6 Identification of problems and business opportunities
P.G. Padma Gowri
Introduction:
Identification of business problem is simply identifying the difference between what is the requirement of the customer and what is actually provided by the companies in terms of products and services
The opportunities always exist in the environment. The surrounding environment is analyzed for sensing opportunities available in it for the entrepreneur. A simple question will arises why is it necessary to identify and select an opportunity?
The answer is to appreciate the need for opportunity/project identification and justification.
Objectives:
- To understand business problems
- Need for opportunity/project identification
- To Identify the business opportunity
Problem:
The rapid change in economic and technological changes means that the right path yesterday may not work today and could be a disaster by tomorrow. Solving the business problems is decides those who excel from the companies who are closing the doors.
Mr. Jenkins (1969) provides the definition for problem .it is the first step in the systems approach is “the recognition and formulation of the problem.”
Problem exploration and identification:
Does the start-up business solve a problem or meet a consumer need in the market? Unless it does, we may end up spinning your wheels developing a solution that the marketplace does not need or want.
Defining a problem is sometimes the most important and difficult step.
According to Mr. Edson, there are three kinds of questions that need to be asked to ensure
we fully understand a problem situation.
First,
How difficult is the problem? Or well understood is the problem?
Second,
Who or what is impacted?
Finally
Finally, what are the different viewpoints of the problem? Every customer think it is a problem?
The answer to this question will help define the tractability of the problem. Problems can be “tame,” “regular,” or “immoral”.
Managing any business or initialisation of a start-up, is all about problem solving. People academic credentials, experience and IQ are some factors for business problem solving. Some people are good at it and some are not. But Problems are a part of every business and day to day activity.
For identify or formulate the problem the following steps are important,
- Define the problem
- Generate alternative solutions
- Evaluate and select an alternative
- Implement and follow up on the solution.
One must identify market problems. Market consists of:
- Existing customers: People who have already purchased the company’s product
- Prospects: People who have not yet purchased the product but are considering it for their future purchase.
- Target market users: People in target market who are not presently looking for a solution.
The key point to remember is, you want to identify what the marketplace says is a problem/need or gap and not what you believe is the problem.
To help you identify the problem ask questions such as:
- What is the consumers/clients main concern?
- What conditions/circumstances that are preventing consumers/clients from getting what they desire?
- Why consumers/clients are seeking a solution?
Another important point to remember is to not define your business around the product/service. Instead, you want to define your business around the problem or the need.
To define the problem clearly takes proper time.
Many businessmen like to jump into solution mode immediately, even before they understand the issue. In some cases, a small problem can become a big one with inappropriate solutions and actions. So clarity will lead to correct path ahead.
1. Follow alternate paths on “facts of life” and opportunities. Problems are merely facts of life. Often, what appears to be a problem is actually an opportunity appears in a different way.
2.Challenge the definition of problem from all angles. Beware of any problem for which there is one definition. The more number of ways you can define a problem, the more likely it is that you will find the best solution. For example, “sales are too low in last year” may mean strong competitors, ineffective advertising, technology advancement or a poor sales process.
3. More number of questions asked to identify the cause of the problem. This is all about finding the main or root cause, rather than treating a symptom. If you don’t get to the root, the problem will repeatedly occurs, with different symptoms. Don’t waste time to re-solving the same problem.
4.Try to identify multiple possible solutions. Entrepreneurs must develop more number of possible solutions, then using proper analysis they end up with appropriate solution. The quality of the solution is in direct proportion to the quantity of solutions considered in problem solving.
5.Prioritize potential solutions. There is a rule that says that every big problem was once a small problem that could have been solved easily at that time.
6. Make a quick decision. Select a solution and then decide on a course of action. The longer you put off deciding on what to do, the higher the cost, and the high impact. Main objective of problem solving is it should be to deal with 80% immediately. Set a specific deadline for making a decision and stick to it.
7.Assign responsibility to others. Who exactly is going to carry out the solution or the different elements of the solution? Assign the responsibility for them.
8.Set a measure for the solution.
Need for opportunity/project identification:
The enterprise and entrepreneur go hand in hand. Most of the enterprises are not successful due to the non-suitability of either entrepreneur or enterprise or both. So it is need and significance of identifying and selecting a suitable business opportunities and enterprise.
The dynamics of suitability or non- suitability between the entrepreneur and enterprise can be given in the table.
Environmental Dynamics and change:
Dynamics of business environment means frequently changing surroundings in which it operates. The business need to adopt to changing conditions and overcome uncertain and unpredictable problems and obstacles to survive and thrive in the market. Because the reason “survival is the fittest”
Business environment have the following characteristics:
1) The Business environment aggregate of various factors,conditions, events,and influences arising from different sources. So, Business environment is a complex phenomenon relatively it is easier to understand its parts but difficult to understand in its totality.
2) The various influences operating on an unabated manner make the Business environment continuously changing. Business environment always dynamic in nature.
3) The environment is perceived differently by different observers. For example, the same new development like nuclear power generation station, perceived as opportunities as well as threat.
4) The growth and profit of the business depends critically on environment. Thus the Business environment has a far –reaching impact on business organizations.
Dimensions of Business environment:
The key components or constitutes or dimensions of business environments are.
- Economic environments
- Social environments
- Political environments
- Legal environments
- Technological environments
Types of business environments:
The business environments are sub divided in to following two types:
- Internal environments
- External environments
Internal environments:
Internal environmental are all the factors which are within the organization the factors of environments are controlled within the system. These include organization value system, vision mission, human resources, structure of the organization, internal relationship. The factors of environment impart strengths and /or cause weakness of strategic nature of the organization. The major components are shown in figure.
External environment:
General environments otherwise called as external environments consist of all the factors which are outside the organization and, hence, they are beyond the control of organization. These factors provide opportunities or pose threats to an organization. The following are major external environment factors:
- Market
- Suppliers
- Technological
- Economic
- Regularity
- Political
- Socio-cultural
- Global
Business opportunities in various sectors:
By Douglas mac Arthur quotation “There is no security on this earth-only opportunity.” According to Thomas j. Watson “Opportunities never knocks the door. You have to knock on opportunity’s door and they are all around.” The fact remains that there are opportunities available everywhere in and around us. What is actually needed is to have the lenses to see and recognize the same. There are plenty business opportunities, available in the environment include but are not confined to the following only:
Identification of business opportunity:
Opportunity:
The term ‘opportunity’ refers for both product and project. The identification of an opportunity or a product or project is identical.
The government of India s “Look East Policy” through north east is an example of opportunity to do business in terms of tea, handcrafts, herbals, turmeric, etc. Opportunity identification and selection are the stepping stones in any business enterprise. The identification and selection of a suitable business opportunity serves as the trite saying ‘Well begun is half done’. Allthe entrepreneur have a question of, what basics we select the project or product? We have market for this product? Is it a profitable business or not?
The literal sense, the word ‘environment ‘means the aggregate of physical surroundings, circumstances and conditions. The environment includes all what exist around.
Sources of new ideas and opportunities
To identify the Business opportunities many resources can be used. They are formal resource and informal resources.
Formal resources of business ideas and opportunities
These resources may be used for already established company. Inspiration for the opportunities generally comes from monitoring of market environment and its factors – such as demand for the certain products, export possibilities.
The idea may also come from new inventions of important commodity’s sources, the discovery of new products and technologies. It is also possible to find the business opportunities ,use the results of various studies such as production and consumption in the country, market studies, analysis of import and its substitution by domestic products, studies valuating effects of development of technique and technology on the environment, science and development, government regulation and policy etc.
Informal resources of business ideas and opportunities
If the entrepreneurs want to start a business most of the time they get the business ideas from informal intellectual resources. That ideas and inspiration are taken from life situations and surroundings
To search the business idea, a person can start from a variety of options, such as:
Business based on hobbies, interests and own skills
Business opportunity arises sometimes in the context of hobby or sport. In that situation, it is essential that the entrepreneur had considerable experience and passion for the activity because it involves the risk that the company will be established rather from the love to the hobby than with the goal to satisfy market needs
Business ideas based on from the parent company
Numbers of business ideas and opportunities are being established by ex-employees who choose to do alone what had previously done in.
Source of ideas from family members and friends
It is advantageous if the person who decides to start a business has people who are already carrying on a business in its nearby area. Research has shown that other entrepreneurs are the second largest group to which the early entrepreneurs turn to information provider.
Business based on the discovery of gap in the market
The entrepreneurs become successful because of the discovery and use of space in the market offer. To perceive a gap however is not always easy and it is not possible to make large conclusions from the limited information they need to further investigate. If it is established that there is a gap (niche, window) it is necessary to identify the common, national and local trends and those that are interesting to try to transform the business plan that would meet the needs arising from these trends.
Remove Key Hassles
Take a look at some of the key hassles customers face when buying or using a product or a service.
You don’t necessarily have to have a new product or service. You can be innovative and improve a product, a service or a business process.. Purchasing processes in some products categories are still a major source of irritation for customers. Think how you can improve and provide a superior alternative.
For example, look at how the search engine market developed. There were millions of websites on the Internet and it was often very hard for customers to find what they were looking for. Searching an index of webpages (on Google, or Yahoo) made it much easier for customers to find information they were seeking.
Customers Desire to Experience Something New
You may or may not have a new business idea or business process to serve a market. And perhaps there are no market inefficiencies for you to exploit. But sometimes, gaging the customers’ desire to experience something new can be a successful strategy. Can you innovate on customers’ experience in existing business models?
Pick a Growing Sector/Industry
When considering a new business, it is important to look at whether or not your idea is in a growing sector or industry. For example, a lot of start-ups in the IT sector in India did very well because there was huge demand in that industry and the growth was outpacing other industries. Investing in a stagnant sector/industry may not best serve your interests, unless you identify a market inefficiency that you can exploit.
Product Differentiation
Creating superior products or services vs. alternatives is important for winning in the market place. What factors will set your product apart from the existing ones? If there is no such differentiating factor, your potential customers may just stick to the existing product rather than adopt yours.
Cash Flow Considerations
At the start-up stage, cash flow considerations are just as important as any other business function. If you run out of cash, despite holding inventory or other assets, your business will risk failure.
There are some types of businesses in which cash is typically held up for a long time. If you are in manufacturing for example, your cash flow can be held up for long periods of time, or money may be stuck in receivables. When picking the right business, you should consider one that provides fairly regular cash inflows and with slower outflows (if possible). It is imperative that you understand the need for constant cash flow in your business. Without cash flows, no matter how good your idea or business process is, you might be destined for failure.
Seasonal Business
When selecting a new business – consider whether it is seasonal or the year round.
If you do decide on a seasonal business, you will need to consider how to operate during off-season months. Managing the cash you make during the season will help you get through off-season. Financial planning will be of most importance.
Conclusion:
Every business exists to solve problems and meet the needs for consumers better than competitors in the market; at an affordable price. A problem/need is a condition that a consumer has that is calling for a solution that either does not exist or the available solution has gaps.
Successful businesses identify these gaps in the marketplace and attempt to fill them with a solution.
Problem exploration and identification is not a one-time process that specifies the problem. But is resolved by using combination with solution synthesis and analysis to progress toward a more complete understanding of problems and solutions over time .
The term opportunity implies a good chance or a favourable situation to do something offered by environments. By the same concert, business opportunity means a good or favourable change available to run a specific business in a given environment at a given point of time.
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