Entrepreneurial Opportunities: A Report on Natural Essence Analysis

Verified

Added on  2020/06/04

|14
|4325
|68
Report
AI Summary
This report provides a comprehensive analysis of entrepreneurial opportunities for Natural Essence, a skincare company planning to launch a new range of organic and natural cosmetic products. The report begins with an introduction to entrepreneurship and the company, followed by a detailed examination of various sources of entrepreneurial ideas, utilizing tools like STEEP analysis (social, technological, economic, environmental, and political factors) and Drucker's sources of innovation. It then explores the rationale and market gap for the new product line, employing industry life cycle analysis and market segmentation techniques. The data needed for evaluating the entrepreneurial idea is discussed, alongside an interpretation of this data. The report applies SWOT analysis to measure the entrepreneurial idea and evaluates the market and competitive environment to assess the potential viability of the new product launch. The conclusion summarizes the key findings, emphasizing the importance of identifying and exploiting market opportunities in a competitive environment, and references relevant academic sources.
Document Page
Identifying Entrepreneurial
Opportunities
tabler-icon-diamond-filled.svg

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Identification and assessment of different sources of entrepreneurial ideas..........................1
TASK 2............................................................................................................................................3
P2 Rationale and market gap for particular entrepreneurial idea by using appropriate tools ....3
TASK 3............................................................................................................................................5
P3 Data needed that help in evaluating entrepreneurial idea .....................................................5
P4 Interpretation of the data .......................................................................................................6
TASK 4............................................................................................................................................7
P5 Application of SWOT analysis to measure entrepreneurial idea...........................................7
P6 Evaluation of market and competitive environment to assess potential viability .................8
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10
Document Page
INTRODUCTION
In today's competitive market, there are ample number of opportunities prevails in the
market that needs to be properly exploited by entrepreneur so as to gain high competitive
advantage over other rivals (Block and Wagner, 2010). It is the willingness and capacity of
entrepreneur to develop, manage and organize a new business venture along with any type of
risk associated with it in order to make profit. They carried out their business activities in such a
manner that contributes significantly towards the growth and development of the country. The
selected company for this report is Natural Essence which is a skin and health care industry. The
company has decided to launch new range of cosmetic product that are made up of organic and
natural ingredients. This business will commercially viable with the help of new and innovative
methods of marketing. Natural essence can expand business with the help of partnership or
franchise business. IT includes assessment of various sources of entrepreneurial ideas, SWOT
analysis, rational deciosn taken and interpretation of data.
TASK 1
P1 Identification and assessment of different sources of entrepreneurial ideas
An entrepreneur is the one who instead of working as an employee, found and run a small
business taking on financial risk in the hope of making profit. In order to determine the impact of
external factor on business operation and activities, STEEP tools is taken into consideration. It is
important for every company to consider some external forces before taking final decision. This
analysis is often conducted by entities so to get a detailed overview on what external elements
determine the trend. STEEP stands for social, technological, economical, environmental and
political.
Social Factor: It include factors like demographics, lifestyles, values, purchasing pattern of
customer etc. Needs and wants of customers are rapidly changing, therefore it is essential for
every firm to identify what are the current like and dislikes of customer. For example: Natural
essence is introducing new range of cosmetic product made up of organic and natural
ingredients. So they need to investigate whether it will liked by customer or not keeping in mind
their current requirement.
Technological Factor: This factor highly focuses on technological advancement. It encompasses
innovation, research and development, life-cycle of product, transport etc. Everyday new
innovation or invention takes place which creates an urge among entities to update their current
1
Document Page
technology with the latest and advance one (Dimov, 2011). High end technology creates lots of
opportunities for the company and provide them the advantage to gain high competitive
advantage in the market. For example: With latest and innovative technology, Natural Essence
can manufacture their product in a cost-effective and timely manner.
Economical Factor: The economic condition of respective country is strongly inter-linked with
customer's buying position. It include factors like savings, international trade, inflation, interest
rate, subsidies etc. The company is introducing new organic range of cosmetic products in the
market. The cost of organic product is little higher as compared to other product. Now if inflation
arises in the economy, prices of these products automatically increases. With such high prices
there might be chances that customer may shift to some other local brand (Ekpe, Mat and Razak,
2010).
Environmental Factors: Such factors are associated with ecosystem factors like water,
pollution, environment regulation, pollution etc. The company indirectly benefits the
environment as they deal in offering new range of cosmetic product that is made up al natural
and organic ingredients.
Political Factors: Such factors determine the extent of government in terms of impacting
business activities and operation. It include factors like political stability, tax policies, price
regulation etc. Before launching new business venture in the market, entrepreneur needs to
analyse the political situation of respective country in which they are planning to introduce its
product.
7 Drucker's Source of Innovation: It includes
The Unexpected: It is an outside event that mainly takes place independently of what the
company is working on. There are large number of opportunities exist in the market, only the
entrepreneur must know how to exploit it in an appropriate manner.
Incongruities: It is a disconnect between what it actually is and what people assume to be. For
example: The demand of organic product increases but the economic performance of company is
not. It mainly outlines the difference between reality and assumption.
Process Needs: Firms tries to implement new innovative methods that help in carrying out
business operation and activities in an effectual manner.
2
tabler-icon-diamond-filled.svg

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
Industry and Market Structure: In today's competitive era, where nothing is constant everyday
new invention or innovation takes place. Therefore company needs to keep an eye on these
changes that takes place on continually basis (Foo,2011).
Demographic: Factors like income level, population, human capital are continually changes that
enable company to pay attention towards these factors. Any change in income will directly
impact overall profitability of Natural Essence.
Change in Perception, Mood and Meaning: Over time people and population change. The way
they view life, their perception, liking everything changer. It is primarily important for the
company to produce such product that satisfy customer needs and wants in an effective and
efficient manner (Heinonen, Hytti and Stenholm, 2011).
New Knowledge: With advance technology, more opportunities prevails in the market only the
person should know how to exploit it properly. For example: Natural Essence can take the help
of social networking sites in order to promote its product in the market.
Types of Innovation:
Innovation play key role in organisational growth and development It enable firm to gain
high competitive edge in the market over other competitors. Following are the different types of
innovation:
Product: It deals with change in product that has been offered by company to target customers.
For example: Natural Essence is going to introduce new range of cosmetic-products that are
made up with organic or natural ingredients.
Process: It refers to the change or innovation that takes place in workflow or business process
that directly affect overall performance and productivity of the company.
Place: It deals with introducing right product at right place on right time.
Schumpeter's source of innovation: The theory states that any change in investment accompanied
by monetary expansion. It states that innovation is the main reason for business fluctuation and
increased investments. It does not mean invention rather it means commercial application of new
material, technology, methods and source of energy.
3
Document Page
TASK 2
P2 Rationale and market gap for particular entrepreneurial idea by using appropriate tools
In the modern era, every day new change takes place in the market whether in the form of
innovation or invention that possess direct impact on overall performance of the company (Quan,
2012). The main objective of any company is to develop unique and innovative products that
contribute significantly towards organisational success and growth. Situation like Brexit has a
direct impact on overall working and operation of the company. With Brexit there are various
changes that takes place in UK's legislation. However local residents were not aware of such
changes and this is the reason why activities are not carried out in a proper manner (.Renko,
Shrader and Simon, 2012). Though there are ample number of opportunities that are available in
the market but they don't know how to exploit such opportunities in an effective manner. This
can be done by analysing environmental factors that possess either direct or indirect impact on
company's overall operation. In the given report, Natural Essence came up with innovative idea
of launching new range of cosmetic-products that are made up with only organic and natural
environment that they do not cause any harm to customer and their skin. R&D department of
respective firm has analysed that now a days consumer prefer to purchase such products that
organic in nature whether in food or cosmetic sector. With the introduction of this innovative
product, company can easily attract large number of customers and attain high market over their
rivals. The main benefit of this innovative product is it can be utilized by age group of any
people because of its composition of natural and organic ingredients that they do not harm the
skin of the customers.
Industry life cycle- this is the cycle which provides information about different stages of
business operate, progress, prospect and lump. This cycle provides information about scope and
growth of start up business. In this cycle there are start up, growth, shake-out, maturity and
decline stage. In case of Essence company, when company started business in industry, then they
enter with start up stage, then they went to growth stage. With growth of business, they enter in
shake-out stage. In this they have to make some new and innovation in their product and services
otherwise they went in maturity stage which is negative for Essence Group. After wards it gets in
decline stage. This makers product old and blunt in industry.
Some common features of entrepreneurial idea are discussed below:
4
Document Page
Example For All: The innovative idea that has been formulated by entrepreneur must practically
possible and play key role satisfying customer needs and wants in an effective manner. If the
product they are offering innovative product in the market that are different from existing ones
than it can be set as a good example for all. The reason is simple it represents that company is
modifying their product as per the requirement of the customers. For instance: Natural Essence
become the first one to introduce organic range of cosmetic-products in the market place in
which no harmful chemical has been used in their making.
Creates Benefits For All: As the product introduced by entrepreneur is innovative and unique,
chances of satisfying customers increases. In addition to that it also creates employment
opportunities in the respective country. As a result new business venture is also contributing in
the growth and development of the country (Short and et. al., 2010).
Market Segmentation: It include classifying the broad range of customer into small sub groups.
It assist the firm in analysing the customers and segregate them on the basis of certain aspects.
Some of the categories of market segmentation is discussed below:
Demographic: Under this market segment, population is categorised on the basis of age,
lifestyle, gender and income etc. Skin care products are usually sold on the basis of
consciousness of buyers in respect to their health which may vary from one person to another
(Tang, Kacmar and Busenitz, 2012).
Behavioural: Under this, behaviour and perception of customers are analysed and on the basis of
that customers are classified. For instance: If a customer is more particular towards their health
and skin then definitely they are going to use organic made products.
Geographic: Under this, population is categories on the basis of geographic region where they
reside. Policy of each country vary from one another.
Porter's Five Forces Model:
Industry Rivalry: There are various other companies exist in the market that offer similar
products that leads to create strong competition in the market. Competitors firms using
distinctive strategies such as clever pricing, promotional strategies that cause strong competition
in the market. The biggest rival of Natural Essence is Lavender Group
Threat from substitute products: There are large number of rivalry firm exit n the market that
offer similar products as Natural Essence. As a result, there are ample of substitute goods present
in the market.
5
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
Bargaining power of suppliers: Suppliers also affect the functioning and operation of production
and operation department. The company is buying goods in bulk quantity from suppliers.
Therefore any change in policy will adversely affect profitability and margin ratio of the
company.
Bargaining power of buyers: It has been assumed that when buyers are more for particular
product then prices of goods also gets affected. With high bargaining power of buyer, company
needs to drop down the price of their product.
Threat from potential entrant: The company is facing strong competition in the form of its
strong competitors. Some of the common threats that they are facing is lack of adequate funds,
economies of scale, government policy and regulation and product differentiation.
TASK 3
P3 Data needed that help in evaluating entrepreneurial idea
There are various factors that are present in the market and also posses an impact on
overall functioning and operation of company (Vaghely and Julien, 2010). Therefore it needs to
assesses in proper manner. Natural Essence needs to undertake various aspects before launching
its business in the market.
6
Document Page
(Source: Market value of cosmetics in Great Britain from 2009 to 2017 (in 1,000 GBP), 2018)
From the above picture shown it is identified that there is more demand of cosmetic as
compared to previous years. As compared to 2009, there is improvement in market value of this
sector. So scope for growth and development of Essence Group is more. It is important to
understand changes in demand of consumers.
The company requires to investigate policies and strategies of competitors firm as well.
This can properly be done its R&D who will collect or gather data related with competitors that
help company in gaining high competitive edge in the market place.
Basis Company Competitive firm
Competition in market Natural essence is selling their
product at comparatively lesser
rate that help them in gaining
Competitors are selling their
product at higher rate which
turn out to be advantage for
7
Illustration 1: Market value of cosmetics in Great Britain from 2009 to 2017 (in
1,000 GBP)
Document Page
high competitive edge in the
market over other rivals. Price
of their product is $3000.
Natural Essence. They are
normally offering their product
at 5% higher rates.
New entrances in industry As the company is selling their
product at an economical rate
they can easily open up more
stores so as to increase its
market base. In-fact in order to
increase its customers base the
company is giving discount to
its loyal customers so as to
retain them for longer period.
Rivalry firm is selling their
product at higher prices and do
not offer and discount to
customers.
Power of supplier Supplier cost is low as
compared to others i.e. 3000$.
They are not charging any
commission from them.
Suppliers are charging high
commission which is the
reason why competitors goods
are so over priced.
Power of buyer They laid stress on meeting
customer requirement by
providing them product as per
their needs and wants.
Competitors firms mainly
emphasize on earning higher
profit instead of focusing on
meeting customer requirement.
P4 Interpretation of the data
From the above picture it is identified that people are more conscious about their skin and
health as compared to past years. So scope of making good brand in industry is possible. It is
important to make changes in product so they can make long term existence in society. Number
of users of skin care products are increasing year by year so this makes demand for natural and
organic products as well.
From the above collected data , following discussion are made:
8
tabler-icon-diamond-filled.svg

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
1. There is a strong competition prevails in beauty and skin care sector. The company is liable to
produce such products that effectively satisfies customers needs and wants (Wang, Ellinger and
Jim Wu, 2013).
2. The company needs to use high end technology in order to promote its product in the
marketplace. They can use promotional channel like social media platform, public relation, sales
promotion etc.
3. The major weakness of Natural Essence is their customers are shifting to other local brands
which results in decreasing their sales and profitability ratio.
TASK 4
P5 Application of SWOT analysis to measure entrepreneurial idea
SWOT Analysis is mainly used by companies in order to figure out their strength, weakness,
threats and opportunities so that formulate strategies accordingly. Discussed below is SWOT
Analysis of Natural Essence:
Strength: Main strength of the company is extensive use of high end technology which gives
them the advantage to meet customer requirement in an effective and efficient manner. If the
demand of organic cosmetic-products increased in the market then the company needs to serve
high quality products in the market that ultimately increases their productivity (Wood and
McKinley, 2010). In addition to that, if company wants to raise their growth and sustainability
in the marketplace then they need to deliver goods of high quality that fulfil customer
requirement effectively.
Weakness: The company is mainly selling their product at low prices which creates its negative
image in the market that ultimately affect its overall profitability and sales figure. If customers
found products costly then they will switch to some local company which gives them product at
low cost.
Opportunities: Company can take the advantage of using high end technology for effectively
promoting their product in the market place. They can use social networking sites such as
facebook, instagram for promoting its product. This result in increasing the sales figures of the
company.
Threats: The company is facing strong competition in the market as there are other competitors
who are also providing the same product (Frank, 2014). Also the company is not having
9
Document Page
adequate funds which become another reason for not expanding its business operation in other
countries.
P6 Evaluation of market and competitive environment to assess potential viability
In order to gain high competitive advantage in the market it is important for every
company to understand current market trend and also figure out prevailing competition in the
market. All such factors needs to be taken into account as it directly or indirectly affect overall
operation and functioning of the company. When an entrepreneur starts its new business venture,
he needs to examine the market situation first and then formulate strategies accordingly which
help in launching business in the market in an effective manner. Employees of Natural Essence
needs to analyse whole market before launching its product in the market so as to check its
viability. With the help of competitive and market analysis company can figure out whether their
product is going to be accepted in the market or not (Wedge and Fee, 2016).
Competitive Market: By doing this analysis, Natural Essence can identify their sustainability in
the market. It provide growth and development opportunities to the company that deals in similar
industry or sector. It also help in gaining high competitive advantage in the market over other
rivals. It includes:
Substitute Goods: Purchasing pattern of customer is also influenced by substitute goods. If
customers found any local company that provide them similar kind of products but at
comparatively lower prices then they instantly shift to that local company. Therefore it is always
important to analyse existence of substitute goods first and then launch business in the market.
Demand: There is high demand of organic product in the market. Taking the advantage of this
situation company needs to analyse the market trend first so that they produce products
accordingly.
Market Environment: It compromise of two factors:
Macro Environment: It include all external factors that directly or indirectly impact overall
operation and functioning of the company. There are certain factors that exist in the external
environment that needs to be taken into account by Natural Essence. Female are conscious
towards their health and skin as compared to male. The company is also gets a certification of
from FDA that signifies their products are safer to use (Heinonen, 2013).
10
Document Page
Micro Environment: There are some other factors that exist within the working surrounding
that also possess an impact on the overall performance of the firm. It include factors like
employees, customers, suppliers etc.
As there is more trend for skin products, then Essence Group can get success in industry.
External environment of UK is also favourable for natural and organic product. So scope of
business is more with regular innovation. As there are more competitors in UK regarding
cosmetics, so it is important to make changes in products according to consumer demand.
CONCLUSION
According to above mentioned report it can be concluded that there are ample number of
opportunities exist in the market but only few of them are actually good. Therefore, entrepreneur
must know how to exploit such opportunities. Cosmetic Industry is one of the fastest growing
industry. Today people are more conscious towards their health and skin which creates an urge
for the company to produce such products and services that satisfy customer requirement in an
effective manner.
11
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
REFERENCES
Books and Journals
Block, J.H. and Wagner, M., 2010. Necessity and opportunity entrepreneurs in Germany:
Characteristics and earnings differentials.
Dimov, D., 2011. Grappling with the unbearable elusiveness of entrepreneurial opportunities.
Entrepreneurship Theory and Practice. 35(1). pp.57-81.
Ekpe, I., Mat, N.B. and Razak, R.C., 2010. The Effect of Microfinance Factors on Women
Entrepreneurs' Performance in Nigeria: A Conceptual Framework. International
Journal of Business and social science. 1(2).
Foo, M.D., 2011. Emotions and entrepreneurial opportunity evaluation. Entrepreneurship
Theory and Practice. 35(2). pp.375-393.
Heinonen, J., Hytti, U. and Stenholm, P., 2011. The role of creativity in opportunity search and
business idea creation. Education+ Training. 53(8/9). pp.659-672.
Quan, X., 2012. Prior experience, social network, and levels of entrepreneurial
intentions. Management Research Review. 35(10). pp.945-957.
Renko, M., Shrader, R.C. and Simon, M., 2012. Perception of entrepreneurial opportunity: a
general framework. Management Decision. 50(7). pp.1233-1251.
Short, J.C and et. al., 2010. The concept of “opportunity” in entrepreneurship research: Past
accomplishments and future challenges. Journal of Management. 36(1). pp.40-65.
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.
Vaghely, I.P. and Julien, P.A., 2010. Are opportunities recognized or constructed?: An
information perspective on entrepreneurial opportunity identification. Journal of
Business Venturing. 25(1). pp.73-86.
Wang, Y.L., Ellinger, A.D. and Jim Wu, Y.C., 2013. Entrepreneurial opportunity recognition: an
empirical study of R&D personnel. Management Decision. 51(2). pp.248-266.
Wood, M.S. and McKinley, W., 2010. The production of entrepreneurial opportunity: a
constructivist perspective. Strategic Entrepreneurship Journal. 4(1). pp.66-84.
12
chevron_up_icon
1 out of 14
circle_padding
hide_on_mobile
zoom_out_icon
logo.png

Your All-in-One AI-Powered Toolkit for Academic Success.

Available 24*7 on WhatsApp / Email

[object Object]