and market making for
complex consumer goods. Strategic Entrepreneurship Journal. 7(4). pp.273-287.
Grégoire, D. A. and Shepherd, D. A., 2012. Technology-market combinations and the
identification of entrepreneurial opportunities: An investigation of the opportunity-
individual nexus. Academy of Management Journal. 55(4). pp.753-785.
Kohlbacher, F., Herstatt, C. and Levsen, N., 2015. Golden opportunities for silver innovation:
how demographic changes give rise to entrepreneurial opportunities to meet the needs of
older people. Technovation. 39. pp.73-82.
Mitchelmore, S. and Rowley, J., 2013. Entrepreneurial competencies of women entrepreneurs
pursuing business growth. Journal of Small Business and Enterprise Development.
20(1). pp.125-142.
Siegel, D. S. and Renko, M., 2012. The role of market and technological knowledge in
recognizing entrepreneurial opportunities. Management Decision. 50(5). pp.797-816.
Smith, D. G. and Ibrahim, D. M., 2012. Law and Entrepreneurial Opportunities. Cornell L. Rev.
98. p.1533.
Suddaby, R., Bruton, G. D. and Si, S. X., 2015. Entrepreneurship through a qualitative lens:
Insights on the construction and/or discovery of entrepreneurial opportunity. Journal of
Business venturing. 30(1). pp.1-10.
Tang, J., Kacmar, K. M. M. and Busenitz, L., 2012. Entrepreneurial alertness in the pursuit of
new opportunities. Journal of Business Venturing. 27(1). pp.77-94.
Wilson, N. and Martin, L., 2015. Entrepreneurial opportunities for all? Entrepreneurial capability
and the Capabilities Approach. The International Journal of Entrepreneurship and
Innovation. 16(3). pp.159-169.
Online
Porter's Five Force Model. 2018. [Online]. Available thorugh:
<https://www.strategicmanagementinsight.com/tools/porters-five-forces.html>
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