BUSINESS OPPORTUNITY BUSINESS OPPORTUNITY

AND AND SELECTIONSELECTION

Dr. Hashim Hussein Dr. Hashim Hussein

Opportunity Identification Opportunity Identification & &

Selection (OIS) :The Selection (OIS) :The ProcessProcess OIS 7 Step Process:OIS 7 Step Process:

1.1. Preparation of personal profilePreparation of personal profile2.2. Development of OS (decision making) Development of OS (decision making)

frameworkframework3.3. Generation of ideasGeneration of ideas4.4. Snap investigationSnap investigation5.5. Evaluation in terms of OS (decision Evaluation in terms of OS (decision

making), framework & short listing of making), framework & short listing of ideasideas

6.6. Pre-feasibility studiesPre-feasibility studies7.7. Opportunity selectionOpportunity selection

Step 1.: Preparation of Step 1.: Preparation of Personal ProfilePersonal Profile

About the entrepreneurAbout the entrepreneur: :

May include following details:May include following details:1.1. Background : Personal, educational, experience, Background : Personal, educational, experience,

personalitypersonality2.2. Objectives for establishing enterpriseObjectives for establishing enterprise3.3. Investment preparednessInvestment preparedness4.4. Attitude to risk takingAttitude to risk taking5.5. Personal considerationsPersonal considerations

Step 2: Development of opportunity Step 2: Development of opportunity selection (OS) frameworkselection (OS) framework

InvestmentInvestment How much are you willing to invest?How much are you willing to invest? P & P expensesP & P expenses Contingency & escalationContingency & escalation Working capital marginWorking capital margin

Technology sophisticationTechnology sophistication Quality & Quantity of technology to acquireQuality & Quantity of technology to acquire

Step 2: Development of opportunity Step 2: Development of opportunity selection (OS) framework (cont’d)selection (OS) framework (cont’d)

Managerial/ Organization demandsManagerial/ Organization demands Size or intensity or organizational taskSize or intensity or organizational task How skills & expertise match?How skills & expertise match?

Market CompetitionMarket Competition Market researchMarket research Aggressiveness & determination to ‘sell’ Aggressiveness & determination to ‘sell’ Export industry considerationExport industry consideration

Step 2: Development of opportunity Step 2: Development of opportunity selection (OS) framework (cont’d)selection (OS) framework (cont’d)

Sector preferenceSector preference Government intervention/ dependenceGovernment intervention/ dependence Implementation timeImplementation time ProfitabilityProfitability Degree of risk & its formDegree of risk & its form LocationLocation Personal considerationsPersonal considerations Taboos/ Religious SentimentsTaboos/ Religious Sentiments

Step 2: Development of opportunity Step 2: Development of opportunity selection (OS) framework (cont’d)selection (OS) framework (cont’d)

LifestyleLifestyle Relative importance of moneyRelative importance of money Amenability takeover by childrenAmenability takeover by children Speculative orientationSpeculative orientation

Step 3: Generation or Step 3: Generation or identification of ideasidentification of ideas

To hit up ideas – the heart of OIS processTo hit up ideas – the heart of OIS process Strong creative dimension to be presentStrong creative dimension to be present Stretch one’s mind for opportunityStretch one’s mind for opportunity Idea generation Idea generation

Step 4: Snap Investigation of IdeasStep 4: Snap Investigation of Ideas

Idea not enough – must examine Idea not enough – must examine preliminary viabilitypreliminary viability

Preliminary investigationPreliminary investigation Questions like:Questions like:

What exactly is the product or service?What exactly is the product or service? Application & usesApplication & uses Possible scales of production or operationPossible scales of production or operation Project cost to a given scale of production/ Project cost to a given scale of production/

operationoperation

Step 4: Snap Investigation of IdeasStep 4: Snap Investigation of Ideas

Market / competitionMarket / competition Unit sale priceUnit sale price Degree of technological complexityDegree of technological complexity Expected annual turnoverExpected annual turnover Expected profit margin (range)Expected profit margin (range)

And any other information you can collect And any other information you can collect without incurring too much expenditurewithout incurring too much expenditure

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideasframework & short listing ideas

Will you be able to learn and get grip over Will you be able to learn and get grip over business?business?

Securing term loans, financial assistance Securing term loans, financial assistance or commercial bank… will it pose a or commercial bank… will it pose a problem?problem?

Key determinants: success & risksKey determinants: success & risks Must cross check all judgmentsMust cross check all judgments

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

Portion a highly individualistic processPortion a highly individualistic process Generation of ideas will depend onGeneration of ideas will depend on

Interest in sending opportunity over timeInterest in sending opportunity over time Sense of urgency of business enterpriseSense of urgency of business enterprise Ability to harness courses of knowledge & Ability to harness courses of knowledge &

informationinformation Vision & creativityVision & creativity Lateral thinking Lateral thinking

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

7 approaches to generation of ideas7 approaches to generation of ideas1.1. Natural resourcesNatural resources2.2. Existing anticipated industriesExisting anticipated industries3.3. Market drivenMarket driven4.4. Service sector scanningService sector scanning5.5. Extension/ modification of present work Extension/ modification of present work

contentcontent6.6. Creative effortCreative effort7.7. Other waysOther ways

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

1.1. Natural resources – to convert into profitable Natural resources – to convert into profitable enterprisesenterprises

ForestForest HorticultureHorticulture Agro-wasteAgro-waste Marine or aquaMarine or aqua MineralMineral AnimalAnimal AnimalAnimal WindWind SunSun HumanHuman

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

1.1. Natural resources – must pay attention to:Natural resources – must pay attention to:1.1. ExploitationExploitation

2.2. Resource quantification & lifeResource quantification & life

3.3. Resource stabilityResource stability

4.4. Critical infrastructure for resource utilization Critical infrastructure for resource utilization

5.5. Commodity/ trading dimensionCommodity/ trading dimension

6.6. Legal dimensionLegal dimension

7.7. Other considerationsOther considerations

8.8. Where will you pick resource based ideas?Where will you pick resource based ideas?

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

2.2. Existing anticipated industriesExisting anticipated industries Similar projectsSimilar projects Raw material for existing industryRaw material for existing industry Further processing of output of existing industryFurther processing of output of existing industry Projects based on waste or by- products of existing Projects based on waste or by- products of existing

industryindustry Packaging materialsPackaging materials Service requirementsService requirements Projects based on skills/ technology developed Projects based on skills/ technology developed

through existing industrythrough existing industry

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

2.2. Existing/ anticipated industries – keep Existing/ anticipated industries – keep following in viewfollowing in view

Outlook for existing industry of your interestOutlook for existing industry of your interest Ancillary parent industry syndromeAncillary parent industry syndrome Captive arrangementCaptive arrangement Nature of decision makingNature of decision making Projects in the pipelineProjects in the pipeline Motivated feedbackMotivated feedback Look beyond local industriesLook beyond local industries Well trenched non- local supply industriesWell trenched non- local supply industries

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

3.3. Demand driven or market driven opportunitiesDemand driven or market driven opportunities Trade flowsTrade flows Import substitutionImport substitution Growth productsGrowth products Product positioning/ differentiationProduct positioning/ differentiation ExportsExports Basis of importBasis of import Competitive advantage, not just potentialCompetitive advantage, not just potential 100% export100% export NetworkingNetworking

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

4.4. Service sector opportunitiesService sector opportunities Existing industrial enterprisesExisting industrial enterprises Medium and large projects in pipelineMedium and large projects in pipeline Commercial establishmentCommercial establishment Public utility orgs.Public utility orgs. Social infrastructureSocial infrastructure Business enterprises catering to community needsBusiness enterprises catering to community needs Government/ quasi- government orgs. & local bodiesGovernment/ quasi- government orgs. & local bodies CitizensCitizens householdshouseholds

Step 5: Evaluation in terms of OS Step 5: Evaluation in terms of OS framework & short listing ideas (cont’d)framework & short listing ideas (cont’d)

5. Creative effort5. Creative effort Development of problem solving products/ servicesDevelopment of problem solving products/ services Exploitation of new technology or material to meet a Exploitation of new technology or material to meet a

widely felt needwidely felt need Creating a demand for a psychological productCreating a demand for a psychological product Technical extension of an established product conceptTechnical extension of an established product concept Creating a demand implicit in emerging lifestyleCreating a demand implicit in emerging lifestyle Technical workTechnical work Introducing products/ services alien to region or countryIntroducing products/ services alien to region or country Value addition through technical or managerial Value addition through technical or managerial

innovation innovation

Final selectionFinal selection

Basic guidelinesBasic guidelines Imperfect knowledgeImperfect knowledge Comprehensive comparisonComprehensive comparison

Key issuesKey issues Technology comfortabilityTechnology comfortability Degree of difficulty of market positionDegree of difficulty of market position RisksRisks ProfitabilityProfitability Government dependenceGovernment dependence Success & risks calculated Success & risks calculated

Final selection – Errors in Final selection – Errors in selectionselection

1.1. ““Me too” syndromeMe too” syndrome2.2. Fallacy of numbersFallacy of numbers3.3. ““Story of an elephant” syndromeStory of an elephant” syndrome4.4. Square peg in a round holeSquare peg in a round hole5.5. Undifferentiated enterpriseUndifferentiated enterprise6.6. Failure to grasp key elements of successFailure to grasp key elements of success7.7. Lack ownershipLack ownership8.8. Catch the first busCatch the first bus9.9. Inaccurate informationInaccurate information10.10. Unwillingness to step backUnwillingness to step back