Identifying Entrepreneurial Opportunities

This report evaluates different sources of entrepreneurial ideas and innovations, and discusses the rationale and market gap for a specific entrepreneurial idea using relevant tools and techniques. It also explores the data needed to support the gap analysis in the evaluation of a specific entrepreneurial idea, and interprets the data to provide evidence of market potential. Additionally, it applies the SWOT framework to collate evidence and evaluates the competitive and market environment in which the idea will be launched to assess potential viability.

Identifying
Entrepreneurial
Opportunities

Contents
INTRODUCTION.......................................................................................................................................3
LO 1............................................................................................................................................................3
P1 Evaluation of different sources of entrepreneurial ideas and innovations...........................................3
LO 2............................................................................................................................................................5
P2 Explain the rationale and the market gap for a specific entrepreneurial idea using relevant tools and
techniques to support your choice............................................................................................................5
LO 3............................................................................................................................................................7
P3 Data needed to support the gap analysis in the evaluation of a specific entrepreneurial idea.............7
P4 Interpretation of data to provide evidence of market potential.........................................................11
LO 3..........................................................................................................................................................13
P5 Application of SWOT framework to collate evidence......................................................................13
P6 Evaluation of competitive and market environment in which the idea will be launched to asses
potential viability...................................................................................................................................14
CONCLUSION.........................................................................................................................................15
REFERENCES..........................................................................................................................................16

INTRODUCTION
Entrepreneur is an individual who starts his own business with a new idea using all the
available resources. He bears all the risks and takes up all the profits. Generally an entrepreneur
explores a field of business by grabbing a new opportunity or bringing a totally new and
creativity idea to cater the target market. An entrepreneur is a person who grabs the opportunity
and exploits it to its fullest. This report has taken an example of Cosmetic Company which
manufactures the beauty products for both men and women. The company deals into the
products like foundation, eye shadows, nail paints, lipsticks, lip gloss and what not. The
company also deals in skin care products which are of good quality (Nesse and et. al., 2013). The
company offers good quality products in reasonable prices or comparatively low prices from its
competitors.
This report talks about the different sources of entrepreneurial idea and innovation, the
rational and the market gap for a specific entrepreneurial idea using various tools and techniques.
The report also includes the data which supports the gap analysis along with its interpretation.
Later the report covers the SWOT framework of the business idea and the evaluation of
competitive and market environments in which the idea would be launched.
LO 1
P1 Evaluation of different sources of entrepreneurial ideas and innovations
An individual who sets up his/her own business or businesses is an entrepreneur, bearing
all the risks in the hope of making a profit (Christiansen, 2014). Studying the market is not
everybody’s cup of tea. Every person who is interested in opening his business, must be able to
study the market thoroughly in order to find the opportunity and grab the same. Studying Market
is crucial sometimes as it nay not be as accurate or it may not turn out to be that accurate as
planned. Most of the entrepreneurial opportunities are grabbed through the market study.
Entrepreneurs share their stories and they tell about how they identified the problem in the
market and how they saw it as an opportunity in order to start the business, taking all the risks.
The idea is to see the inefficiency in the market and how it can be solved and that becomes the
business idea.
The biggest example of it can be Paytm, ola, grofers etc. All these businesses identified the
problem of not having an ease of online payment, available cabs at the phone tips, home delivery
of groceries etc. And grabbed these opportunities, risked it all in order to earn profit and market
Though many business ideas are identified from the exciting business franchise. One of the ways
can be related to expanding the business in the same country or can be another one. There are
various sources from where you can learn and can be taken as an opportunity to start a new

business. The biggest source can be the customers, and listening to their problems and
understanding can lead to a new idea (Yoon, 2012).
A customer needs, their demand, what they want, what they desire to have, what are their
dreams, what they want in a product and services, how they want it, how they want the product
and services to be delivered and at what price, Price is the major concern for any customer in the
world, quality can be second but the price is the priority.
Employees can be another source of developing an idea. In an organization, a large one
especially, employees can provide many ideas. This why they say that employees employees
should be given the opportunity to share their views and perspectives in order to understand the
organization better and to improve the quality of the product and services. For example,
companies like google give a free time to their employees so that they can utilize this time in
order to create, learn, and understand the product and services. Listening to employees,
customers, in as beneficial as studying the market and it’s the easiest and most effective ways to
get any business opportunities. Well, the questions like is the product and services real? Are
these products and services market-ready? Will they be accepted in the market by the
consumers? Will they generate profit for the business or be a complete fail? How much time will
it take to establish the business in the market?
It’s the age of the internet, where there are a number of opportunities for people to start their
business and sometimes without much of an investigation and investment. They can just find an
idea and start working on it and in no time they’ll start earning profit (Saeed, Chaudhari and
Mokhtar, 2012). The existing businesses have found the opportunity to expand the business like
making the business online and providing the online purchase and delivering the product and
services at the doorstep. The major key is to analyze the market in order to understand the
current state of the economy and if the market is real or not? Who will you serving the product
and service? How will they reach to you or the business will reach them? How they’ll know
about the business? How the products and services will be delivered to them?
Current competitors in the market can be the new business opportunity or can be a threat to the
business. How to be better than the existing businesses? How to establish a market for the new
business with the presence of the existing ones. Before starting any business, an entrepreneur has
to consider many risks, like will the product and services will be accepted by the consumers, is
the market segment suitable for the same, are any competition to be worried about, how the
product or service will be introduced so that it doesn’t fail even before starting.

LO 2
P2 Explain the rationale and the market gap for a specific entrepreneurial idea using relevant
tools and techniques to support your choice.
Entrepreneurial idea can be identified by analyzing the internal and external environment.
Internal analyses may at the initial point may include whether the entrepreneur has that interest,
capability or resources to grab that opportunity. Before starting of any business, Cosmetic
Company in this given case has to do a lot of research to know about the market and the
customer’s preferences (Prasad and et. al., 2013). These researchers may include:
Identifying the customers: - The entrepreneur main motive is to find the customers for his
business idea that who are the people interested in buying your products or can afford the
products. As in the case with cosmetic company, the entrepreneur has to find out the prospective
customers for his business. He needs to find out the people who uses more cosmetic and has that
income to buy the price at which he sells his products. Identification can be done through the
segmentation of market. Segmentation is the process in which an entrepreneur divides the market
into groups which are different on many bases. These bases may include:-
Behavioral segmentation: In this type of segmentation, the market is divided on the bases of
behavior and attitude of the people. Different region of people has different attitudes and
behavior with regarding a particular topic. By knowing the taste and preferences of the
customers, a business will develop those products which would satisfy the needs and desire of
the customers. As in the case with Cosmetic Company, they can segment the market accordingly
to the behavior of people that whether they prefer to use any cosmetic onto their faces or not. Or
what kinds of customers or skin products they prefer to use, organic, natural or skin care
products which are manufactured from synthetic ingredients (Mendonça, Varajão and Oliveira,
2015).
Demographic segmentation: In demographic segmentation, the market is divided on the
following basis:-
Age: What is the age group of majority of population is considered here.
Gender: The demographic distribution of gender is considered here. What is the total
ratio between man and woman, the total number of man, or kids, or girls and women? The total
number of old people and etc.
Education: Education refers to the literate rates of the population. What number of
population is educated into the country or region? What number of population is not educated
into a particular region? And etc.

Income: In this the segment is basis on the income which people earn during a particular
time (Maunder, 2019). Income is a main factor because through income, a company can know
what kind of products needs to get served into the market.
Through this the Cosmetic Company can segment the market and can make the decisions
accordingly.
Geographic segmentation: In this type of segmentation, the market is divided geographically
and on region wise. Here the divide is done on the basis of country, state, district, city, colony,
and the like. As in the case with Cosmetic Company, the geographical segmentation may be the
country which a company wants to target or any state which it feels can have more customers.
Products and Services
Tangible: Tangible are the products which can be touch, feel and can be seen by the
people. For example: as in case with skin care; creams, moisturizers, face packs and etc. These
products do not get perishable quickly. Tangible products can also get store with the customers.
Intangible: Intangible are the services which only can be felt by the service takers. For
example, restaurants services, salon services, service done by maids and the like. These services
cannot be seen and touched by the people but can only experience it. The service taker cannot
also store it as they are perishable after competition of the defined course (Markus and
Loebbecke, 2013).
Industry environment: - Industry environment refers to the external factors of the whole
industry which affects the operations and activities of an industry. Analyzing the industry
environment is very much necessary; this helps an organization to know about the trends and
situations which are running into the industry. As in the case with Cosmetic Company, the
company would get to know about the competitors or competitions which are prevailing into the
industry. The company would also get to know about the substitute products and the power of
the customers which can force the company to make alternations into the products or services
they offers (Markides, 2015). The industry environment can be analyzed by Porter’s five force
model.
Porter’s five force model is used to analyze the competitive advantage and the industry. It is an
external analysis in which the industry analyses its competitive advantage which it can serve into
the market. This model has 5 factors and they are:-
Threats of new entrants: It refers to the entry of new competition into the industry. New entries
into the market place puts burden onto the shoulders of the existing companies. The level of new
entries depends upon the barrier which is present in an industry. High the barriers, low will be
the new entrants into the market. Whereas low the barriers, high would be the level of new
entrants. As in the case with Cosmetic company, the industry hardly has any barrier so therefore

the number is new entrants is large as any time they can enter into the business and any time they
can make an exit.
Competitive rivalry: Competitive rivalry refers to the competition which is available into the
market place. Competition refers to the rivalry. Higher the rivalry more will be the burden on the
companies. To win the rivalry competition, businesses need to come up with innovative and new
product or services which can help them in gaining the competitive advantage and grab the first
opportunity. As in the case with Cosmetic Company, the industry has many other companies
which also play a dominant role into the industry.
Threat of substitute: Substitute products are the products which are offered by some other
company with same features but at low prices. Substitute products works as a threat for
companies as they would shift the customers to some other substitute company (Lim, Busenitz
and Chidambaram, 2013). As in the case with Cosmetic Company, the company has the threat of
substitute as the number of competition is also very much high. So any company can produce the
same product at different price. Therefore, it is necessary for the business to regularly come up
with new products and services to gain competitive advantage.
Bargaining power of buyers: It refers to the power of buyers which can affect the operations
activities of a business. The buyers can easily shift to some other company when other company
has something new and innovative to offers. The buyers also can affect the operations and
activities of a company; if any other company provides better products then Cosmetic Company
has to lower its price as to attain its customers.
Bargaining power of suppliers: The bargaining power of suppliers refers to the level of terms
and conditions of suppliers of the company to supply raw materials and to distribute the products
into the market place. Higher the terms and condition will make the price of the product quite
costly, whereas lower the terms and conditions of the suppliers can low the prices of the product.
As in the case of Cosmetic Company, the level of terms and conditions are quite flexible
therefore creating an easy availability of resources because the organization has many options
from where it can procure the resources making the power more into the hands of companies.
LO 3
P3 Data needed to support the gap analysis in the evaluation of a specific entrepreneurial idea.
Market research refers to the process of gathering information about the market situation
and scenario. It is considered as an important component in business strategy. Through market
research the company can maintain the competitiveness and gain the tag of first mover for an
opportunity (Lechler, Edington and Gao, 2012). Market research is of two types, namely
primary and secondary research.

Primary research: Primary research is concerned with the gathering of information and
data by observation, survey, self- experiments and so on. This is the first hand data which a
researcher gathers. This method of market research is quite time consuming and costly to the
investigator. In primary research the chances for wrong assumptions or results are quite low
(Krotov, 2017).
Secondary research: Secondary research refers to the use of researches which already
has been done by some other researcher. There are many sources available for secondary
research like newspapers, journals, books, surveys, articles and so on. Secondary research is
done was a primary research from someone. This method is very easy, less time consuming and
very cheap to avail.
No
Q1. Do you know about Cosmetic Company?
ANS. Yes 6
No 4
Questionnaire
Name:
Age:
Address:
Q1. Do you know about Cosmetic Company?
ANS. Yes
N
No
Q2. Are you familiar to the products of Cosmetic Company?
ANS. Yes
No
Q3. Are they providing satisfaction to you?
ANS. Yes
No
Q4. Do you have any issue with the products of Cosmetic Company?
ANS. Yes
No
Q5. Do you prefer to buy the cosmetics from online?
ANS. Yes
No

Yes No
0
1
2
3
4
5
6
7
Pole
Q2. Are you familiar to the products of cosmetic companies?
Yes 8
No 2
Yes No
0
1
2
3
4
5
6
7
8
9
Q3. Are they providing satisfaction to you?
Yes 9

No 1
Yes No
0
1
2
3
4
5
6
7
8
9
10
Q4. Do you have any issue with the cosmetic company?
Yes 2
No 8
Yes No
0
1
2
3
4
5
6
7
8
9

Q5. Do you prefer to buy cosmetic from online?
Yes 8
No 2
Yes No
0
1
2
3
4
5
6
7
8
9
P4 Interpretation of data to provide evidence of market potential.
Q1. Do you know about Cosmetic Company?
ANS. Yes 7
No 3
Mean: 5
Mode: 5
Mode: 2
Interpretation: From the pole above out of 10 customers 6 respondents known about the
Cosmetic Company and 4 do not know about the company.
Q1. Do you know about Cosmetic Company?
ANS. Yes 6
No 4
Q2. Are you familiar to the products of cosmetic companies?
Yes 8
No 2

Mean: 6
Mode: 6
Mode: 0
Interpretation: From the pole perform above out of 10 respondents 8 people are familiar to the
products of Cosmetic Company. 8 customers have used it.
Mean: 5.5
Mode: 5.5
Mode: 1
Interpretation: From the pole done above, out of 10 respondents 9 customers are satisfied with
the products of cosmetic company.
Mean: 6
Mode: 6
Mode: 0
Interpretation: From the pole done above, out of 10 respondents 2 customers have issue with the
company else 8 are very much happy with the company.
Mean: 6
Q3. Are they providing satisfaction to you?
Yes 9
No 1
Q4. Do you have any issue with the cosmetic company?
Yes 2
No 8
Q5. Do you prefer top buy cosmetic from online?
Yes 8
No 2

Mode: 6
Mode: 0
Interpretation: From the pole done above, out of 10 respondents 8 prefers to buy the cosmetic
online.
It is s statistical tool which evaluates the gap between the target and anticipated results.
This gap will get reduces by the use of various strategic tools for example through SWOT
analyses where a company performs internal analyses and then forms the strategic plan
accordingly (Horner and et. al., 2015). Also the company can use the Porter’s five forces model
to know about the competitive advantage of it by knowing about the competition, situations and
companies which are present into the industry.
LO 3
P5 Application of SWOT framework to collate evidence.
SWOT analysis is a tool which is used by a company for the internal analysis. From the
analysis a company forms its strategic planning. SWOT stands for Strengths, weakness,
opportunities and threat of a company. It helps the company in decision making process. In
SWOT-
Strengths include the characteristics which differentiate the business from other businesses.
Weakness includes the weak points where the business is lacking or has any sort of
disadvantage.
Opportunities include the area where the business can exploit more business or projects for its
growth.
Threats are the risks which an organization face or that causes trouble to the company.
The SWOT analyses of Cosmetic company are as follows:-
Strengths: The strength may include that the Cosmetic Company provides the quality
products to the customers at a lower prices compared to its competitors. The company also has a
wide range of products ranging from cosmetic which may includes foundation, eye shadow,
lipsticks, primer, highlighter and what not. Similarly the company produces good quality of skin
care products (Fai, Mark and Prasad, 2013). The company also has great ideas to market itself
into the market space. The company’s basic motive is to provide quality products by gaining cost
advantage.
Weakness: The weakness may include the lacking efficiency in the distribution network
and channels. It also includes the innovations and creativity use by the other companies which
outdated the products of Cosmetic Company. Weaknesses also include the marketing techniques

used by the other companies to educate the customers about their products and how they are
different from the others.
Opportunities: The Company can exploit more into the skin care and Cosmetic area as
these areas will keep on foster with the time. The company can also go for mergers or acquisition
which will help the company in major way to get successful. The company also has the
advantage of diversifying itself into many other fields or areas in skin care (Ehret, Kashyap and
Wirtz, 2013). The company can also expand itself to other locations or region making it well
known about itself to the customers or targeted market.
Threats: The threat includes the competition received from the other companies. The
rivalry from other brands as a threat of the company. The threat also includes the innovations and
new ideas brings by other companies into the market. Social factor or any change in the taste and
preference of customers also works as a threat to the company.
P6 Evaluation of competitive and market environment in which the idea will be launched to
asses potential viability.
Market environment are the factors which affects the working and operations of a
businesses. Market environment includes both internal and external environment. Internal
environment are the factors may include employees, organizational structure, policies, customers
and so on. These factors can get in control by the business (Berman, 2012). Whereas external
factors include political, economical, social, technological, environment and legal. These factors
are out of control of any business but can affect the business in a huge way.
There is a model called PEST analysis which is used by a company to analyze the
external factors in the environment. The PEST analysis of Cosmetic company is as follows:-
Political: These factors include the degree to which the government can have a control on the
businesses. The political factor may include fiscal trade policies, rules and regulation formed by
the government and so on. Any political change would lead in a change in the operations and
activities of Cosmetic Company.
Economical: Economical factors tell about the situation and conditions of an economy. The
factors may include employment rates, GDP, growth rates, and so on. If the economic condition
of a nation is stable then the companies running there would also be stable. Similarly, if the
economic condition or situation of a nation is not so good then the company there will also
suffer.
Social: Social factors include the attitude, behavior, values, ethics, taste, preferences and so on
of the people. By knowing this the company gets an idea about the trends which are running into
the business and also about attitude of the people regarding a particular topic (Choi and et. al.,
2015). Cosmetic company from this factor knows about the prevailing trends and the needs and
desires of the target market.

Technological: Technological factors include the technological advancements and awareness.
More the technology prevailing into a nation, more will be its development. The Cosmetic
Company makes the use of digitalization to perform digital marketing, and also by putting its
products at online platform also (Davenport, 2014). The digitalization helps a company in
performing the advertising and promotion activities which is comparatively cost low to them.
Also the company can put their products online at their own website or other shopping sites.
CONCLUSION
From the report presented above, the business opportunity which an entrepreneur can find
for himself is included. The report has taken the business environment which affects the working
of a business. These environments include both internal and external factors. For analyzing of
internal factors, SWOT is performed for the organization which helps in making the decisions
about strategic planning. Whereas for external analyses PEST is done this undertakes the
political, economical, social and legal factors into account.

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