Report: Identifying Entrepreneurial Opportunities for Natural Essence

This report provides a comprehensive analysis of entrepreneurial opportunities within the cosmetic and beauty product sector, focusing on the case of Natural Essence. It begins by identifying and assessing various sources of entrepreneurial ideas and innovation, highlighting factors such as social, economic, and technological influences, and referencing Peter Drucker's sources of innovation. The report then delves into the rationale and market gap for a specific entrepreneurial idea, emphasizing the creation of organic skincare products. It utilizes tools such as market segmentation (demographic, behavioral, and geographic) and Porter's Five Forces model to analyze the competitive environment. The report further outlines the data needed to support gap analysis, comparing Natural Essence with competitors in terms of pricing, market entry, and supplier and buyer power. SWOT analysis is employed to assess the strengths, weaknesses, opportunities, and threats associated with the entrepreneurial idea. Finally, the report evaluates the competitive and market environment to assess the potential viability of the venture, providing a holistic view of the entrepreneurial landscape and strategic considerations for Natural Essence.

Identifying Entrepreneurial
Opportunities

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Identify and assess various sources of entrepreneurial ideas & innovation...........................1
TASK 2............................................................................................................................................3
P2 Rationale and market gap for a particular entrepreneurial idea using tools & techniques....3
TASK 3............................................................................................................................................5
P3 Data needed to support gap analysis in evaluation of entrepreneurial idea...........................5
P4 Interpretation of data to give evidence of market potential...................................................6
TASK 4............................................................................................................................................7
P5 SWOT analysis to support objective assessment of entrepreneurial idea..............................7
P6 Evaluation of competitive & market environment to assess potential viability....................7
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
In contemporary market place, various opportunities are available in market which is
important for entrepreneur to identify and exploit. Cosmetic & beauty products sector is one of a
growing industry as many people are interested in establishing their own start up with their
innovative ideas and creativity for the purpose of earning higher profits (Block and Wagner,
2010). In the present assignment, preferred organisation is Natural essence which offers beauty
& skin care products. It is consider as new venture which is liked by customers very much and
earn high profits from their goods. The report includes evaluation of various sources of
innovative ideas and based on external market scanning, rational decisions are taken. Apart from
this, SWOT analysis is defined which assist an organisation in knowing strengths and
weaknesses of their ideas.
TASK 1
P1 Identify and assess various sources of entrepreneurial ideas & innovation
Entrepreneurs are those persons who identifies opportunities and grab them in order to
execute their innovative ideas for establishing a venture. They set up their own business by
taking financial risk with the hope of earning high profits. These individuals contribute in
economic growth of country by implementing noble and innovative ideas. Business environment
is dynamic & changes are happening rapidly because of innovative technologies introduced by
entrepreneurs. They first identify market opportunities by understanding needs of customers and
grab chances to create an innovative product. Huge employment opportunities can be created for
local population by execution of STEEP factor (Dimov, 2011). Peter's 7 sources of innovation
plays an important role in implementing innovative idea and establishing a venture. There are
some factors that needs to be considered before developing a product. These are:
Social factor: This factor is considered in order to determine that people must be able to
understand technology value. It is important for an entrepreneur to be in good financial position
before starting a new venture. Due to Brexit, there are various changes that takes place in laws
and regulations from which people are not fully aware of.
Economical factor: These are related with GDP rate and per capita income that depicts
stable economic condition of country. For investing high capital, the economical condition of a
nation must be good. It is right time for entrepreneur to establish cosmetic product industry.

Technological factor: Today, there are various new technologies available in market that
creates huge number of opportunities for people. It is important for an entrepreneur to develop
cosmetic products by using such highly innovative technologies (Ekpe, Mat and Razak, 2010).
Environmental factor: Before establishing any venture, it is necessary for an
entrepreneur to consider environmental factors for a particular place. All protective measures
should be taken in order to ensure that operations of firm will not harm nature or environment in
any way.
7 sources of innovative opportunity by Peter Drucker are defined to manufacture
cosmetic products such as Natural essence.
Incongruity: It is concerned with the gap of what is produced and what is needed. It is
related with the production processes of various cosmetic products.
Process needs: For performing different business operations effectively, it is necessary
for firm to implement innovative and new techniques.
Market structure & industry needs: Implementation of changes in prices of products as
per market trends is necessary for firm. So, it is important for company to design innovative
pricing strategies.
Demographics: It is required by firm to pay attention towards the changes that constantly
occurs in income levels, populations, education and age.
Changes in meaning, perception & mood: Customer perceptions should be considered
by management team of natural essence. It assists them in developing cosmetic products for
consumers as per their needs and in attaining high profits.
New knowledge: It is related with finding out new and innovative ways of doing things
as well as improving processes. Natural essence should use innovative technology in order to
gain competitive edge over competitors (Foo, 2011).
Unexpected: It is important for natural essence to do market analysis on regular basis in
order to determine and exploit new opportunities.
Types of innovation:
Innovation is a factor that plays vital role in growth and success of firm. Various types of
innovation are as follows:
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Product innovation: It is related with introduction of such product that is new or
improved and differentiate from others. Natural essence use product innovation for producing
cosmetic products.
Process innovation: By using process innovation, Natural essence implement new or
improved production processes that creates some value for firm. In this, firm brings innovation in
production processes (Heinonen, Hytti and Stenholm, 2011).
Incremental innovation: Natural essence brings various small improvements in existing
cosmetic products of company by using incremental innovation. This assists the firm in
executing effective changes in their goods.
Disruptive innovation: By disruptive innovation, company develops new value network
and market & disrupts the existing one. It is a new utilization for technology which breaks
business model of those firms who are unable to integrate & adapt with it.
The theory of Schumpeter's performs an effective role in improving business operations and
functions. If the firm has innovative ideas and tools, it becomes easy for company to introduce
innovative goods in market. When any innovation takes place in business cycle, it refers as
Schumpeter’s source of innovation.
TASK 2
P2 Rationale and market gap for a particular entrepreneurial idea using tools & techniques
In current scenario, various changes takes place in business as any change occurs in
business surroundings. Main aim of firm is to create innovative and creative products that leads
the firm towards growth and success as well as satisfy needs of customers. Brexit highly
influence the working and operations of Natural essence as various changes occurs in legislation
process of UK (Quan, 2012). People are not aware of these changes and due to which activities
are not performed properly. Various opportunities lie in market that can be exploit by
entrepreneurs by proper environmental analysis. A good idea an entrepreneur, firm as well as
society. The idea can be a completely organic skin product which only contains natural
ingredients and are very effective for customers. This product can assist the firm in attracting
more customers and attaining large portion of market share. The thing which makes it acceptable
by customers is its suitability for all skin types.
Other feature that makes it differentiate with others is that it can utilized by individuals of
any age group as all the ingredients used in this product are natural and can not harm anyone.
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There is no fear of skin damage or any other skin problem (Renko, Shrader and Simon, 2012).
All the hygienic factors are keep in view during manufacturing of product so that high quality
goods can be produced. Some entrepreneurial ideas are as follows:
Example for all: One of the curious thing in market for both customers and competitors
is product. If it is unique and different from existing one then, it can be a good example for all.
Natural essence is committed to introduce innovative goods that are crafted naturally. So, the
firm came up with skin care product range which are produced by high quality ingredients and
are organic.
Creates benefits to all: As the product is unique and hits market, it generates benefits for
all. It enhance the skin of customers and administer some other benefits, generates employment
for local population as well as contributes in economic development and growth of GDP.
Market segmentation:
Segmentation provides a basis to divide market in small sub groups. It assists the firm in
analysing their customers and alterations are made in product accordingly. Natural essence
divides market on the basis of types of segmentation as follows:
Demographic segmentation: Population is divide on the basis of age, income, life style,
gender etc. Products related to skin are sold according to the consciousness of customers in
respect to their health which differs person to person.
Behavioural segmentation: In this, behaviour & perception of customers are analysed
and market is divide on that basis. For instance, if an individual is more health conscious, they
look for various products than others (Short and et. al., 2010).
Geographic segmentation: Population is segmented based on their geographic region
where they reside. For instance, policies of each country are different.
Porter's five force model:
Industry rivalry: When many firms available in market with similar products, rivalry
develops. Competitors use different pricing strategies, products and promotional techniques to
win the market. Natural essence facing various challenges like overcapacity, exit risk from
market, lack of differentiation, high stakes investment etc. Currently, the major competitor of
company is Lavender group.
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Threat from substitute products: Because of availability of competitors, substitute goods
are easily available in market. Customers always try to find alternatives that provides them value
for money.
Bargaining power of buyers: When number of buyers are more, price of product gets
affected. If bargaining power of customers are high, firm have to cut down prices of their
products. So, satisfaction and retention of customers is the main concern of company (Tang,
Kacmar and Busenitz, 2012).
Bargaining power of suppliers: Suppliers put huge impact on production of firm. They
administer raw materials to company which are necessary for producing a product. Presence of
many companies with similar goods affect bargaining power of suppliers. They can rise price
that affect costs of natural essence.
Potential entrants: Major threat of entrant for firm are:
 Strong promotional channels are needed by new ventures to advertise products
effectively.
 Product differentiation, satisfaction and loyalty of customers.
 Capital requirement.
 Economies of scale.
 Government policies and regulations are the huge barrier for new entrants.
TASK 3
P3 Data needed to support gap analysis in evaluation of entrepreneurial idea
There are various factors that influence that influence thinking ability of an individual.
An entrepreneur needs to analyse such factors and try to lower down their adverse impact. There
are various competitors of natural essence so, it is essential for them to take care of their policies
and plans. In cosmetic industry, the scopes are so wide (Break Even Point, 2017). This is the
reason that many firms enter into market. Some data of company are as follows:
Basis Company Competitive firm
Competition in market Product cost of company is
low in comparison of other
firms which provides benefits
to firm in terms of growth.
Prices of competitive firms are
more by 5% in comparison of
Natural Essence. Due to high
prices, customers do not like
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Their product price is $6000. to buy such products.
New entrances in industry Products are sell by company
at cheaper rates and their
outlets at various places makes
it easy for customers to buy it.
They provide some percent of
discount to regular customers.
Prices of new entrants are fix
at $9000 which is little high
than natural essence.
Power of supplier Cost of suppliers for
administering readily available
product is $ 2000 which is less
in comparison to others
(Vaghely and Julien, 2010).
More commission is charged
from suppliers of competitive
company, that is, $2200 which
is high and influence profits.
Power of buyer Natural essence emphasize
more on their customers in
order to satisfy them with their
products so that they purchase
products on regular basis.
Competitor firms emphasize
more on profits rather than
customers. Hence, they are not
satisfied with the goods
provided by firm.
Threat of substitute $700 is charging as
subscription fee by firm which
is low in comparison of other
firms.
$900 are charged by
competitive firm from
consumers. So, they do not
like to buy their goods.
P4 Interpretation of data to give evidence of market potential
From the above mentioned data, following interpretations are made:
 In beauty and skin care sector, competition is high. So, firm needs to take care of needs
and demands of customers in order to satisfy them. This assist in attracting them more
towards the product. The offer product in $6000 which is less in comparison to
competitive firm (Wang, Ellinger and Jim Wu, 2013).
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 Natural essence administers some amount of discount to their regular customers. Some
more discount is given by company to those consumers who recommend their products to
others also, this will assist in increasing profitability and growth of company.
 The company develops and maintain good relations with suppliers so that goods are
getting on time whenever required (COSMETIC PRODUCTS, 2017). They cost $2000
less then other companies.
 They give more importance to customers rather than profits and administer them high
quality goods. This will assist company in creating good image in minds of customers. At
the time of occasion such as Christmas, valentine's week etc., they should come up with
new & innovative schemes.
 The biggest threat that Natural essence have is that there customers can switch to
substitute products. But, they minimise it by taking feedback from their potential
customers on regular basis and charge less subscription fees from others.
TASK 4
P5 SWOT analysis to support objective assessment of entrepreneurial idea
Natural essence needs to conduct SWOT analysis in order to know their strengths and
weaknesses. It also defines the influence of external factors on company. Consequences of these
factors on SWOT Analysis are:
Strengths Different technologies are used by company in order to diversify their business
operations in various countries. If demand of product is more in market then, it
is required by company to offer standard quality product for increasing their
profits. In order to improve growth and sustainability, high quality beauty
products is offered by Natural essence.
Weaknesses Prices of products are little high which weak their portfolio of goods and decline
their sales. Products such as oil based soaps, beauty creams etc. are exclusive
and not affordable by lower and middle class (Wood and McKinley, 2010).
Opportunities Firm need to administer products online in order to enhance their sales. This
gives competitive advantage to firm over their competitors.
Threats There are various threats of firm as many competitors of beauty products
industry are available in market. In research and development sector, company
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is not spending much amount and do not expand their business in other
countries. Due to this, they are not getting much opportunities. This influence
their sustainability in market.
P6 Evaluation of competitive & market environment to assess potential viability
Market analysis is required by entrepreneurship as it will influence on business. There are
various factors which impacts on performance of firm such as market trends, consumer
preferences, competition and environment. While starting a venture, it is crucial for firm to
analyse their competitors available in market (Consumers are changing their purchase
behaviours, 2017). At the time of introducing new product, there are various barriers that
company face. Natural essence carefully analyse market before introducing their organic
cosmetic product in order to check viability of business. As many competitors available in
market, it is not easy for new entrant to enter in beauty product market. So, it is important to
analyse competitors before entering in market and check its impact on potential viability of firm.
Define below are the market environment and competitive analysis that will assist in identifying
business idea success in cosmetic industry.
Competitive market: Competitor analysis is done in this market. By this, business
sustainability can be determine. It provides an opportunity to firms which are dealing in similar
sector. There are various products available in market by competitors. So, it is important for
natural essence to analyse their competitors. Below defined are some factors on which
competitive analysis is made:
Substitute goods: These are various substitutes available in market that influence buying
behaviour of customers. It is essential for firm to implement such strategies that distinguish their
products from competitors. Effective pricing strategy, variety of products etc. assist the company
in it.
Demand: Demand of organic products is high. Its main reason is that it do not cause any
side effect. According to changing lifestyle, people change themselves. This directly impacts on
demand of cosmetic goods (Block and Wagner, 2010). This factor makes it clear expected
market demand to business.
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Target audience: Company mainly emphasize on women therefore products are
manufactured accordingly. By market analysis, is is analysed that product will get high
preference of target audience.
Market environment: At the time of doing market environment analysis, 2 factors are
basically considered. These are:
Macro environment: It includes all the factors of external environment such as social,
legal, political, environmental, economical and technological. In order to analyse external
environment, PESTLE analysis is conducted by company. Target audience of Natural essence
are women who are very conscious for their skin. The products of company are approved by
FDA which depicts that product is 100% organic & safe to use. Business also emphasize on
pricing strategy in order to make their product economic in nature. Both the factors impact on
buying behaviour of customers (Dimov, 2011).
Micro environment: It includes all the internal factors that influence working of business
such as customers, competitors, suppliers etc. It is important for company to analyse potential of
workforce. Training must be provided to them so that they can handle business processes
effectively. For effective promotion of product, it is necessary to provide complete information
to sales department. This will assist in growth of business as well as make workforce competent.
CONCLUSION
As per the above mentioned report, it has been concluded that it is important for an
entrepreneur to identify opportunities from market and exploit them. Creation of new and
innovative goods is important for company in order to attain high success and sustainability in
market. For finding rational and market gap, various tools and techniques are used by
entrepreneur. This assist firm in making crucial decisions. Before introducing any new product in
market, it is essential to do proper market analysis so that viability of product can be checked.
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