Opportunity Recognition: Module 2

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Questions and Answers

In the context of recognizing opportunities, what differentiates a 'need' from a 'want'?

  • A 'need' is essential for survival, such as water or food, while a 'want' is a product or service that people desire. (correct)
  • A 'need' is any product or service, while a 'want' is only related to basic survival.
  • A 'need' is something people desire, while a 'want' is essential for survival.
  • There is no practical difference between a 'need' and a 'want' in business; they both represent opportunities.

Which of the following best describes how 'problems' can be a 'source of opportunity' for entrepreneurs?

  • Problems entrepreneurs experience personally are rarely valid business opportunities because they're too niche.
  • Observing problems that others experience can lead to identifying unmet needs or gaps in the market, which can be addressed by a new business. (correct)
  • Focusing on problems leads to negative thinking and hinders the creative process necessary for identifying opportunities.
  • Problems are only useful as opportunities if they can be solved using existing solutions; new solutions are too risky.

How can 'changes', such as increased environmental awareness, lead to new business opportunities?

  • Changes only benefit large corporations that have the resources to adapt, not small businesses or startups.
  • Changes create new needs and wants that are not currently being met, opening the door for businesses that can cater to these demands. (correct)
  • Changes should be ignored by businesses, as they tend to be temporary and unreliable.
  • Changes mainly disrupt existing markets, making it more difficult for new businesses to compete.

How do 'new discoveries' contribute to the identification of business opportunities?

<p>New discoveries, especially in technology or medicine, can be converted into products or services that meet previously unmet needs. (A)</p> Signup and view all the answers

What does it mean to leverage 'existing products and services' as a source of opportunity, and which action does NOT fall under this category?

<p>Copying a product or service and selling it under a different name. (B)</p> Signup and view all the answers

How can 'unique knowledge' possessed by an individual be transformed into a business opportunity?

<p>Unique knowledge, or one-of-a-kind experiences, can be turned into a product or service that benefits others. (A)</p> Signup and view all the answers

According to Peter Drucker, what key questions should a business model answer?

<p>Who is the customer, what value can you create/add for the customer, and how can you do that at reasonable costs? (B)</p> Signup and view all the answers

Which of the following is NOT a key component typically addressed within a business model?

<p>The CEO's personal investment portfolio and diversification strategy. (D)</p> Signup and view all the answers

What is a distributor's primary role in a business model?

<p>Buying products from manufacturers and reselling them to retailers or the public. (D)</p> Signup and view all the answers

How does a 'franchise' business model differ from starting a completely new and independent business?

<p>A franchise uses the parent business's model and brand, while an independent business develops its own unique model. (A)</p> Signup and view all the answers

What is a manufacturer's primary function in a business model?

<p>Creating finished products from raw materials. (B)</p> Signup and view all the answers

How does a retailer operate within a business model?

<p>By buying products from a distributor or wholesaler and selling them directly to the public. (C)</p> Signup and view all the answers

What is the defining characteristic of a brick-and-mortar business model?

<p>Operates a physical storefront where customers are served face-to-face. (D)</p> Signup and view all the answers

How does the E-commerce business model improve upon the traditional 'brick-and-mortar' model?

<p>By selling products through a web-store on the internet, expanding reach and convenience. (D)</p> Signup and view all the answers

In opportunity recognition, which scenario exemplifies turning a 'Problem' into a business opportunity?

<p>An individual creates a ride-sharing app to address the difficulty of finding reliable transportation in a city. (A)</p> Signup and view all the answers

Which action best represents leveraging 'Existing Products and Services' as a source of opportunity?

<p>A local bakery creates a gluten-free version of its popular cake to cater to customers with dietary restrictions. (D)</p> Signup and view all the answers

Consider an entrepreneur who is passionate about sustainable living and has extensive knowledge of eco-friendly products. Which action exemplifies this person leveraging 'Unique Knowledge' to create a business opportunity?

<p>Starting an online store that curates and sells only sustainable and eco-friendly products. (D)</p> Signup and view all the answers

Which description demonstrates the 'Changes' source of opportunity?

<p>A community establishes a local farmers market in response to increasing interest in locally sourced foods. (B)</p> Signup and view all the answers

What is the significance of a business model for a company?

<p>It describes how the company creates, delivers, and captures value. (D)</p> Signup and view all the answers

Which one is an example of a franchise business model?

<p>McDonald’s. (D)</p> Signup and view all the answers

Flashcards

Business Opportunity

A consumer need or want that can potentially be met by a new business.

Need (in economics)

Something essential for survival, like water, food, clothing, or shelter.

Want

A product or service that people desire but isn't essential for survival.

Problems as Opportunity

Problems you or others experience, which can lead to business ideas.

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Changes as Opportunity

New needs or wants resulting from shifts in society, technology or environment.

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New Discoveries

New technologies or medical breakthroughs converted into products.

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Existing Products and Services

Significantly improving existing product's quality or price.

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Unique Knowledge

Turning unique experiences or uncommon knowledge into a product or service that helps others.

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Business Model

Conceptual structure that supports a product or company viability, how it makes money and achieves its goals.

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Manufacturer

Produces finished goods from raw materials, selling to customers directly or via a middleman.

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Distributor

Purchase products from manufacturers and sell to retailers or the public.

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Retailer

Sell directly to the public, having purchased goods from a distributor or wholesaler.

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Franchise

Franchise uses an existing business model whilst paying royalties to it.

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Brick-and-mortar

A traditional business model where businesses deal face-to-face in a physical location.

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E-Commerce

Upgraded model focuses on selling products by creating a web-store on the internet.

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Study Notes

  • Opportunity Recognition is covered in Module 2

Recognizing Opportunities

  • A business opportunity addresses a consumer need or want that a new business can potentially satisfy.
  • In economics, needs are essential for survival, examples: water, food, clothing, or shelter.
  • Wants refer to products or services that people desire.

Sources of Opportunity

  • Problems encountered personally or observed in others can be sources of opportunity.
  • Changes can lead to unmet needs or wants, especially regarding climate change and environmental concerns, opening doors for "green" products and services.
  • New discoveries, especially in technology or medicine, that entrepreneurs can convert into products and services.
  • Improving upon existing products or services, without illegally copying them, such as offering better quality, lower prices, improved service, locations, or hours.
  • Unique knowledge involves leveraging one-of-a-kind experiences or uncommon knowledge to create beneficial products or services.

Business Model

  • A Business Model is a conceptual framework that ensures a product or company’s viability.
  • It details the company's operations, revenue generation, and goal achievement strategies.
  • Business processes and policies adopted by a company also form part of its business model.
  • Peter Drucker says a business model identifies the customers, the value created for them, and how this is achieved at reasonable costs must be answered by the business model.

Types of Business Models

  • Manufacturer: Produces finished goods from raw materials, selling directly to customers or through intermediaries; examples: Ford, 3M, General Electric.
  • Distributor: Purchases products from manufacturers and resells them to retailers or the public; examples: Auto Dealerships.
  • Retailer: Sells directly to the public after buying products from distributors or wholesalers; examples: Amazon, Tesco.
  • Franchise: Adopts the parent business's model and brand, paying royalties; examples: McDonald’s, Pizza Hut
  • Brick-and-Mortar: Traditional model involving face-to-face interactions in physical locations owned or rented by the business
  • E-Commerce: An upgrade of the traditional brick-and-mortar model, focusing on online sales through web-stores

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