Unit 27 Identifying Entrepreneurial Opportunities

Introduction

The role of the entrepreneur is to weigh up opportunities, threats and personal capacity to translate an opportunity into a business idea. This unit provides students with an understanding of where new venture ideas come from and gives them the opportunity to investigate and evaluate a new venture idea.Students will explore concepts of innovation and creativity and develop creative abilities. They will learn about and use methods and frameworks to help develop and assess venture ideas, including defining product/service benefits, identifying target customers and understanding the industry and competitors from the perspective of a new entrant. They will learn about market research and apply primary and secondary research techniques to investigate a personal entrepreneurial idea and make an assessment of whether it is likely to be a commercially viable business or social enterprise proposition.

Learning outcomes

LO1 Evaluate possible sources for a new and innovative business idea

Sources of business ideas

• External/macro-environmental sources of change that create opportunities (Drucker’s 7 sources of innovation, STEEP factors).
• The role of the ‘entrepreneur’ in weighing up opportunities, threats and personal capacity to translate the opportunity into a business idea.
• Personal situational factors and knowledge.

Types of innovation:

• The scope of innovation, particularly in relation to small firms.

The different types of innovation:

• product and process innovation; incremental vs big bang; Schumpeter’s sources of innovation.
• The difference between invention and innovation and the role of creativity.
• Exploring the difference between a product or service idea and a business idea.
• Innovation and location and the role of ‘clusters’ in fostering innovation amongst small firms.

Exploring creativity:

• Understand and practice using creativity techniques to generate ideas.

LO2 Explain the choice of a specific entrepreneurial idea for investigation and the market gap that it addresses

Identifying customers:

• Understand the need to identify specific customer types for targeting new ideas.
• Behavioural, demographic and geographic segmentation.
• Tangible and intangible features and benefits of a product or service.

Understanding the industry environment:

• How the industry environment affects the likely success of a new entrant.
• Explore Porter’s Five Forces model to analyse the attractiveness of an industry from the perspective of a new entrant.
• Approaches to competitor analysis relevant to entrepreneurs and small firms.
• Industry life-cycle.

LO3 Use primary and secondary data to identify market potential

Market research:

• Primary and secondary research techniques for the investigating of new business ideas.
• Identify, plan and undertake market research required.
• The use of new technologies for audience research and analysis: use of big data to assess market trends, internet forums and social media to test market responses and evaluation.

Gap analysis:

• Gap analysis to explain the gap in the market and the target customer group.

LO4 Evaluate the entrepreneurial idea in the context of the market and competitors and make an assessment of potential viability

Methods of Evaluation:

• Evaluation of ideas using SWOT based on evidence from macro-environment, market and competitor analysis.
• Objective assessment of the idea to judge whether it is likely to be viable as a business or social enterprise proposition.

Resources

• BURNS, P. (2011) Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave MacMillan.
• BURNS, P. (2014) New Venture Creation: A Framework for Entrepreneurial Start-ups. Basingstoke: Palgrave MacMillan.
• RIES, E. (2011) The Lean Start-up, London: Penguin Books.
• MOLE, K. and RAM, M. (2012) Perspectives in Entrepreneurship: a critical approach. Basingstoke: Palgrave MacMillan.

Journal

• Journal of Small Business Management. Oxford: Wiley-Blackwell http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1540-627X
• The Institute for Small Business and Entrepreneurship (ISBE) website: www.isbe.org.uk