WEEK 2

BUSINESS OPPORTUNITY
SCREENING

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Learning Outcomes

At the end of this topic student are given

the following competencies:
1. Understanding the business opportunity
and environment
2. Analyzing business opportunity

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INTRODUCTION

Business n opportunity recognition is

considered the first critical step in
starting a new business. Kirzner, (1979)

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Business opportunity should comprises

of three important characteristics;
potential economic value (generate
profit); newness (product did not exist
previously) and desirability (moral and
legal acceptance of the new product)
(Baron, 2006) .

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Screening Environment
OPPORTUNITIES

THREATS

Outside Yourself!!
Regional Economic/
Business trend

Government Policy /
Initiatives

ENTREPRENEUR
Strength
Global Economic/
Business trend

Weakness

Inside
Yourself!!

Private Sectors
Initiatives

Other Issues ( Education, Health, Social, Political, Culture)

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Steps to select new ventures

Step 4 Select one which is suitable to the
entrepreneur and develop business concept.

Step 3 Analyze specific opportunities which are

feasible to venture.
Step 2 Screening environment, evaluating self,
community & society, value and
culture of the potential target group.

Step1

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Identify Customers needs and wants

Step 1 : Identifying customer needs & wants

Needs & Wants

Products
Something physical
which can satisfied
customer needs and
wants.

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Needs : something
basic which people
must have. Example:
clothing, house, food,
health, basic education,
protection etcs.
Wants: desire to have
more than basic needs.
Wants will be fulfill
after the basic needs
were being fulfilled.
Examples: cars, bigger
house, traveling, golf
club, latest fashions,
jewelry etcs.

Services
Non-physical but able
to fulfill customer
needs and wants

Step 2 : Screening environment, evaluating self, community

& society, value and culture of the potential target group.

Analyze
Environment
Population structure, Income, taste,
preferences
Country export & imports
Local resources and new technology
Industry linkages
Government and Private
development projects
Global and Regional development
Currents issues, social, rules &
regulations.
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Self

Community

Experience
Knowledge &
skills
Financial standing
Interest
Networking

Norm

Step 3: Analyzing the feasibility of

Opportunities
Legal perspective

Market Competition
level
Funding
Technology availability

Analyze

Raw material supply

Feasibility

Expertise & manpower

Logistic
Sustainability

Risks Level
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Step 4: Select New Ventures

Market Competition
level / Marketing Plan
Operational Plan
( Technology, Supply
Chain)
Organizational &
Admin. Plan ( Expertise
& manpower )

Analyze

Viability

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Funding ( working
capital, fixed assets)
Profitability ( ROI,
ROE, Pay back, Cash
Flow, Risks Level

Step 4 ( cont: )
New venture selected.
Prepare Details Business
Plan.
Execute Plan

Monitor and
Improvement.

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Example business opportunities

AGRICULTURE

Forestry

Veneer Plywood
Logging
Furniture
Sawn timber

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Fishery

Fishing Equipment
Deep-sea fishing
Fish Processing
Wholesales/
distributions

Plantation

Clearing plantation
Planting
Processing
Wholesale/
distribution
Nursery

Poultry

Poultry farming
Processing
Wholesales/
Supplies

Example of Industrial Linkages

FORWARD

BACKWARD

OIL INDUSTRY

Explorations engineering
Steel Fabrications
Oil Rigs construction
Engineering Servicing
Equipment components

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Petroleum Refinery
Petroleum Trading
Engine Oil products
Hydrocarbon raw material
Plastic / resin products

Example of Risk in Business Opportunities

High Risks

Business Risk
Risk could be transfer
insurance (fire, loss etc)
Controlled risk but not
100% - market forecast,
quality products,

Uncontrolled risk : economy

recession, currency value,
disaster
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Financial Risk
Liquidity level
Loan
Credit
Currency exchange

SWOT ANALYSIS OF BUSINESS

ENVIRONMENT (EXAMPLE)
Strength (inside)
Competent staffs
Strong financial

Weaknesses (inside)
Lack of resources

Opportunity (outside)

Threat (outside)

Strategic location
Government support
High demand

High competitors
Economic problems

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SWOT ANALYSIS OF BUSINESS

ENVIRONMENT (YOU !!)
Strength (inside)

Weaknesses (inside)

Opportunity (outside)

Threat (outside

Relate with your first assignment!!

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PEST MODEL - AS BUSINESS OPPORTUNITY

SCREENING AND EVALUATION
Factors

How?

Political

Government policy and political factor can have

significant influence on businesses as well as
affect consumer confident and business
spending.
Existing of legal or business procedures of the
country such as Companies Act (1965),
Business Registration Act (1954), and various
act..

Economic and
environment

There are a number of economic indicators can

be used to analysis the economics of a country
such as Gross Domestic Product (GDP),
unemployment rate, and so on. For instance,
with the GDP at 5% to 6% in year 2010,
Malaysian economic development is among the
highest in Asia (Economic Planning Unit, 2011)

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PEST MODEL - AS BUSINESS OPPORTUNITY

SCREENING AND EVALUATION
Factors

How?

Social

Socio and culture influence on business vary

from country to country. For instance, changes
in social trends, values, lifestyles,
demographics etc may impact on the
entrepreneurship development.

Technology

is the making, modification, usage, and

knowledge of tools, machines,
techniques, crafts, systems, methods of
organization, in order to solve a problem,
improve a pre-existing solution to a problem,
achieve a goal or perform a specific function.

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Exercise

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Select one potential business and

analyze the business opportunity
based on SWOT and PEST Model !!