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Successfully Launching
New Ventures, 2/e
Bruce R. Barringer
R. Duane Ireland
Chapter 2
2-1
Chapter Objectives
(1 of 2)
Chapter Objectives
(2 of 2)
2-3
What is An Opportunity?
(1 of 2)
Opportunity Defined
An opportunity is a favorable set of circumstances that
creates the need for a new product, service, or business
idea.
Most entrepreneurial firms are started in one of two ways:
Some firms are internally stimulated. An entrepreneur decides to
start a firm, searches for and recognizes an opportunity, then starts
a business.
Other firms are externally stimulated. An entrepreneur recognizes
a problem or an opportunity gap and creates a business to fill it.
2-4
What is an Opportunity?
(2 of 2)
An opportunity has four essential qualities
2-5
Window of Opportunity
Window of Opportunity
The term window of opportunity is a metaphor
describing the time period in which a firm can realistically
enter a new market.
Once the market for a new product is established, its window of
opportunity opens, and new entrants flow in.
At some point, the market matures, and the window of opportunity
(for new entrants) closes.
2-6
2-7
Observing Trends
The first approach to identifying opportunities is to observe
trends and study how they create opportunities for
entrepreneurs to pursue.
There are two ways that entrepreneurs can get a handle on
changing environmental trends:
They can carefully study and observe them.
They can purchase customized forecasts and market analyses from
independent research firms.
2-8
2-9
Social Forces
Changes in social trends provide openings for new
businesses on an ongoing basis.
The continual proliferation of fast-food restaurants, for
example, isnt happening because people love fast food. It
is happening because people are busy, and have disposable
income.
Similarly, the Sony Walkman was developed not because
consumers wanted smaller radios but because people
wanted to listen to music while on the go.
2-11
2-14
2-16
Prior Experience
Social Networks
Cognitive Factors
Creativity
2-18
2-19
Cognitive Factors
Cognitive Factors
Studies have shown that opportunity recognition may be an
innate skill or cognitive process.
Some people believe that entrepreneurs have a sixth
sense that allows them to see opportunities that others
miss.
This sixth sense is called entrepreneurial alertness, which
is formally defined as the ability to notice things without
engaging in deliberate search.
2-20
Social Networks
(1 of 3)
Social Networks
The extent and depth of an individuals social network
affects opportunity recognition.
People who build a substantial network of social and
professional contacts will be exposed to more opportunities
and ideas than people with sparse networks.
In one survey of 65 start-ups, half the founders reported
that they got their business idea through social contacts.
Social Networks
(2 of 3)
Result
It is more likely that an entrepreneur will get new business
ideas through weak-tie rather than strong-tie relationships.
(See next slide.)
2-22
Social Networks
(3 of 3)
Why weak-tie relationships lead to more new business ideas
than strong-tie relationships
Strong-Tie Relationships
These relationships, which
typically form between likeminded individuals, tend to
reinforce insights and ideas that
people already have.
Weak-Tie Relationships
The relationships, which form
between casual acquaintances,
are not as apt to be between
like-minded individuals, so one
person may say something to
another that sparks a completely
new idea.
2-23
Creativity
(1 of 2)
Creativity
Creativity is the process of generating a novel or useful
idea.
Opportunity recognition may be, at least in part, a creative
process.
For an individual, the creative process can be broken down
into five stages, as shown on the next slide.
2-24
Creativity
(2 of 2)
Five Steps to Generating Creative Ideas
2-25
2-26
Brainstorming
Focus Groups
Surveys
Other Techniques
2-27
Brainstorming
(1 of 2)
Brainstorming
Is a technique used to generate a large number of ideas and
solutions to problems quickly.
A brainstorming session typically involves a group of
people, and should be targeted to a specific topic.
Rules for a brainstorming session:
No criticism.
Freewheeling is encouraged.
The session should move quickly.
Leap-frogging is encouraged.
2-28
Brainstorming
(2 of 2)
Brainstorming (continued)
There are two reasons brainstorming generates ideas that
might not arise otherwise:
Because no criticism is allowed, people are more likely to offer
ideas than they would in a traditional setting.
Brainstorming sessions can generate more ideas than a traditional
meeting because brainstorming focuses on creativity rather than
evaluation.
In most meetings, one person suggests an idea, and immediately the
rest of the group begins evaluating it. This happens because most
people are better at criticizing ideas than they are at suggesting new
ones.
2-29
Focus Groups
Focus Group
A focus group is a gathering of five to ten people, who
have been selected based on their common characteristics
relative to the issues being discussed.
These groups are led by a trained moderator, who uses the
internal dynamics of the group environment to gain insight
into why people feel they way they do about a particular
issue.
Although focus groups are used for a variety of purposes,
they can be used to help generate new business ideas.
2-30
Surveys
(1 of 2)
Survey
A survey is a method of gathering information from a
sample of individuals. The sample is usually just a fraction
of the population being surveyed.
The most effective surveys sample a random portion of the
population, meaning that the sample is not selected haphazardly or
only from people who volunteer to participate.
The quality of survey data is determined largely by the purpose of
the survey and how it is conducted.
Surveys
(2 of 2)
Result
2-32
Other Techniques
Customer Advisory Boards
Some companies set up customer advisory boards that meet
regularly to discuss needs, wants, and problems that may
lead to new ideas.
Day-In-The-Life Research
A type of anthropological research, where the employees of
a company spend a day with a customer.
2-33
Step 2
The idea should be secured. This may seem like an
obvious step, but is one that is often overlooked.
Step 3
Avoid making an inadvertent or voluntary disclosure of an
idea, in a manner that forfeits the right to claim exclusive
rights to it.
2-35